Wa/168/2008 Of Prakash Gold Palace (P) Ltd. And Another v. The Asst. Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH FRIDAY, THE 25TH JANUARY 2008 / 5TH MAGHA 1929 W.A.No. 168 of 2008 --------------------------------------- AGAINST THE JUDGEMENT IN WPC.24585/2007 Dated 22/08/2007 .................... APPELLANTS/PETITIONERS: ---------------------------------------- 1.PRAKASH GOLD PALACE (P) LTD.,39/358 B, POOTHULIL HOUSE,39/358 B, POOTHULIL HOUSE, IIND FLOOR, MONASTERY ROAD, COCHIN - 11, REPRESENTED BYTHE AUTHORISED SIGNATORYSHRI S.K. CHAKRABORTY.THE AUTHORISED SIGNATORYSHRI S.K. CHAKRABORTY. 2.KARUNDUTT SINGH ALIAS RINKU SINGH,POOTHULIL HOUSE, MONASTERY ROAD,COCHIN-11.POOTHULIL HOUSE, MONASTERY ROAD,COCHIN-11. BY ADVOCATES SHRI T. N. SEETHARAMAN & SHRI ARUN RAJ S. RESPONDENTS/RESPONDENTS: ---------------------------------------------- 1.THE ASSISTANT COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE - I, ERNAKULAM.CENTRAL CIRCLE - I, ERNAKULAM. 2.THE DEPUTY COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE-1, I.S. PRESS ROAD,ERNAKULAM.CENTRAL CIRCLE-1, I.S. PRESS ROAD,ERNAKULAM. 3.THE CHIEF COMMISSIONER OF INCOME TAX,COCHIN.COCHIN. BY STANDING COUNSEL SHRI GEORGE K. GEORGE THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 25/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L. DATTU, C.J. & K. M. JOSEPH, J. -------------------------------------------------- W. A. NO. 168 OF 2008---------------------------------------------------Dated this the 25th January, 2008JUDGMENT H.L. DATTU, C.J: This Appeal is directed against the orders passed by the learned SingleJudge in W.P.(C). No.24585/07 dated 22.8.2007. By the impugned Order, thelearned Judge has modified Ext.P9 order passed by the Assistant Commissioner ofIncome Tax, Central Circle-I, Ernakulam dated 12.7.2007. 2. In this Order of ours, we will be referring the parties as arrayed in the WritPetition. 3. First petitioner is a manufacturer of gold ornaments. First petitioner claimsthat the second petitioner is its employee. It is the claim of first petitioner Companythat it effects large scale sale of gold ornaments to various reputed gold merchantsand traders. It is further stated that it is an assessee under the provisions of theKerala Value Added Tax Act and Central Sales Tax Act. It is its further case that thegold ornaments are principally manufactured in West Bengal and from their stock, itwas transferred to Chennai, and its further case is that the gold ornaments requiredin Kerala are usually stock transferred from Chennai to Cochin. 4. Case of first petitioner is that the goods sent from Chennai to Keralathrough the second petitioner was seized by the Officials of the Income TaxDepartment. 5. Second petitioner had filed a petition on 23.1.2007, inter alia, requestingthe respondents to release the gold ornaments seized on 24.7.2006. 6. The Assistant Commissioner of Income Tax, while entertaining thepetition, has directed the second petitioner to furnish sufficient Bank Guarantee ofequivalent amount, to release the seized gold ornaments (Ext.P9 order). 7. Aggrieved by the said order passed by the Assistant Commissioner ofIncome Tax, both the petitioners were before this Court in W.P.(C). No.24585/07.The learned Single Judge by order dated 22.8.2007, has modified the order passedby the Assistant Commissioner of Income Tax and further, has directed therespondents in the Writ Petition to release the entire gold seized, to the petitionerson the petitioners furnishing Bank Guarantee for 70 per cent of the value of thegoods and on both the petitioners jointly executing a simple bond without surety forthe balance 30 per cent in favour of the first respondent. The Order passed by thelearned Single Judge is as under: 7. Aggrieved by the said order passed by the Assistant Commissioner ofIncome Tax, both the petitioners were before this Court in W.P.(C). No.24585/07.The learned Single Judge by order dated 22.8.2007, has modified the order passedby the Assistant Commissioner of Income Tax and further, has directed therespondents in the Writ Petition to release the entire gold seized, to the petitionerson the petitioners furnishing Bank Guarantee for 70 per cent of the value of thegoods and on both the petitioners jointly executing a simple bond without surety forthe balance 30 per cent in favour of the first respondent. The Order passed by thelearned Single Judge is as under: "Since maximum rate of tax payable is 30% and evenif the entire value of goods is treated as escaped income,the maximum tax and equal amount towards penalty willaccount for 70% of it's value and since first petitioner is anassessee, W.P. is disposed of modifying Ext.P9 directing thefirst respondent to release the entire goods to the petitionerson petitioners together or first petitioner executing BankGuarantee for 70% of the value of the goods and on bothpetitioners jointly executing a simple bond without surety forthe balance 30% in favour of the first respondent." 8. Aggrieved by the orders passed by the learned Single Judge, thepetitioners are before us in this Writ Appeal. 9. Shri T.N. Seetharaman, learned counsel appearing for the appellants,after arguing the matter for quite some time, may be knowing the mind of the court,would submit that the first petitioner shall deposit a sum of Rs.24 lakhs for thepresent and that amount may be adjusted towards the tax liability that may bedetermined by the respondents either against the first or second petitioner and onsuch payment, this Court may direct the first respondent to release the entire goldseized on 24.7.2006. 10. In view of the aforesaid submission made by learned counsel for theappellant, we had requested Shri George K. George, learned counsel appearing forthe Income Tax Department to obtain appropriate instructions from the Officials of the Income Tax Department. 11. Shri George K. George after obtaining instructions would inform us thatthe Department is prepared to accept a sum of Rs.24 Lakhs (Rupees TwentyfourLakhs) that may be paid by the first petitioner for and on behalf of the secondpetitioner, for release of the gold ornaments and the amount so deposited would beadjusted towards any tax liability that may be fastened by the first respondent eitheragainst the first petitioner or the second petitioner. He would further submit thatliberty may be reserved to the respondents to recover the balance amount that maybe found due after the proceedings are completed by the first respondent, eitherfrom the first petitioner or from the second petitioner. In view of the submissions somade by both the learned counsels, it may not be necessary for us at this stage togo into the correctness or otherwise of Ext.P9 order passed by the Officers of theDepartment or the Orders passed by the learned Single Judge. Accordingly, wepass the following: Order (1) The Writ Appeal is disposed of. (2) The first petitioner/first appellant shall deposit a sum of Rs.24 Lakhs(Rupees Twentyfour Lakhs) with the first respondent within fifteen days from today. Ifsuch deposit is made, the first respondent is directed to release the gold ornamentsseized on 24.7.2006 either in favour of the first petitioner or in favour of the secondpetitioner. (3) Liberty is reserved to the Income Tax Department to recover any amountthat may be found due after completing the assessment proceedings either againstthe first petitioner or the second petitioner. W.A.NO.168/08 (4) First respondent is directed to complete the assessment proceedingsinitiated against the first or the second petitioner as expeditiously as possible and, atany rate, within six weeks from today. With these observations and directions, the Writ Appeal is disposed of. Ordered accordingly. (3) Liberty is reserved to the Income Tax Department to recover any amountthat may be found due after completing the assessment proceedings either againstthe first petitioner or the second petitioner. W.A.NO.168/08 (4) First respondent is directed to complete the assessment proceedingsinitiated against the first or the second petitioner as expeditiously as possible and, atany rate, within six weeks from today. With these observations and directions, the Writ Appeal is disposed of. Ordered accordingly. H.L. DATTU, CHIEF JUSTICE K.M. JOSEPH, JUDGE kbk/DK.