The Rajasthan High Court held that the seizure of Jewellery duly disclosed and substantiated with documents is unjustified and illegal.
The petitioner, Kantivardhan Pradeep Choraria was intercepted and searched at Jaipur Airport during his journey from Mumbai to Jaipur while he was carrying jewellery and diamonds, by the Income Tax Authorities. The said jewellery found in his possession was seized in terms of Section 132 of the Income Tax Act, 1961
Mr. Siddharth Ranka, counsel for the petitioners submits that the Department valuer, who conducts the valuation sheet, has valued the stock on a very higher side. It is stated that the goods mentioned from serial No.1 to 24 belonged to M/s Maha Pragya Jewellers while goods were stocks belonging to M/s Daha Dimon. The petitioners also appeared before the investigation wing of the Income Tax Department and produced all the relevant papers and the jewellery had been purchased through proper banking channel and therefore the petitioners submitted that the stock-in-trade ought to be delivered back to the petitioners.
On the other hand, Mr. Siddharth Bapna, the counsel appearing for the respondents submitted that the concerned person who was searched namely petitioner failed to produce any evidence to prove the source of the seized jewellery while two challans were seized. They did not mention the price and value of the material. It was submitted that the challan mentions the goods to be sent to Jaipur while the challan has to be issued from Jaipur and the concerned persons were travelling from Mumbai to Jaipur and therefore the same would be concocted and false.
The single judge bench of Justice Sanjeev Prakash Sharma held that merely on account of reasons to suspect, seizure of goods ought not to be undertaken.
“If the concerned person has shown documents in order to explain the goods which he is carrying and also gives a statement like in the present case that the articles were belonging to a firm and were part of stock-in-trade. Before seizure is conducted explanation ought to be taken from the concerned firms and if they are able to produce the related books of account and necessary proof of articles which may include sale details, purchase details, stock register, audit reports, income tax returns etc, the Income Tax Authorities ought to take a decision at this stage and ought not to be allowed to seize the goods for years together to await for the assessment order to be passed in relation to concerned employee,” the Court noted.
The court observed that as the claim of the goods in terms of Section 132(1)(iii) of the Act of 1961 has been made by the petitioner as the jewellery seized in stock-in-trade and required material has already been placed before the Income Tax Authorities. The same was required to be released as the seizure itself is found to be unjustified and illegal. Non mentioning of price of the goods in the challan would not construe that the goods are not part of stock-in-trade.
Therefore, the court held that the seizure itself was wholly illegal and all consequential actions based on such seizure are illegal and contrary to the provision of Section 132(1)(iii) of the Act of 1961. Hence, the petitioners were entitled to receive back the goods from the respondents as more than one year and six months have lapsed. The petitioners would also be entitled to interest of a sum of Rs.1 lakh which was paid as a gross amount towards retention of the jewellery which is stock-in-trade and is marketable.
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