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Judgment
K.A. Puj, J.—Since common issue is involved in all these petitions and since they are heard together, the same are being disposed of by this common judgment and order.
In all these petitions the Petitioners have prayed for quashing and setting aside the order passed by the Respondent No. 2 u/s 132B(1)(i) of the IT Act, 1961 rejecting the Petitioners'' application for release of the seized gold ornaments and jewellery or part thereof under the provisions of Clause (i) of Sub-section (1) of Section 132B of the Act.
The facts arc taken from Special Civil Appln. No. 10659 of 2009 for sake of convenience.
It is the case of the Petitioner that Section 132 proceedings were initiated on 12th June, 2008 when the jewellery was seized. Section 132B enables the raided person to apply for the release of seized assets within 30 days from the end of the month in which the asset was seized. Accordingly the Petitioner made an application to AO on 23rd July, 2008 stating that there was search proceedings u/s 132 on 12th June, 2008 and the jewellery belonging to her was seized. She has submitted in detail the evidences of the nature and source of acquisition of the said jewellery and requested to release the said jewellery as per second proviso to Section 132B(1)(i) i.e., within a period of 120 days from the date of such authorization. The Petitioner has also stated that if the Respondent requires any further information, the Respondent No. 1 should kindly let her know of the same. Not having heard anything from the Respondent No. 1, the Petitioner addressed another letter to the Respondent No. 1, dt. 17th Nov., 2008 inviting attention to her earlier application dt. 23rd July, 2008 for release of jewellery and specifically drawing attention to the second proviso to Section 132B(1)(i) of the Act. She has also pointed out that since the period of 120 days has expired long back, the jewellery be released at the earliest.
Having heard nothing on her second letter too the Petitioner addressed second letter dt. 16th Jan., 2009 to the Addl. CIT enclosing therewith her application dt. 17th Nov., 2008 and pointing out that her ornaments were liable to be released long back but the same have not been released till date and that the letter was addressed to the Respondent No. 2 since the Petitioner has been informed that her case has been transferred to Central range. The Petitioner, therefore, requested the Respondent No. 2 to instruct the jurisdictional ITO to do the needful at the earliest to release her ornaments. Even to this letter addressed to the Addl. CIT, there was no response. The Petitioner addressed a letter dt. 9th Feb., 2009 to the CIT reiterating that she made an application dt. 23rd July, 2008 for release of jewellery seized on 12th June, 2008 with the substantiating evidence that by virtue of second proviso to Section 132B(1)(i) the said jewellery was liable to be released within a period of 120 days from the date of last authorization, that in view of the clear provisions of law the jewellery was required to be released latest by 11th Nov., 2008.
Since none of the authorities did anything on the application of the Petitioner, the Petitioner filed on 20th April, 2009 the Special Civil Appln. No. 3735 of 2009 praying for issuance of writ of mandamus on the Respondent to return the gold ornaments seized forthwith because the seizure beyond period of 120 days as specified in Section 132B(1)(i) was against law. The adjournments were taken on the excuse of filing an affidavit on number of occasions but instead of receiving the affidavit the Petitioner received an order dt. 24th Aug., 2009 from the Asstt. CIT, Central Circle 1, Surat, rejecting the Petitioner''s application for release of said gold ornaments.
It is this order which is under challenge in the present petition.
Mr. J.P. Shah, learned senior counsel appeared with Mr. Manish J. Shah in Special Civil Appln. Nos. 10656, 10677, 10676 and 3738 of 2009. Mr. S.N. Soparkar, learned senior counsel appeared with Ms. Niyati Sheth, learned advocate appeared in Special Civil Appln. No. 10915 of 2009 on behalf of the Petitioner. Mr. B.B. Naik, learned senior counsel appears on behalf of Respondent in all these petitions.
Mr. Shah and Mr. Soparkar, both have submitted that the Department''s right of passing any adverse order is forfeited on expiry of 120 days mentioned in second proviso to Section 132B(1)(i) and, therefore, the impugned order which is hopelessly out of time and absolutely invalid, could not provide any excuse for not releasing the gold ornaments and jewellery within a period of 120 days. They have further submitted that this order could have some validity if the same would have been passed within a period of 120 days. They have further submitted that there was no existing liability under the Act or the provisions of the Act mentioned in Section 132B(1)(i). The Petitioners have made application for release of jewellery with the proof of nature and source of acquisition of such jewellery within the time mentioned in first proviso to Section 132B(1)(i) of the Act and the second proviso provides that the jewellery on the Petitioner fulfilling the condition laid down in first proviso shall be released within a period of 120 days. The Respondents have not taken any care about the Petitioner''s application for release till the impugned orders are passed.
In support of their submissions reliance is placed on the decision of this Court in the case of Cowasjee Nusserwanji Dinshaw Vs. Income Tax Officer, wherein the residential premises of the Assessee were raided by the officers of the IT Department and certain documents was seized during the course of the raid in exercise of the power under Sub-section (1) of Section 132 of the IT Act, 1961. On an application filed by the Assessee under Article 226 of the Constitution challenging the retention of the seized books as illegal and unlawful on the ground that the documents seized were retained in the custody of the Department beyond the period of 180 days from the date of seizure without communicating the reasons recorded by the authorized officer and the approval of the CIT, this Court held that the retention beyond the period of 180 days was illegal and unlawful. The Respondent authorities were directed to return the account books/documents forthwith and not later than two weeks from the date of receipt of the writ of the Court. They have, therefore, submitted that considering the provisions contained in Section 132B(1)(i) and also the decision of this Court, the prayer made in all these group of petitions deserves to be granted and the Respondent authorities are required to be directed to release the gold ornaments forthwith.
Mr. B.B. Naik, learned senior counsel appearing for the Respondent in all these petitions submitted that so far as Special Civil Appln. No. 10659 of 2009 is concerned, search and seizure operation was carried out u/s 132 of the Act at the residence of the Petitioner and family members on 12th June, 2008. During the course of search and seizure operation total gold ornaments of 2,678 grams were found from the Petitioner and family members. Out of 2,678 grams, the ornaments weighing 2,055.479 gms. were seized on 12th June, 2008. The remaining ornaments, which were not seized on 12th June, 2008 weighing 776.45 gms. and other ornaments weighing 1,959.13 gms. found from the bank locker Nos. 257 and 642 belonging to the Petitioner and her husband Rajan P. Shah with Surat Peoples Cooperative Bank Ltd., were also seized on 14th June, 2008. The last authorization u/s 132 of the Act was issued on 14th June, 2008. Since the material seized during search and seizure operation was not received by the AO with an appraisal report of the officer-in-charge of the search and seizure operation, the application was forwarded to the Dy. Director of IT (Inv.), Unit-III. on 29th July, 2008. The said Asstt. Director of IT considered the said application and after recording reasons in detail found that the ornaments cannot be released and a detailed note in this behalf was prepared by him on 1st Aug., 2008.
Mr. Naik further submitted that search and seizure operation u/s 132 of the Act was centralized by the CIT-I, Surat, by passing an order u/s 127 of the Act on 21st Oct., 2008 for release of the ornaments. The Asstt. CIT, Central Circle-1, Surat, received the record of the Petitioner from the Dy. CIT, Circle-1, Surat, on 26th Dec, 2008, as the case was assigned to him by the CIT-I, Surat, by order dt. 21st Oct., 2008 passed u/s 127 of the Act. The said Asstt. Director of IT sent the search folder to the Asstt. CIT, Central Circle-1, Surat on 9th March, 2009. Since the Asstt. Director of IT (Inv.), Unit-III, Surat by detailed note dt. 1st Aug., 2008 decided not to release ornaments by recording reasons, the AO, who received the record, was of the opinion that no further orders were required to be passed in that behalf.
Mr. Naik further submitted that notice issued by this Court in a writ petition being Special Civil Appln. No. 3735 of 2009 was; forwarded by the CIT, Central Circle-I, Ahmedabad to the Addl. CIT, Central Range, Surat on 19th May, 2009 and, in turn, the Addl. CIT, Central Range, Surat, forwarded the same to the Asstt. CIT, Central Circle-I, Surat, who was assigned the case for assessment on 22nd May, 2009. The Asstt. CIT, Central Circle-I, Surat, resumed the charge on 4th June, 2009 and, thereafter, he passed an order rejecting the application of the Petitioner u/s 132B(1)(i) of the Act on 24th Aug., 2009. Mr. Naik has, therefore, submitted that there was no delay in passing the order on the application of the Petitioner for release of ornaments and the Petitioner is not entitled to any relief much less the relief prayed for by the Petitioner in this petition.
Mr. Naik further submitted that the Petitioner has failed to make out case for release of the seized ornaments as provided in Section 132B(1)(i) r/w first proviso thereto which clearly requires that the Assessee has to prove to the satisfaction of the AO the nature and source of acquisition of the jewellery seized. The order passed by the Asstt. CIT, Central Circle-1, Surat, clearly shows that the Petitioner was unable to explain with evidence for the deviation of items and valuation report filed along with WT return and jewellery found and seized during the course of search. He has further submitted that it is also a requirement of the provisions of Section 132B(1)(i) that if the value of jewellery seized during the search and seizure operation is required to recover the tax, which might be leviable upon the Assessee in the assessment made u/s 153A of the Act, then also, the same cannot be released to the Petitioner.
Mr. Naik further submitted that the Petitioner during the course of survey, failed to explain the nature and source of jewellery found in the premises of the Petitioner in terms of the WT return and valuation report and, therefore, the search team decided to seize the unexplained part of the jewellery for verification at the time of assessment proceedings. The search of ornaments was made with due consent of the Petitioner and by properly explaining the provisions of the Act to the Petitioner. He has, therefore, submitted that the Petitioner is not entitled to any relief, much less the relief as prayed for by the Petitioner in the present petition.
Mr. Naik also invited the Court''s attention to the note prepared by the Addl. Director of IT (Inv.)-III, Surat, on 1st Aug., 2008. The Addl. Director in the said note observed that the Assessee had made an attempt to explain the nature and source of acquisition of the seized gold ornaments and jewellery by classifying it broadly under the following four categories:
(a) Remade from old jewellery
(b) Jewellery received by gift
(c) Jewellery purchased in the past supported by photocopies of bills
(d) Acquisition out of gold bars/coins purchased earlier.
Mr. Naik further submitted that as per the note the claims of remade from old jewellery are supported by copies of the valuation reports which by itself do not support the Petitioner''s claim. The claims of the jewellery received by gift are not supported by gift deeds and evidence to the effect that the items gifted were accounted for in the hands of the donors. The claims of jewellery purchased in the past are supported by photocopies of bills, which by themselves do not prove that the purchases were made out of accounted funds. Again the claims of acquisitions out of gold bars/coins purchased earlier are also not supported by any evidence to prove that the gold bars/coins were purchased out of accounted funds and the ornaments were indeed made out of such gold bars/coins. He has further submitted that in the application filed by the Assessee, the Assessee has admitted that few items of seized jewellery cannot be identified with the description available in the valuation report and hence the Petitioner needs inspection of the seized jewellery. There is no provision under the IT Act providing for inspection of the jewellery after seizure is effected. He has, therefore, submitted that there appears no merit in the application filed by the Assessee for release of the seized gold ornaments and jewellery or part thereof under the provisions of Clause (i) of Sub-section (1) of Section 132B of the IT Act. He has, therefore, submitted that the petition deserves to be dismissed.
Having heard the learned advocates appearing for the parties and having considered their rival submissions in light of the statutory provisions and facts and circumstances of the case, the Court is of the view that the impugned order passed by the Respondent rejecting the Petitioner''s application for release of jewellery and gold ornaments is not tenable at law and hence the same deserves to be quashed and set aside. The provisions contained in Section 132B(1) are very clear and unambiguous. Section 132B deals with the assets seized u/s 132 or requisitioned u/s 132A of the Act. A detailed procedure is prescribed u/s 132B(1)(i) of the Act. Out of such seized assets, the amount of the existing liability or the amount of the liability determined on the completion of the regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment is required to be recovered. The first proviso of this section enables the Assessee to make an application within 30 days from the end of the month in which the asset was seized. For release of the assets the Assessee is required to explain the nature and source; of acquisition of such assets to the satisfaction of the AO. On such satisfaction and with prior approval of the Chief CIT the AO is empowered to release the asset to the person from whose custody the assets were seized. The second proviso to this section makes it clear that the assets are required to be released within a period of 120 days from the date on which the last of the authorizations for search u/s 132 or for requisition u/s 132A, as the case may be, was executed.
Considering the above provisions, the Petitioner made an application within the permissible time-limit. Despite the fact that the period of 120 days was over, the assets were not released. The Petitioner thereafter sent reminder and still no action was taken on behalf of the Respondent. The Petitioner, therefore, approached this Court by way of writ petition. During the pendency of this petition, the Petitioner''s application was rejected and since the order was passed by the Respondent giving fresh cause of action the earlier petition was allowed to be withdrawn with a liberty to file fresh petition. The action of the Respondent authorities is highly objectionable in view of the fact that in earlier petition, after issuance of notice time was sought for to file the reply affidavit. However, this time was utilized for the purpose of passing the order so as to make the earlier petition as infructuous one. In the affidavit-in-reply the Respondents have come out with the stand that a detailed note was prepared by the Asstt. Director of Inv. whereby the Petitioner''s claim for release of the gold ornaments and jewellery was rejected. However, the said note was never communicated to the Petitioner. The Petitioner is not concerned with the stand taken by the Respondents in the affidavit-in-reply. With regard to the change of jurisdiction one has to see the compliance of the provisions of Section 132B(1)(i) of the Act. The first thing is to make an application in time explaining the nature and source of acquisition of the asset which was duly made by the Petitioner. No dispute was raised during the permissible time of 120 days. It is only after the expiry of the said period the order was passed raising all sorts of contentions. However, this is not permissible in view of the mandate contained in second proviso to Section 132B(1)(i) of the Act. It clearly says that the assets or any portion thereof shall have to be released within a period of 120 days. Once this period is over the Respondents have no authority to retain these assets. Interpreting somewhat similar provisions, this Court has already taken the view in Cowasjee Nusserwanji Dinshaw (supra) wherein the books of account retained beyond the period of 180 days from the date of seizure without communicating the reasons recorded by the authorised officer and approval of the CIT were held to be illegal and unlawful. The ratio of the said decision would squarely cover the present case and in all these cases the Respondent authorities have retained the seized assets beyond the period of 120 days. The orders passed by the Respondent authorities beyond such period are of no consequence and they are not tenable at law.
In the above view of the matter, all these orders which are challenged in the present group of petitions retaining the assets beyond the period of 120 days are hereby quashed and set aside and the Respondent authorities are directed to release the gold ornaments and jewellery seized by them during the course of search and seizure operation forthwith and in any case not later than two weeks from the date of receipt of the writ of this Court or from that date of receipt of certified copy of this order, whichever is earlier.
Since we have decided the legal issue in this group of petitions, the discussion of facts of other petitions is not required. The ultimate conclusion drawn and finding arrived at by us equally apply to all other petitions.
With these directions and observations all these petitions are accordingly allowed to the aforesaid extent. Rule is made absolute without any order as to costs in each of the petitions.