Wp/22467/2005 Of M/S. Kiran Jewellers v. The Assistant Director Of Income Tax

THE HON’BLE Mr. JUSTICE B. SUDERSHAN REDDY AND THE HON’BLE Mr. JUSTICE S. ANANDA REDDY WRIT PETITION No.22467 OF 2005 DATED: 17-11-2005 Between M/s. Kiran Jewellers, a proprietary concern, Rep. by its Proprietor, Mr. Kiran Jain, S/o. Kishore Mal Jain, aged 36 years, Registered office at 22, Rashtradut Press Building, Chameliwala Market, M.I. Road, Behind Silver Land, Jaipur, Rajasthan. .. Petitioner AND The Assistant Director of Income Tax(Investigation), Unit-II (1), Hyderabad & 3 others .. Respondents THE HON’BLE Mr. JUSTICE B. SUDERSHAN REDDY AND THE HON’BLE Mr. JUSTICE S. ANANDA REDDYWRIT PETITION No.22467 OF 2005 ORDER:(Per Hon’ble Mr. Justice B. Sudershan Reddy) The petitioner prays for issuance of Writ of Mandamus declaring theseizure of 21.8 Kilograms of gold and withdrawal of a sum of Rs.20.00 lakhsfrom the petitioner’s bank, HDFC Bank, as being contrary to Section 132(1) ofthe Income Tax Act, 1961. The petitioner, accordingly, prays for issue ofconsequential direction directing the respondents to forthwith release theseized gold and refund the amount of Rs.20.00 lakhs seized from the HDFCBank with interest. Shorn of all the details, Sri D. Prakash Reddy, learned Senior Counselappearing on behalf of the petitioner, submitted that the seized gold forms partof the stock-in-trade, which cannot be seized, even if it is unaccounted. LearnedSenior Counsel placed reliance upon proviso to Section 132 (1) of the Act,which mandates that bullion, jewellery or other valuable article or thing arebeing stock-in-trade of the business, found as a result of search, shall not beseized but the authorized officer shall make a note or inventory of such stock-in-trade. A detailed counter affidavit has been filed by the 3[rd] respondent-Deputy Director of Income Tax (Investigation), Unit-I (3),Hyderabad, wherein, it is explained that there are severe and extremecontradictories between the averments made by Manoj Jain of M/s. SiddhiJewellers, Hyderabad, from whom the gold has been seized, and Kishoremal B.Jain of M/s. Kiran Jewellers (writ petitioner herein) with regard to their businessdealings, sales, purchases, receipts, deposits in Bank and stock-in-trade. It isfurther stated that the entire gamut of the transactions taking place between thepetitioner, Manoj Jain, M/s. Kiran Jewellers and M/s. Siddhi Jewellers, appearsto be a large scale money-laundering operation, with no record of personsdepositing cash in the on-line bank accounts of M/s. Kiran Jewellers both at HDFC Bank and Andhra Bank. It is stated that under the circumstances, theDepartment had the reasons to believe that the bullion was the unexplainedinvestment and a resultant of this large scale money-laundering in the name ofgold bullion trade, and Manoj Jain from whom the gold was seized was aconduit and agent of M/s. Siddhi Jewellers, Hyderabad. We have elaborately heard the learned senior counsel appearing on behalf ofthe petitioner as well as the learned senior counsel appearing on behalf of therespondents and perused the material available on record. In our considered opinion, it would be premature to express any opinion,at this stage, as to whether the seized gold may have to be treated as stock-in-trade. Each of the assertion made by the petitioner in the affidavit filed insupport of the writ petition is put in issue by the respondents. Number ofdisputed questions of facts arises for consideration, which cannot besatisfactorily resolved in a proceeding under Article 226 of the Constitution ofIndia. We are of the considered opinion that it is eminently a fit case, where a regularenquiry has to be held for the purpose of determining as to whether the seizedgold forms part of the stock-in-trade of the petitioner. Interest of justicerequires to refuse the relief, as prayed for, by the petitioner, at this stage. In our considered opinion, it would be premature to express any opinion,at this stage, as to whether the seized gold may have to be treated as stock-in-trade. Each of the assertion made by the petitioner in the affidavit filed insupport of the writ petition is put in issue by the respondents. Number ofdisputed questions of facts arises for consideration, which cannot besatisfactorily resolved in a proceeding under Article 226 of the Constitution ofIndia. We are of the considered opinion that it is eminently a fit case, where a regularenquiry has to be held for the purpose of determining as to whether the seizedgold forms part of the stock-in-trade of the petitioner. Interest of justicerequires to refuse the relief, as prayed for, by the petitioner, at this stage. We, accordingly, reject the contention urged by the learned seniorcounsel for the petitioner and express no opinion as to whether the seized goldforms part of the stock-in-trade. It could be said that there is no material, at least, prima facie, to arrive at the conclusion that the seized gold does notform part of stock-in-trade. Any interference by this Court, at this stage, maycreate an irreversible situation, for which purposes, no writ, ordinarily, lies. However, having regard to the facts and circumstances of the case, weconsider it appropriate to direct completion of the enquiry, as expeditiously aspossible, preferably within a period of six months from the date of receipt of acopy of this order. There shall be an order accordingly. With the aforesaid limited direction, the Writ Petition shall standdismissed. No order as to costs. ___________________________ B. SUDERSHAN REDDY, J Date:17-11-2005 PV __________________________ S. ANANDA REDDY, J