Goutam Chakraborty v. Deputy Director Of Income Tax (Investigation), Unit – 3 (2)

CORAM THE HON'BLE MR.JUSTICE C.SARAVANANW.P.No.24261 of 2017andW.M.P.No.9645 of 2019 1.Lalithaa Jewellery Mart (P) Ltd., Rep. by its General Manager / Authorised Signatory Rep. by its General Manager / Authorised Signatory Mr.Indermal Ramani, 123, Usman Road, Panagal Park, T. Nagar, Chennai – 600 017. 123, Usman Road, Panagal Park, T. Nagar, Chennai – 600 017. 2.BB Jewellers & Manufacturers, Rep. by its Partner Mr.D.Padmanabhan, No. 3-B, Kences, Sundar Flat, No.15/21, Raghaviah Road, T.Nagar, Chennai – 600 017. 3.Chakraborty Jewellers, Rep. by its Partner, Mr. Goutam Chakraborty, No.16, Gopalchandra Bose Lane, Kolkata – 700 050. Rep. by its Partner, Mr. Goutam Chakraborty, No.16, Gopalchandra Bose Lane, Kolkata – 700 050. 4.Goutam Chakraborty ... Petitioners Vs. 1.Deputy Director of Income Tax (Investigation), Unit – 3 (2), No. 108, Nungambakkam High Road, Chennai – 600 034. Unit – 3 (2), No. 108, Nungambakkam High Road, Chennai – 600 034. 2.Deputy Director of Income Tax (Investigation), Unit – 1(3), Aayakar Bhawan Annexe, P-13, Chowringhee Square, Kolkata – 700 069. Unit – 1(3), Aayakar Bhawan Annexe, P-13, Chowringhee Square, Kolkata – 700 069. 3.The Income Tax Officer, Central Circle – I (4), Office of the Income Tax Department, Ayakar Bhavan, M.G.Road, Nungambakkam, Chennai – 600 034. 4.Mohanlal Jewellers (P) Ltd., Rep. by its Director Suresh Kumar Khatri, No.139-141 (Old # 68-69), N.S.C. Bose Road, Chennai – 600 001. 5.The Assistant Commissioner of Income Tax, Office of the Assistant Commissionerof Income Tax, ACIT / DCIT, Circle – 44, Kolkatta.(R5 impleaded as per order dated01.10.2019 in W.M.P.No.4596 of 2019) ...Respondents Writ Petition filed under Article 226 of the Constitution ofIndia praying to issue a Writ of Certiorarified Mandamus, tocall for the records pertaining to the purported search andseizer proceedings Warrant No.8609, dated 1[st] July 2016 and allpurported proceedings initiated thereunder and/or relatingthereto and/or in pursuance thereof and quash the same includingthe proceedings of the Office of the Assistant Commissioner ofIncome Tax, dated 31.12.2018 ACIT/DCIT/Circle-44, Kolkattapassed in Order No.ITBA/AST/S/143(3)/2018-19/1014678722(1) forthe Assessment Year 2017-18 in the name 4[th] petitioner and quashthe same in so far as it relates to the Bullion and Jewelleryseized vide Panchanama 01.07.2016 by the 2[nd] respondent andconsequently direct the 2[nd] respondent to release the goldbullion and jewellery seized vide Panchanama dated 01.07.2016 bythe 2[nd] respondent to the custody of the 1[st] petitioner and alsoto pay interest in accordance with Section 132B of the IncomeTax Act, 1961. For Petitioners: Mr.N.Murali Kumaran forM/s.Mcgan Law Firm.For R1 to R3 & R5: Mr.A.P.Srinivas Special Government Pleader for R.Venkatraman, Sr.CounselFor R4: Mr.A.Sivakumar O R D E R Originally the present writ petition was filed for thefollowing relief:-To call for the records pertaining to thepurported search and seizure proceedings WARRANTNo.8609 dated 1[st]July, 2016 and all thepurported proceedings initiated thereunderand/or relating thereto and/or in pursuancethereof and quash the same and consequentlydirect the 2[nd] respondent to release the goldbullion and jewellery seized vide Panchanamadated 01.07.2016 by the 2[nd] respondent to thecustody of the 1[st] petitioner and also to payinterest in accordance with Section 132B of the Income Tax Act, 1961. 2.Since the 5[th] respondent proceeded to pass an assessmentorder dated 31.12.2018 against the 4[th] petitioner during thependency of the present Writ Petition, the petitioners amendedthe prayer in the above writ petition for the following reliefafter impleading the 5[th] respondent:- Income Tax Act, 1961. 2.Since the 5[th] respondent proceeded to pass an assessmentorder dated 31.12.2018 against the 4[th] petitioner during thependency of the present Writ Petition, the petitioners amendedthe prayer in the above writ petition for the following reliefafter impleading the 5[th] respondent:- To call for the records pertaining to thepurported search and seizer proceedings WarrantNo.8609, dated 1[st] July 2016 and all purportedproceedings initiated thereunder and/or relatingthereto and/or in pursuance thereof and quashthe same including the proceedings of the Officeof the Assistant Commissioner of Income Tax,dated 31.12.2018 ACIT/DCIT/Circle-44, Kolkattapassed in Order No.ITBA/AST/S/143(3)/2018-19/1014678722(1) for the Assessment Year 2017-18 in the name 4[th] petitioner and quash the same inso far as it relates to the Bullion andJewellery seized vide Panchanama 01.07.2016 bythe 2[nd] respondent and consequently direct the 2[nd]respondent to release the gold bullion andjewelleryseizedvidePanchanamadated01.07.2016 by the 2[nd] respondent to the custodyof the 1[st] petitioner and also to pay interest inaccordance with Section 132B of the Income TaxAct, 1961. Brief facts of the case as follows:- 3.About 18043.960 g of fine gold (Bullion) and about 1765.45g of used gold ornaments ostensibly meant for manufacturingrepair and polishing were seized from the custody of the 4[th]petitioner in the early hours of 01.07.2016, at the NetajiSubash Chandra Bose International Airport, Kolkata by theofficers under the 2[nd] respondent. 4.The aforesaid seizure took place when the 4[th] petitionerdisembarked from a flight from Chennai and was about to leavethe airport. It appears that on receipt of specific intelligencefrom the officers of the 1[st] respondent at the Chennai KamarajInternational Airport, the officers of the 2[nd] respondent seizedthe aforesaid quantity of gold from the 4[th] petitioner. 5.The aforesaid seizure was purportedly made by the officersunder the 2[nd] respondent under Section 132 of the Income Tax Act,1961. Statement was also recorded from the 4[th] petitioner by the2[nd] respondent on 01.07.2016. The 4[th] petitioner stated that hewas a partner of the 3[rd] petitioner and that the seized gold inquestion were handed over to him by the 2[nd] petitioner formanufacturing and polishing/repair purpose and that he hadcarried the gold on earlier occasions also for such purpose fromthe 2[nd] petitioner. 6.Based on the statement recorded from the 4[th] petitioner,the 1[st] respondent also issued a summons dated 01.07.2016 andcalled upon the principal officer of the 2[nd] petitioner toexplain the position. On the same day, the 2[nd] petitioner alsoexplained the background and stated that the 2[nd] petitioner wasan exclusive manufacturer of gold jewellery for the 1[st]petitioner and that seized quantity of gold was earlier handedover to the 2[nd] petitioner on 30.6.2016 for manufacturing ofjewellery items and for repair & polishing purpose by the 1[st]petitioner and that work was sub-contracted to the 3[rd] petitionerrepresented by its partner the 4[th] petitioner. 7.As a follow-up, a summons dated 08.07.2016 was also issuedto one Indermal Ramani, the Authorised Officer of the 1[st]petitioner to appear and give statement. On the same day,another summons was also issued to the principal officer of the2[nd] petitioner. Thereafter, a notice under Section 131(1A) of theIncome Tax Act, 1961 was issued to the 2[nd] petitioner. The 2[nd]petitioner once again explained the position reiterating whatwas explained earlier by their reply dated 22.08.2016. 7.As a follow-up, a summons dated 08.07.2016 was also issuedto one Indermal Ramani, the Authorised Officer of the 1[st]petitioner to appear and give statement. On the same day,another summons was also issued to the principal officer of the2[nd] petitioner. Thereafter, a notice under Section 131(1A) of theIncome Tax Act, 1961 was issued to the 2[nd] petitioner. The 2[nd]petitioner once again explained the position reiterating whatwas explained earlier by their reply dated 22.08.2016. 8.Meanwhile, the 1[st] and the 2[nd] petitioners filed a separatedeclaration regarding the seized gold bars and jewellery on01.02.2017 before the 2[nd] respondent. The 4[th] petitioner alsofiled a declaration regarding the seized gold with the 2[nd]respondent on 28.02.2017 and stated that the 4[th] respondent had https://hcservices.ecourts.gov.in/hcservices/ purchased about 10 Kgs of gold bars (995) on 01.06.2016 and 10Kgs of gold bars (995) on 30.06.2016 from the Bank of NovaScotia. 9.It was further stated that out of the aforesaid quantity,the 4[th] respondent had sold 9 Kgs of gold bars to the 1[st]petitioner on 30.06.2016 and that 10 Kgs of gold were handedover to the 1[st]petitioner for manufacturing purpose on30.06.2016. 10.It was further stated that the 1[st] petitioner in turncontracted the 2[nd] petitioner to manufacture jewellery wherein inturn had handed over 18043.960 g of gold bar for manufacturingpurpose and 1765.450 g of gold jewellery for repair andpolishing purpose. The 3[rd] petitioner represented by the 4[th]petitioner and therefore it cannot be treated as undisclosedincome of the 4[th] petitioner. 11.In the course of the event, notice under Section 274 readwith Section 271 AAB Of the Income Tax Act, 1961 was also issuedto the 4[th] petitioner stating that pursuant to search that wasconducted the said petitioner and that he was found to haveundisclosed income and therefore 4[th] petitioner was called for ahearing on 30.1.2019 to show cause as to why an order imposing apenalty should not be made under Section 271 AAB of the IncomeTax Act, 1961. 12.On 31.12.2018 an assessment order was passed by the 5[th]respondent for the Assessment Year 2017-18 assessing the 4[th]petitioner of undisclosed income of Rs.6,41,92,737/-. The 5[th]respondent has extracted the statements of the petitioners andthe 4[th] respondent to conclude that the 4[th] respondent hadpurportedly issued a invoice dated 04.07.2016 whereas part ofgold in question was seized from the possession of the 4[th]petitioner on 01.07.2016 and therefore the sale which has takenplace on 04.07.2016 could not form part of the gold seized fromthe 4[th] petitioner. 13.It is further concluded that no regular books of accountswere submitted in the links of the chain of the event from whichit could be verified as to who was the original purchaser andthe source of purchase. The 5[th] respondent has not onlydisbelieved the 4[th] petitioner’s claim but also the claim of the1[st], 2[nd] petitioner and 4[th] respondent herein. 14. The 1[st] respondent has concluded that the informationfurnished by the petitioner was inaccurate leading toconcealment of income. It has been concluded that as per Section132 (4A) of theIncome Tax Act, 1961, any books of account orother documents, money, bullion, jewellery or other valuable https://hcservices.ecourts.gov.in/hcservices/ articles or thing which are found in possession or control ofany person in the course of search is presumed to belong to suchperson. 15.It has been further concluded that as per Section 292C(1)of the Income Tax Act, 1961 also there is a presumption that anybooks of account, other documents, money, bullion, jewellery orother valuable articles or thing found in possession or controlof any person in the course of search under Section 132 orSurvey under Section 133A belongs to such person. https://hcservices.ecourts.gov.in/hcservices/ articles or thing which are found in possession or control ofany person in the course of search is presumed to belong to suchperson. 15.It has been further concluded that as per Section 292C(1)of the Income Tax Act, 1961 also there is a presumption that anybooks of account, other documents, money, bullion, jewellery orother valuable articles or thing found in possession or controlof any person in the course of search under Section 132 orSurvey under Section 133A belongs to such person. 16.Accordingly the seized gold valued at Rs.6,41,92,737/-has been added as undisclosed income of the petitioner andtherefore the 4[th] petitioner has been asked to pay a sum ofRs.6,00,69,834/- as the tax apart other amounts. 17.It is the contention of the petitioners that the seizedgold belong to the 1[st] petitioner in view of subsequentadjustment between 1[st] petitioner and 4[th] respondent on account ofseizure of gold. An affidavit of the parties have been filed. Itis further submitted that the seized gold belong to the 1[st]petitioner and therefore the officers of the 2[nd] respondent oughtto have returned the seized gold to the 1[st] petitionerparticularly in the light of the fact that it has claimedownership over the seized good. 18.It is further submitted that the 2[nd] respondent had noauthority under the provisions of Section 132 of the Income TaxAct, 1961 to seize bullion and jewellery as they were stock intrade of the business of the petitioners. The 2[nd] respondent wasmerely bound to make a note or inventory of such stock in tradeof the business and return the jewellery items. 19.It is submitted that before the actual seizure waseffected despite information recorded from both the 1[st] and 2[nd]petitioners and furnishing of details which clearly establishedthat the seized goods were handed over by the 1[st] petitioner tothe 2[nd] petitioner who in turn sub-contracted the work to the 4[th]petitioner and was given the seized gold for the purpose ofmanufacture and polish/repair only. 20.It is therefore submitted that the 2[nd] respondent oughtnot to have effected seizure and the 5[th] respondent ought not tohave treated the seized gold as formally part of undisclosedincome of the 4[th] petitioner. It is submitted that even if therespondents had doubts about the claim of the 1[st] and 2[nd]petitioners, the seized gold ought to have been sent to thejurisdictional Income Tax Officers at Chennai within whosejurisdiction the 1[st] and the 2[nd]petitioners are assessees andtheir incomes were being regularly assessed. 21.Opposing the writ petition, the learned counsel for therespondents submits that the writ petition is withoutjurisdiction in as much as the entire cause of action has arisenKolkata and therefore outside the jurisdiction of this court. Hetherefore submits that the writ petition ought to have beendismissed in limini. 22.In this connection, the learned counsel for the 1[st] to 3[rd]and 5[th] respondents relied on the decision of the Supreme Courtand that of this court and in the Delhi High Court the followingcases:- 23.The learned counsel for the respondents further submitsthat the assessment order has also been passed by the 5[th]respondent on 31.12.2018 who is located in Kolkata and thereforethe 4[th]petitioner has an alternate remedy before theCommissioner of Income Tax (Appeals). 24.It is further submitted that in any event, this court hasno jurisdiction to quash the aforesaid impugned order of the 5[th]respondent even otherwise. 25.Countering these arguments learned counsel for thepetitioner relies on the decision of the Supreme Court in thefollowing cases:- https://hcservices.ecourts.gov.in/hcservices/ Vs. M/s. Vindhya Metal Corporation and Others, (1997) 5 SCC 321. vi.Mrs. Anita Sahai Vs. Director of Income-Tax, 2004SCC OnLine All 1769. 23.The learned counsel for the respondents further submitsthat the assessment order has also been passed by the 5[th]respondent on 31.12.2018 who is located in Kolkata and thereforethe 4[th]petitioner has an alternate remedy before theCommissioner of Income Tax (Appeals). 24.It is further submitted that in any event, this court hasno jurisdiction to quash the aforesaid impugned order of the 5[th]respondent even otherwise. 25.Countering these arguments learned counsel for thepetitioner relies on the decision of the Supreme Court in thefollowing cases:- https://hcservices.ecourts.gov.in/hcservices/ Vs. M/s. Vindhya Metal Corporation and Others, (1997) 5 SCC 321. vi.Mrs. Anita Sahai Vs. Director of Income-Tax, 2004SCC OnLine All 1769. vii.Mitaben R Shah Vs. Deputy Commissioner of IncomeTax and Another, 2010 SCC OnLine Guj 1740. viii.Tejram Omprakash (Huf), Indore Vs. Director ofIncome Tax (Investigation), 2013 SCC OnLine MP10794. ix.Mul Chand Malu (HUF) and 3 Others Vs.Assistant/Deputy Commissioner of Income Tax and 5Others, 2016 SCC OnLine Gau 138. x. Ameeta Mehra Vs. Additional Director of Income Tax(INV)-Unit and Another, 2017 SCC OnLine Del 8439.xi.Ajit Jain Vs. Union of India and Others, 2000 SCCOnLine Del 92. xii.Union of India Vs. Ajit Jain and Another, 2003(260) ITR 80.xiii.Dimondstar Exports and Others Vs. DirectorGeneral of Income Tax (Investigation) and Others,2004 SCC OnLine Bom 1255.xiv.Sterling Agro Industries Ltd. Vs. Union of Indiaand Others, 2011 (122) DRJ 693 (FB). xv.Sterling Agro Industries Ltd. Vs. Union of Indiaand Others, 2011 (124) DRJ 633 (FB). xvi.Vishnu Security Services Vs. Regional ProvidentFund Commissioner, 2012 (129) DRJ 661 (DB).xvii.Sonu Sardar Vs. The Union of India and Another,2016 SCC OnLine Del 6206. xviii.M/s. Venkata Sai Ram Traders Vs. The customs,Central Excise & Service Tax SettlementCommission, 2017 SCC OnLine Mad 37515. xix.Additional Commissioner of Income Tax Vs. S.Pichaimanickam Chettiar, 1982 SCC OnLine Mad 257.xx.Commissioner of Income Tax Vs. Mrugesh Jaykrishna,1999 SCC OnLine Guj 415.xxi.Commissioner of Income Tax, Delhi Vs. Anoop Jain,2019 SCC OnLine Del 9718,xxii.Firm Kaura mal Bishan Dass Vs. Firm Mathra DassAtma Ram, Ahmedabad and Others, 1959 SCC OnLineP&H 2.xxiii.Smt. Shakuntala Devi Vs. Banwari Lal andOthers, AIR 1977 ALLAHABAD 551(1).xxiv.Ram Narain Singh Vs. Gurinder Kaur and Another,(1997) 116 PLR 1.xxv.Arun Batra Vs. M/s. Bimla Devi and Others, 2009SCC OnLine Del 769. 26. The Learned Counsel for the Petitioners further submitsthat the expression “Unexplained Money” is defined in Section 69A of the Income Tax Act, 1961. It is submitted that bullionjewellery and etc. could be deemed to be that of the 4[th]petitioner if only the explanation offered by the 4[th] petitionerwas unsatisfactory. It is submitted that there is a categoricaldenial regarding ownership by the 4[th] petitioner and since thesewere part of stock in trade of the 1[st] petitioner, there is nobasis to conclude that the seized gold bullion/use jewellerywere that of the 4[th] petitioner. 27. I have considered the arguments advanced on behalf ofthe petitioners and the respondents and perused the records. 28. Gold bullion and jewellery were seized from the custodyof the 4[th]petitioner on 01/07/2016. At the time ofinterrogation, by the officer of 2[nd] respondent the 4[th] petitionerhad categorically stated that the entire consignment ofgold/bullion and jewellery were handed over to him by the 2[nd]petitioner on 30.06.2016 for the purpose of manufacture andrepair/polishing purpose. 27. I have considered the arguments advanced on behalf ofthe petitioners and the respondents and perused the records. 28. Gold bullion and jewellery were seized from the custodyof the 4[th]petitioner on 01/07/2016. At the time ofinterrogation, by the officer of 2[nd] respondent the 4[th] petitionerhad categorically stated that the entire consignment ofgold/bullion and jewellery were handed over to him by the 2[nd]petitioner on 30.06.2016 for the purpose of manufacture andrepair/polishing purpose. 29.The 4[th] petitioner has not wavered for his submissionwhether at the time when Panchanama was drawn or at the time ofseizure or thereafter. Pursuant to the statement recorded fromthe 4[th]petitioner at the Netaji Subash Chandra BoseInternational Airport, Calcutta, a summons was also issued tothe 2[nd] petitioner on the same date on 01.07.2016 by the 1[st]respondent. 30.The 2[nd] petitioner has also explained the position thatit had received 18043.960 gms for manufacturing and 1765.450 gmsof old gold jewellery for repair and polishing purpose from the1[st] petitioner on 30.06.2016 and that these gold items werehanded over to the 4[th] petitioner along with voucher Nos. 98 and100 dated 30.06.2016. 31.They have also produced stock register of fine gold andgold repairs. Thereafter, summonses were issued on 08.07.2016 tothe 1[st] and the 2[nd] petitioners for recording statements. 32.There is no variance between the statements of thepetitioners in the proceedings. They have clearly stated thatthe seized gold bullion and jewellery were meant formanufacturing and repair/polishing purpose and were handed overto the 4[th] petitioner only for the aforesaid purpose. Thus, theofficial respondents can no longer rely on presumption underSection 292C of the Income Tax Act, 1961. The 5[th] respondent alsocannot deem the seized gold as that of the 4[th] petitioner for thepurpose of Section 69 of the Income Tax Act, 1961. 33.Therefore, the 2[nd] respondent was not justified inseizing the gold bullion/jewellery from the custody of the 4[th]petitioner on 01.07.2016. The 5[th] respondent was also notjustified in concluding that the seized gold/jewellery wasundisclosed income of the 4[th] petitioner in terms of Section 69Aof the Income Tax Act, 1961. Only question therefore to beanswered is whether this court can exercise jurisdiction andinterfere with the seizure effected by the 2[nd] respondent atCalcutta on 01.07.2016 and quash the consequential assessmentorder passed by the 5[th] respondent holding the explanationoffered by the 4[th] petitioner as unsatisfactory to tax as incomefrom undisclosed source? 34.Admittedly, the 4[th] petitioner had carried the goldbullion and jewellery from Chennai on 30.06.2016 and seizure waseffected by the officers of the 2[nd] respondent on 01.07.2016based on the exchange of intelligence/tip off from the 1[st]respondent at Chennai. 35.The seizure effected by the 2[nd] respondent and theconsequential assessment order dated 31.12.2018 are intertwinedand have their basis from the intelligence gathered at Chennairegarding the gold being carried from Chennai to Kolkata by the4[th] petitioner. 36.The 4[th] petitioner has adequately explained that the goldin question were carried by him for manufacturing andrepair/polishing purpose for the 2[nd] petitioner. That should havebeen sufficient ground for the 2[nd] petitioner to send the seizedgold to the 1[st] respondent for further investigation at Chennai.Instead, the 2[nd] petitioner not only seized the gold but alsorefused to send it to his counterparts at Chennai for furtherinvestigation. 35.The seizure effected by the 2[nd] respondent and theconsequential assessment order dated 31.12.2018 are intertwinedand have their basis from the intelligence gathered at Chennairegarding the gold being carried from Chennai to Kolkata by the4[th] petitioner. 36.The 4[th] petitioner has adequately explained that the goldin question were carried by him for manufacturing andrepair/polishing purpose for the 2[nd] petitioner. That should havebeen sufficient ground for the 2[nd] petitioner to send the seizedgold to the 1[st] respondent for further investigation at Chennai.Instead, the 2[nd] petitioner not only seized the gold but alsorefused to send it to his counterparts at Chennai for furtherinvestigation. 37.In fact, summonses were also issued to the 1[st] and the 2[nd]petitioners at Chennai by the officers attached to the 1[st]respondent’s officer. The 1[st]petitioner has claimedownership/responsibility over the seized gold bullion/jewellery.Therefore, it was imperative for the 2[nd] respondent should havealso transferred the seized gold for further investigation tohis counterparts at Chennai. 38.Instead the 5[th] respondent has chosen to disbelieve thestatements of the petitioners to conclude that the explanationgiven by the 4[th] petitioner was not satisfactory even though asper 1[st] proviso to Section 132(1)(c), makes it clear thatbullion, jewellery or other valuable article or thing beingstock in trade of the business, found as a result of searchshall not be seized and the is authorised officer shall merelymake a note of inventory of such stock in trade of the business. 39.Since the investigation and eventual seizure by theofficers of the 2[nd] respondent was pursuant to the tip off fromthe officers of the 1[st] respondent at the Chennai KamarajInternational Airport when the 4[th] petitioner was boarding theflight in evening to Kolkata on 30.06.2016 carrying gold, the 2[nd]respondent ought to have seized the gold and sent it to hiscounterpart for further investigation. 40.Detention & seizure effected by the officers at Kolkatashows arbitrary exercise of power in as much as person claimingto be the owners of the seized gold bullion and jewellery isadmittedly located within the State of Tamil Nadu at Chennai andcarry on business in retail sale and manufacture of goldjewellery. 41.If the 1[st] respondent had any doubts regarding theownership, he should have detained the 4[th] petitioner andeffected a seizure at the Chennai Airport before the 4[th]petitioner boarded the flight. Instead, after the 4[th] petitionerwas airborne to Kolkatta, he informed the 2[nd] respondent. Merelybecause the seizure was effected at Kolkata by itself is not asufficient ground to conclude that this court will have nojurisdiction to pass appropriate orders as the basis of theseizure itself is on account of tip off/exchange of intelligenceby the officers located at the Chennai Kamaraj InternationalAirport. The fact that ownership is claimed by persons locatedin Chennai, also shows that investigation should have beentransferred over to the officers in Chennai by the 2[nd]respondent. 42.Further, to exercise the power to search and seize underSection 132(1)(c) of the Income Tax Act, 1961, an officerconcerned has to form a subjective opinion that goldbullion/jewellery either represents wholly or partly income orproperty which has not been, or would not be disclosed in thereturn. If the seized gold were transferred to the 1[st]respondent, the 1[st] respondent could have scrutinized thedocuments and could have came to a fair conclusion on facts.There was no basis for the 2[nd] respondent to conclude otherwiseto effect seizure from the 4[th] petitioner. Therefore, theimpugned seizure effected by the 2[nd] respondent is quashed. 42.Further, to exercise the power to search and seize underSection 132(1)(c) of the Income Tax Act, 1961, an officerconcerned has to form a subjective opinion that goldbullion/jewellery either represents wholly or partly income orproperty which has not been, or would not be disclosed in thereturn. If the seized gold were transferred to the 1[st]respondent, the 1[st] respondent could have scrutinized thedocuments and could have came to a fair conclusion on facts.There was no basis for the 2[nd] respondent to conclude otherwiseto effect seizure from the 4[th] petitioner. Therefore, theimpugned seizure effected by the 2[nd] respondent is quashed. 43. Further, both under Section 132(4A) and Section 292C(1),there is only a presumption. However, such presumptions arerebuttable if adequate explanations are given. Therefore, it wasnot proper on the part of the 2[nd] and the 5[th] respondents toexercise control over the seized gold articles to deny therights of the 1[st] and 2[nd] petitioners under the 1[st] proviso toSection 132 of the Income Tax Act, 1961. In P.R.Metrani Vs.Commissioner of Income Tax, Bangalore, (2007) 1 SCC 789, wherein, it was observed that a presumption is an inference offact drawn from other known or proved facts. It is a rule of lawunder which courts are authorised to draw a particular inferencefrom a particular fact. It is of three types, (i) “may presume”,(ii) “shall presume” and (iii) “conclusive proof”. “May presume”leaves it to the discretion of the court to make the presumptionaccording to the circumstances of the case. “Shall presume”leaves no option with the court not to make the presumption. Thecourt is bound to take the fact as proved until evidence isgiven to disprove it. In this sense such presumption is alsorebuttable. “Conclusive proof” gives an artificial probativeeffect by the law to certain facts. No evidence is allowed to beproduced with a view to combating that effect. In this sense,this is irrebuttable presumption. 44.The Court further observed as follows:- 24.The words in sub-section (4-A) are “may bepresumed”. The presumption under sub-section (4-A), therefore, is a rebuttable presumption. Thefinding recorded by the High Court in theimpugned judgment that the presumption undersub-section (4-A) is an irrebuttable presumptioninsofar as it relates to the passing of an orderunder sub-section (5) of Section 132 andrebuttable presumption for the purpose offraming a regular assessment is not correct.There is nothing either in Section 132 or anyother provisions of the Act which could warrantsuch an inference or finding.25.Presumption under sub-section (4-A) wouldnot be available for the purpose of framing aregular assessment. There is nothing either inSection 132 or any other provision of the Act toindicate that the presumption provided underSection 132 which is a self-contained code forsearch and seizure and retention of books, etc.can be raised for the purposes of framing of theregular assessment as well. Wherever thelegislature intended the presumption tocontinue, it has provided so. Reference may bemade to Section 278-D of the Act which providesthat where during the course of any search underSection 132, any money, bullion, jewellery orother valuable articles or things or any booksof account, etc. are tendered by the prosecutionin evidence against the person concerned, thenthe provisions of sub-section (4-A) of Section132 shall, so far as may be, apply in relationto such assets or books of account or other documents. This clearly spells out the intentionof legislature that wherever the legislatureintended to continue the presumption under sub-section (4-A) of Section 132, it has providedso. It has not been provided that thepresumption available under Section 132(4-A)would be available for framing the regularassessment under Section 143 as well.26 [Ed.: Para 26 corrected vide OfficialCorrigendum No. F.3/Ed.B.J./17/2007 dated 22-2-2007] .This is also evident from the fact thatwhereas the legislature under Section 132(4) hasprovided that the books of account, money,bullion, jewellery and other valuable articlesor things and any statement made by such personduring examination may thereafter be used asevidence in any other proceedings under the Actbut has not provided so under sub-section (4-A)of Section 132. It does not provide that thepresumption under Section 1324-A would beavailable while framing the regular assessmentor for that matter under any other proceedingunder the Act except under Section 378-D.27.Section 132 being a complete code in itselfcannot intrude into any other provision of theAct. Similarly, other provisions of the Actcannot interfere with the scheme or the workingof Section 132 or its provisions.28.Presumption under Section 132(4-A) isavailable only in regard to the proceedings forsearch and seizure and for the purpose ofretaining the assets under Section 132(5) andtheir application under Section 132-B. It is notavailable for any other proceeding except whereit is provided that the presumption underSection 132(4-A) would be available. 45.Since 3[rd] respondent is the jurisdictional Income Officerwithin whose circle the 1[st] and the 2[nd] petitioners are registeredas income tax assessee, I am of the view that seized gold shouldbe directed to be delivered to the office of Chief Commissionerof Income Tax, Chennai who may himself decide or nominate asenior officer from the department to investigate the case. 46.The 1[st] and the 2[nd] petitioners along with 3[rd] and 4[th]petitioners and the 4[th]respondent may thereafter fileappropriate written submission together with evidence in supportof this case before the Chief Commissioner of Income Tax or anyother senior officer of the Income Tax Department who may be https://hcservices.ecourts.gov.in/hcservices/ nominated by the Chief Commissioner of Income Tax, Chennai forthe aforesaid purpose. 47.It is for the said officer to conclude as to whether the1[st] petitioner and/or the 4[th] respondent or both can claimownership over the seized gold bullion and jewellery which wasseized from the 4[th] petitioner by the 2[nd] respondent on01.07.2016. 48.If on further investigation such officer comes to aconclusion that the explanation offered by the 1[st] and 2[nd]petitioners along with the 4[th] petitioner and 4[th] respondent areunsatisfactory, appropriate steps shall be thereafter taken inaccordance with law. On the other hand, if on enquiry it isconcluded that the 1[st] petitioner or the 4[th] respondent are indeedthe owner of the seized gold bullion and jewellery, it shall behanded over to the lawful owner or person who is entitled to it. 49.The above exercise shall be carried out within a periodof three months from date of receipt of a copy of this orderstrictly without any deviation. The petitioners shall be givendue notice of hearing before order is passed. 50.As far as impugned order dated 31.12.2018 passed by the5[th] respondent is concerned, liberty is given to the 4[th]petitioner to take appropriate steps against the said orderbefore the jurisdictional Appellate Commissioner within a periodof thirty days from the date of receipt of a copy of this order. 51.The petition stands disposed with the above directions.No cost. Connected Miscellaneous Petition is closed.Sd/-Assistant Registrar(CS-III)// True Copy// Sub Assistant Registrar jen To 49.The above exercise shall be carried out within a periodof three months from date of receipt of a copy of this orderstrictly without any deviation. The petitioners shall be givendue notice of hearing before order is passed. 50.As far as impugned order dated 31.12.2018 passed by the5[th] respondent is concerned, liberty is given to the 4[th]petitioner to take appropriate steps against the said orderbefore the jurisdictional Appellate Commissioner within a periodof thirty days from the date of receipt of a copy of this order. 51.The petition stands disposed with the above directions.No cost. Connected Miscellaneous Petition is closed.Sd/-Assistant Registrar(CS-III)// True Copy// Sub Assistant Registrar jen To 1.Deputy Director of Income Tax (Investigation), Unit – 3 (2), No. 108, Nungambakkam High Road, Chennai – 600 034. Unit – 3 (2), No. 108, Nungambakkam High Road, Chennai – 600 034. 2.Deputy Director of Income Tax (Investigation), Unit – 1(3), Aayakar Bhawan Annexe, P-13, Chowringhee Square, Kolkata – 700 069.3.The Income Tax Officer, Central Circle – I (4), Office of the Income Tax Department, Ayakar Bhavan, M.G.Road, Nungambakkam, Chennai – 600 034. 4.The Assistant Commissioner of Income Tax, Office of the Assistant Commissionerof Income Tax, ACIT / DCIT, Circle – 44, Kolkatta. +1cc to M/s.Mcgan Law Firm, Advocate, SR.No.11612.+1cc to Mr.A.Sivakumar, Advocate, SR.No.11611.+1cc to Mr.A.P.Srinivas, SSC(I.T), SR.No.11342. OrderinW.P.No.24261 of 2017and W.M.P.No.9645 of 2019VSN II(CO)CSR: 12/03/2020