M/S Paras Jewelers v. Principal Director Of Income Tax, Investigation, Raipur, C.g

AFR HIGH COURT OF CHHATTISGARH, BILASPUR WA No. 160 of 2024 M/s Paras Jewelers, Proprietor Inder Chand Jain, Through- Its Sepcial PowerOf Attorney Holder Shri Paras Chand Jain, S/o Inder Chand Jain,aged about50 years having its registered office at 1, SBI Road, Balaji Ward, Jagdalpur,Bastar, C.G. ---- Appellant Versus 1 - Principal Director of Income Tax, Investigation, Raipur, C.G. 2 - Additional Director Income Tax (Investigation Unit 3), Raipur Branch (C.G.). 3 - Deputy Director of Income Tax (Investigation Unit 3), Raipur, C.G. ---- Respondents ______________________________________________________________ For Appellant : Mr. Apurv Goyal, Advocate. For Respondents : Mr. Amit Chaudhari, along with Mr. Ajay Kumrani, Advocates. ______________________________________________________________ Hon’ble Shri Justice Goutam Bhaduri Hon'ble Smt. Justice Rajani DubeyJudgment on Board Per Goutam Bhaduri. J. 26.06.2024 Heard. 1.(i) The present appeal is against the judgment dated 29.02.2024 passedby the learned Single Bench, wherein the writ petition challenging theseizure of jewellery which was said to be stock-in-trade by the petitionerwas refused to be handed over from seizure. The premises of the casewould emerge from the facts that on 19.10.2023, a search and seizureaction under Section 132 of the Income Tax Act, 1961 was conducted atthe residence-cum-business premises of appellant M/s Paras Jewelersat Jagdalpur. On the same date, the preliminary statement of Paras Chand Jain was recorded under Section 131 (1A) of the Act of 1961. (ii) Subsequent to it, the Government Approved Valuer prepared avaluation report for the gold ornaments and silver ornaments found inthe residence of Shri Inder Chand Jain. On 20.10.2023 and21.10.2023, statement of Paras Chand Jain was recorded underSection 132 (4) of Act of 1961, subsequent thereto GovernmentApproved Valuer prepared a valuation report of the gold ornaments andthe silver ornaments found in the showroom of the appellant firm. Theapplication was submitted by the petitioner submitting that on22.10.2023, the search team concluded their investigation anddeparted from the residential-cum-business premises, marking thetermination of the investigation proceeding at the said location. (iii) The appellant states that he has paid an advance tax of Rs.75,00,000/- (Rupees seventy five lakhs) on 15.12.2023. Subsequently,on 29.12.2023, the firm lodged a representation seeking release of thejewelry discovered within the bedroom of Inder Chand Jain on theground that it was a stock-in-trade of the jewelry shop and asked forrelease of the same. On 16.01.2024, the appellant firm voluntarilysubmitted a letter of disclosure depicting additional business incomeout of unaccounted business transactions for a total amount of Rs.8,76,96,000/- (Rupees eight crores seventy six lakhs ninety sixthousand). It was contended that the stock-in-trade could not havebeen seized and the business could not have been closed. The saidapplication was rejected by the Revenue on 25.01.2024, thesubsequent representation was also stand rejected. (iv) Eventually, the writ petition bearing No. W.P. (T) No. 27 of 2024 wasfiled wherein jewellery which was seized for the reason that saidjewellery is part of stock-in-trade was sought to be released. Thelearned Single Bench dismissed the petition on the ground that theappellant may avail the remedy under Section 132B (i) of Income TaxAct, 1961 and apply before the Principal Commissioner Central Circlefor release of the gold & other ornaments. (iv) Eventually, the writ petition bearing No. W.P. (T) No. 27 of 2024 wasfiled wherein jewellery which was seized for the reason that saidjewellery is part of stock-in-trade was sought to be released. Thelearned Single Bench dismissed the petition on the ground that theappellant may avail the remedy under Section 132B (i) of Income TaxAct, 1961 and apply before the Principal Commissioner Central Circlefor release of the gold & other ornaments. 2.Learned counsel for the appellant would submit that as per Section 132(1) (iii) if the goods which are seized form part of stock-in-trade, thenthey could not be seized at all. He would submit that learned SingleBench completely ignored this provision and went upon Section 132-B (i)to say that the appellant can apply for release of the goods on paymentof tax. He would further submit that direction ipso facto would lead toadmission of the fact that they were unaccounted, but the law asprovided under Section 132 (1) (iii), is that the stock-in-trade could notbe seized at all. The Department of Revenue can only prepare theinventory. He further submits that when the things moved are in thestock-in-trade whether it will be accounted for or not, it would not affectthe status. 3.Ex adverso, learned counsel for the respondents would submit that theorder to affirm certain goods were under stock-in-trade, it has to beprima facie established. He would refer to the statement made on oathunder Section 132 (4) of the Act of 1961 to submit that the appellantadmitted the fact that they do not have any record or invoices for suchgoods which were found in the residence to show that it was stock-in- trade. Therefore, in order to avail the benefit of Section 131 (iii) this factis required to be established that it was the part of the stock-in-trade.Accordingly, the Writ Appeal do not have any merit and is liable to bedismissed. 4.We have heard the counsel for both the parties and have gone throughthe record and also the order of learned Single Judge. 5.The reason assigned in the order of the learned Single Judge primarilytravels on Section 132B of the Act of 1961 which leads to a situationwherein assessee will have to admit the fact that he wants to pay thetax. By the judicial order, the assessee cannot be compelled to makesuch admission by resorting to such provision. We may not agree withthe reason assigned by the learned Single Bench, however event offacts demonstrates that though appellant claimed the goods under stock-in-trade, but in order to put the goods which in such basket as stock-in-trade were seized, as stock-in-trade, prima facie it requires that it is to beproved as stock-in-trade by supporting documents. The stock-in-tradehas not been defined under the Income Tax Act, 1961. It is a generalparlance, the definition by meaning how it attributes the goodspurchased or procured and put into stock of running business andignorance may be ominous to draw adverse inference. 6. When the appellant itself has stated in the statement (question 17 and18) recorded under Section 132 (4) of the Act of 1961 that they do notpossess any bill or invoices, prima facie by making such statement itappears that goods so seized by the stock-in-trade will not take it withinits sweep of definition so as to insulate it with the proviso of Section 132 (1) (iii) which reads as under:- (iii) seize any such books of account, other documents,money, bullion, jewellery or other valuable article or thingfound as a result of such search: [Provided that bullion, jewellery or other valuable article orthing, being stock-in-trade of the business, found as a resultof such search shall not be seized but the authorised officershall make a note or inventory of such stock-in-trade of thebusiness;] 7.Therefore, both the statements recorded under Section 132 (4) we do not find that prima facie, the appellant was able to establish the goods so seized apart from the showroom, were part of the stock-in-trade meaning (1) (iii) which reads as under:- (iii) seize any such books of account, other documents,money, bullion, jewellery or other valuable article or thingfound as a result of such search: [Provided that bullion, jewellery or other valuable article orthing, being stock-in-trade of the business, found as a resultof such search shall not be seized but the authorised officershall make a note or inventory of such stock-in-trade of thebusiness;] 7.Therefore, both the statements recorded under Section 132 (4) we do not find that prima facie, the appellant was able to establish the goods so seized apart from the showroom, were part of the stock-in-trade meaning thereby it was in the pipeline of the business transaction by mere turn of phrase. 8. Accordingly, we are not inclined to interfere into the acts of the Revenue resulting into dismissal. 9.Ex consequenti, the Writ Appeal sans substratum, is liable to be and is hereby dismissed. Sd/- Sd/- (Goutam Bhaduri) (Rajani Dubey) Judge Judge Uttej