The Delhi High court in the case of Khem Chand Mukim vs. Pr. Director of Income Tax held that the seized trade-in-stock under Section 132 of the Income Tax Act which is within the custody of the Income Tax authority must be released within 120 days.
The petitioner is Proprietor of M/s. Shrimati Gems and Jewels over the business and engaged in the trading of jewellery. The petitioner was travelling from Delhi to Guhawati and he was stopped at Indira Gandhi Airport, New Delhi while he was possessing the jewellery. The jewellery was seized by the authorities. The M/s. Shrimati Gems and Jewels requested the authorities several times that the jewellery was stock-in-trade and its seizure for a long duration may hamper the business of the petitioner.
The issue raised was whether the seizure done by the authority was justified under the law or not?
The division bench of Delhi High court comprising of Justice Vipin Sanghi and Justice Sanjeev Narula as per section 132 B the custody and release of material must be within 120 days held that the authorities failed to furnish the details and the jewellery seized was trade-in-stock which was already established. As a consequence, the division bench of Delhi High court declared all the search and seizure was not in accordance with the law and so it was illegal. Further, the bench also ordered that Pr. Director of India hereinafter the respondent must return all the jewellery which is being searched and seized from the petitioner. In order to discourage such arbitrary acts by the authority, the court held that the respondent must pay compensation of INR 50.000/- to the Delhi Legal Service within 4 weeks.
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