Wp(C)/11000/2010 Of Balaso Kakso Nikam v. The Director General Of Income Tax (Inv)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 9TH DAY OF JULY 2014/18TH ASHADHA, 1936 WP(C).No. 11000 of 2010 (Y) ---------------------------------------- PETITIONER(S): ---------------------- BALASO KAKASO NIKAM ALIAS BALU SAIT, AGED 42 YEARS, S/O.KAKASO NIKAM RESIDING AT'SATHGURU', MANIKATH CROSS ROAD, RAVIPURAM, ERNAKULAM. BY ADVS.SRI.P.T.DINESH SMT.REKHA VASUDEVAN RESPONDENT(S): ------------------------ 1.THE DIRECTOR GENERAL OF INCOME TAX (INV), MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016. 2.THE CHIEF COMMISSIONER OF INCOME TAX, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI-18. 3.THE DIRECTOR OF INCOME TAX (INV), MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016. 4.THE COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, M.G.ROAD, KOCHI. 5.THE ADDITIONAL DIRECTOR OF INCOME TAX (INV), MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016. 6.THE DEPUTY DIRECTOR OF INCOME TAX (INV), MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016. MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016. 7.THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, THARAKANDAM BUILDINGS, BANERJI ROAD, KOCHI. 8.THE ASSITANT DIRECTOR OF INCOME TAX (INV)-I, MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016.MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD, KOCHI-682016. PJ WP(C).No. 11000 of 2010 (Y) ---------------------------------------- 9.THE DEPUTY COMMISSIONER (INV), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM AT EDAPPALLY, KOCHI-24. 10.THE INTELLIGENCE OFFICER, SQUAD NO.IV, COMMERCIAL TAXES, OFFICE OF THE DEPUTY COMMISSIONER (INT), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM AT EDAPPALLY, KOCHI-24.COMMERCIAL TAXES, OFFICE OF THE DEPUTY COMMISSIONER (INT), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM AT EDAPPALLY, KOCHI-24. 11.THE DIRECTOR GENERAL OF POLICE, POLICE HEADQUARTERS, THIRUVANANTHAPURAM. 12.THE INSPECTOR GENERAL OF POLICE, ERNAKULAM. 13.THE COMMISSIONER OF POLICE, KOCHI CITY, KOCHI. 14.THE SUB INSPECTOR OF POLICE, ERNAKULAM TOWN SOUTH POLICE STASTION, THEVARA, KOCHI.STASTION, THEVARA, KOCHI. R11-14 BY GOVERNMENT PLEADER SRI.BOBBY JOHN R1-10 BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09-07-2014, ALONG WITH WPC. 16554/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 11000 of 2010 (Y) ---------------------------------------- APPENDIX PETITIONERS' EXHIBITS ----------------------------------- P1:COPY OF THE PERMANENT ACCOUNT NUMBER (PAN) CARD OF THE PETITIONER P1(A): COPY OF THE PERMANENT ACCOUNT NUMBER (PAN) CARD OF JAYASREE BALASOBALASO P2:COPY OF THE INCOME TAX RETURN SUBMITTED BY THE PETITIONER FOR THE A.Y.2009-10THE A.Y.2009-10 P2(A): COPY OF THE INCOME TAX RETURN SUBMITTED BY THE PETITIONERS' WIFE JAYASREE BALASO FOR THE A.Y.2009-10JAYASREE BALASO FOR THE A.Y.2009-10 P3:COPY OF THE ADVANCE TAX RECEIPT OF RS.40,000/- PAID BY THE PETITIONER ON 24/12/2009 THROUGH INDIAN BANKPETITIONER ON 24/12/2009 THROUGH INDIAN BANK P3(A): COPY OF THE ADVANCE TAX RECEIPT OF RS.10,000/- PAID BY JAYASREE BALASO ON 24/12/2009 THROUGH INDIAN BANKBALASO ON 24/12/2009 THROUGH INDIAN BANK P3(B): COPY OF THE ADVANCE TAX RECEIPT OF RS.10,000/- PAID BY JAYASREE BALASO ON 11/3/2010 THROUGH UNITED BANK OF INDIA BALASO ON 11/3/2010 THROUGH UNITED BANK OF INDIA P3(C): COPY OF THE ADVANCE TAX RECEIPT OF RS.90,000/- PAID BY THE PETITIONER ON 13/3/2010 THROUGH UNITED BANK OF INDIA PETITIONER ON 13/3/2010 THROUGH UNITED BANK OF INDIA P2(A): COPY OF THE INCOME TAX RETURN SUBMITTED BY THE PETITIONERS' WIFE JAYASREE BALASO FOR THE A.Y.2009-10JAYASREE BALASO FOR THE A.Y.2009-10 P3:COPY OF THE ADVANCE TAX RECEIPT OF RS.40,000/- PAID BY THE PETITIONER ON 24/12/2009 THROUGH INDIAN BANKPETITIONER ON 24/12/2009 THROUGH INDIAN BANK P3(A): COPY OF THE ADVANCE TAX RECEIPT OF RS.10,000/- PAID BY JAYASREE BALASO ON 24/12/2009 THROUGH INDIAN BANKBALASO ON 24/12/2009 THROUGH INDIAN BANK P3(B): COPY OF THE ADVANCE TAX RECEIPT OF RS.10,000/- PAID BY JAYASREE BALASO ON 11/3/2010 THROUGH UNITED BANK OF INDIA BALASO ON 11/3/2010 THROUGH UNITED BANK OF INDIA P3(C): COPY OF THE ADVANCE TAX RECEIPT OF RS.90,000/- PAID BY THE PETITIONER ON 13/3/2010 THROUGH UNITED BANK OF INDIA PETITIONER ON 13/3/2010 THROUGH UNITED BANK OF INDIA P4:COPY OF THE RELEVANT PART OF THE LICENCE NO.ICH17/90/08-09 DATED 6/6/2008 ISSUED BY THE COCHIN CORPORATION TO THE PETITIONER 6/6/2008 ISSUED BY THE COCHIN CORPORATION TO THE PETITIONER P4(A): COPY OF THE RELEVANT PART OF THE LICENCE NO.MOH 14/4673/09 DATED 19/2/2010 ISSUED BY THE COCHIN CORPORATION TO THE PETITIONER 19/2/2010 ISSUED BY THE COCHIN CORPORATION TO THE PETITIONER P5:COPY OF THE 'MAHAZAR' DATED 16/1/2010 BY THE S.I.OF POLICE OF ERNAKULAM TOWN SOUTH POLICE STATION.ERNAKULAM TOWN SOUTH POLICE STATION. P6:COPY OF THE RELEVANT PART OF THE NEWS ITEM PUBLISHED IN THE MALAYALA MANORAMA DAILY DATED 17/1/2010MALAYALA MANORAMA DAILY DATED 17/1/2010 P7:COPY OF THE ISSUE VOUCHER OF ALAPPAT GOLD DATED 14/1/10 PERTAINS TO 1000 GRAMS OF GOLD BAR NUMBER 355235TO 1000 GRAMS OF GOLD BAR NUMBER 355235 P7(A): COPY OF THE ISSUE VOUCHER DATED 14/1/2010 BY ALAPPATT GOLD PERTAINS TO 700 GRAMS OF OLD GOLD ORNAMENTPERTAINS TO 700 GRAMS OF OLD GOLD ORNAMENT P7(B): COPY OF THE ISSUE VOUCHER DATED 15/1/2010 BY THE ALAPATT GOLD PERTAINS TO OLD GOLD BARDS NUMBER 57213 AND 57214 OF 2000 GRAMSPERTAINS TO OLD GOLD BARDS NUMBER 57213 AND 57214 OF 2000 GRAMS P8:COPY OF THE ISSUE SUMMARY BYT S.S.JEWELLERY PONNURUNNI FROM 14/1/2010 TO 15/1/201014/1/2010 TO 15/1/2010 P9:COPY OF THE G.S.ISSUE VOUCHER DATED 15/1/10 BY S.S.FASHION JEWELLERY, CHALIKKAVATTOMJEWELLERY, CHALIKKAVATTOM P10:COPY OF THE GOLD OUTWARD VOUCHER DATED 14/1/10 BY PADIKALA JEWELLERY, ERNAKULAMJEWELLERY, ERNAKULAM P11:COPY OF THE GOLD ISSUE VOUCHER DATED 15/1/10 BY GLOBAL JEWELLERS BROADWAYJEWELLERS BROADWAY P12:COPY OF THE OUTWARD VOUCHER BY THE THRISSUR GOLD WEDDING CENTRE,ADOOR DATED 14/1/10CENTRE,ADOOR DATED 14/1/10 P12(A): COPY OF THE OUTWARD VOUCHER BY THE THRISSUR GOLD WEDDING CENTRE, ADOOR DATED 15/1/10CENTRE, ADOOR DATED 15/1/10 P13:COPY OF THE RELEVANT PART OF THE OFFICIAL RECEIPT OF G4 CASH SERVICES INDIA PVT.LTD.,AND THE BANK OF NOVA SCOTIA DATED 30/12/2009PERTAINS TO the 1 KILOGRAM OF GOLD.SERVICES INDIA PVT.LTD.,AND THE BANK OF NOVA SCOTIA DATED 30/12/2009PERTAINS TO the 1 KILOGRAM OF GOLD. P13(A):COPY OF THE RELEVANT PART OF THE OFFICIAL RECEIPT OF G4 CASH SERVICES INDIA PVT.LTD.,AND THE BANK OF NOVA SCOTIA DATED 15/1/2010 PERTAINS TO THE 1 KILOGRAM OF GOLD.SERVICES INDIA PVT.LTD.,AND THE BANK OF NOVA SCOTIA DATED 15/1/2010 PERTAINS TO THE 1 KILOGRAM OF GOLD. P14:COPY OF THE SUMMONS DATED 18/1/2010 ISSUED TO SHRI.ARUN BY THE ASSISTANT DIRECTOR OF INCOME TAX (INV)-IASSISTANT DIRECTOR OF INCOME TAX (INV)-I P15:COPY OF THE LETTER DATED 19/1/10 SUBMITTED BY ARUN KISSAN SAWANT TO THE 5TH RESPONDENTTO THE 5TH RESPONDENT P16:COPY OF THE SUMMONS DATED 8/2/10 ISSUED BY THE 6TH RESPONDENT TOALAPATT GOLDALAPATT GOLD P17:COPY OF THE LETTER DATED 16/2/10 SUBMITTED TO THE 8TH RESPONDENT BY THE PETITIONER BY THE PETITIONER P18:COPY OF THE NOTIFICATION C.NO.1(9)/GL/CENT/CIT/13/09-10 BY 4TH RESPONDENT RESPONDENT P19:COPY OF THE REPRESENTATION DATED 3/2/10 SUBMITTED BY THE PETITIONER UNDER SECTION 132(B) OF THE INCOME TAX ACT,1961PETITIONER UNDER SECTION 132(B) OF THE INCOME TAX ACT,1961 P20:COPY OF THE LETTER NO.ENQ.ISE.IV-09/10 DATED 19/1/10 ISSUED BY THE 10TH RESPONDENT10TH RESPONDENT P15:COPY OF THE LETTER DATED 19/1/10 SUBMITTED BY ARUN KISSAN SAWANT TO THE 5TH RESPONDENTTO THE 5TH RESPONDENT P16:COPY OF THE SUMMONS DATED 8/2/10 ISSUED BY THE 6TH RESPONDENT TOALAPATT GOLDALAPATT GOLD P17:COPY OF THE LETTER DATED 16/2/10 SUBMITTED TO THE 8TH RESPONDENT BY THE PETITIONER BY THE PETITIONER P18:COPY OF THE NOTIFICATION C.NO.1(9)/GL/CENT/CIT/13/09-10 BY 4TH RESPONDENT RESPONDENT P19:COPY OF THE REPRESENTATION DATED 3/2/10 SUBMITTED BY THE PETITIONER UNDER SECTION 132(B) OF THE INCOME TAX ACT,1961PETITIONER UNDER SECTION 132(B) OF THE INCOME TAX ACT,1961 P20:COPY OF THE LETTER NO.ENQ.ISE.IV-09/10 DATED 19/1/10 ISSUED BY THE 10TH RESPONDENT10TH RESPONDENT P21:COPY OF THE REPLY DATED 23/1/2010 SUBMITTED BY THE PETITIONER TO THE 10TH RESPONDENTTHE 10TH RESPONDENT PJ ---------------------------------------- P22:COPY OF THE RELEVANT PART OF THE REPRESENTATION DATED 12/3/10 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT P22(A): COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT ON 12/3/10PETITIONER TO THE 2ND RESPONDENT ON 12/3/10 P22(B): COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT ON 12/3/10PETITIONER TO THE 3RD RESPONDENT ON 12/3/10 P22(C): COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 4TH RESPONDENT ON 12/3/10PETITIONER TO THE 4TH RESPONDENT ON 12/3/10 P22(D): COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 5TH RESPONDENT ON 12/3/10PETITIONER TO THE 5TH RESPONDENT ON 12/3/10 P22(E): COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 6TH RESPONDENT ON 12/3/10PETITIONER TO THE 6TH RESPONDENT ON 12/3/10 P22(F): COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 7TH RESPONDENT ON 12/3/10PETITIONER TO THE 7TH RESPONDENT ON 12/3/10 P23:COPY OF THE RELEVANT PART OF THE LOCAL DELIVERY BOOK OF THE AUDITOR OF THE PETITIONER M/S.VENKIT AND HARI IN WHICH ACKNOWLEDGEMENTS WERE GIVEN BY THE RESPONDENTS NOS.1 OT 7 REGARDING THE RECEIPT OF EXT.P22 SERIES OF REPRESENTATIONSAUDITOR OF THE PETITIONER M/S.VENKIT AND HARI IN WHICH ACKNOWLEDGEMENTS WERE GIVEN BY THE RESPONDENTS NOS.1 OT 7 REGARDING THE RECEIPT OF EXT.P22 SERIES OF REPRESENTATIONS P24:COPY OF THE RELEVANT PART OF THE REPRESENTATION DATED 12/3/10 SUBMITTED BY THE PETITIONER TO THE 11TH RESPONDENT SUBMITTED BY THE PETITIONER TO THE 11TH RESPONDENT P24(A): COPY OF THE SPEED POST RECEIPT REGARDING SENDING OF EXT.P24. P25:COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 12TH RESPONDENTPETITIONER TO THE 12TH RESPONDENT P25(A): COPY OF THE ACKNOWLEDGEMENT NO.B1/2591/10ER DATED 16/3/10 BY THE12TH RESPONDENT 12TH RESPONDENT P26:COPY OF THE 1ST PAGE OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO 13TH RESPONDENT THE COMMISSIONER OF POLICEPETITIONER TO 13TH RESPONDENT THE COMMISSIONER OF POLICE P26(A): COPY OF ACKNOWLEDGEMENT NO.G4/12973/WEC DATED 16/3/10 BY THE 13TH RESPONDENT 13TH RESPONDENT P27:COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2004-05 P27(A): COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2005-06 P27(B):COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2006-07 P27(C):COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2007-08 PJ WP(C).No. 11000 of 2010 (Y) ---------------------------------------- P27(D): COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2008-09 P27(E):COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2009-10 P27(F): COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2010-11 P28:COPY OF THE ORDER F.NO.ACMPN 7503K/2006-07 DATED 16/1/12 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAMDEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM P28(A):COPY OF THE ORDER F.NO.ACMPN 7503K/2009-10 DATED 16/1/12 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAMDEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM P27(B):COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2006-07 P27(C):COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2007-08 PJ WP(C).No. 11000 of 2010 (Y) ---------------------------------------- P27(D): COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2008-09 P27(E):COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2009-10 P27(F): COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2010-11 P28:COPY OF THE ORDER F.NO.ACMPN 7503K/2006-07 DATED 16/1/12 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAMDEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM P28(A):COPY OF THE ORDER F.NO.ACMPN 7503K/2009-10 DATED 16/1/12 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAMDEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM P28(B): COPY OF THE ORDER F.NO.ACMPN 7503K/2000-10 DATED 16/1/12 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAMDEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM P29:COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.87,130/- WAS DEPOSITED FOR THE ASSESSMENT YEAR 2004-05DEPOSITED FOR THE ASSESSMENT YEAR 2004-05 P29(A): COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.2,55,426/- WAS DEPOSITED FOR THE ASSESSMENT YEAR 2005-06DEPOSITED FOR THE ASSESSMENT YEAR 2005-06 P29(B): COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.1,56,801/- WAS DEPOSITED FOR THE ASSESSMENT YEAR 2006-07DEPOSITED FOR THE ASSESSMENT YEAR 2006-07 P29(C): COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.3,488/- WAS DEPOSITEDFOR THE ASSESSMENT YEAR 2007-08FOR THE ASSESSMENT YEAR 2007-08 P29(D): COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.25,766/- WAS DEPOSITED FOR THE ASSESSMENT YEAR 2008-09DEPOSITED FOR THE ASSESSMENT YEAR 2008-09 P29(E): COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.1,031/- WAS DEPOSITEDFOR THE ASSESSMENT YEAR 2009-10FOR THE ASSESSMENT YEAR 2009-10 P29(F): COPY OF THE COMPUTRIZED RECEIPT TO SHOW RS.1,00,146/- WAS DEPOSITED FOR THE ASSESSMENT YEAR 2004-05DEPOSITED FOR THE ASSESSMENT YEAR 2004-05 P30:COPY OF THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 OF THE INCOME TAX ACT, 1961 TO M/S.ALAPPAT GOLD DEN(P) LTD., DATED 25//3/13 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAMINCOME TAX ACT, 1961 TO M/S.ALAPPAT GOLD DEN(P) LTD., DATED 25//3/13 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM P31:COPY OF THE RELEVANT PART OF THE ASSESSMENT ORDER OF ALAPPAT GOLD DEN (P) LTD, FOR THE ASSESSMENT YEAR 2010-11GOLD DEN (P) LTD, FOR THE ASSESSMENT YEAR 2010-11 P32: COPY OF THE RELEVANT PART OF THE ASSESSMENT ORDER OF ALAPPAT GOLD DEN (P) LTD, FOR THE ASSESSMENT YEAR 2007-08GOLD DEN (P) LTD, FOR THE ASSESSMENT YEAR 2007-08 P33:COPY OF THE NOTICE ISE NO.IV/09/10 DATED 10/3/14 ISSUED BY THE INTELLIGENCE OFFICER, SQUD NO.IV, DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAMINTELLIGENCE OFFICER, SQUD NO.IV, DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM PJ WP(C).No. 11000 of 2010 (Y) ---------------------------------------- P34:COPY OF THE REPLY DATED 15/3/14 SUBMITTED TO THE INTELLIGENCE OFFICER, SQUAD NO.IV, ERNAKULAMOFFICER, SQUAD NO.IV, ERNAKULAM P35:COPY OF THE ORDER NO.CR30/(35)/TECH/CIT(C)-CHN/2013-14/1384 DATED 14/3/14 ISSUED B Y THE COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI.14/3/14 ISSUED B Y THE COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI. RESPONDENTS' EXHIBITS -------------------------------------- NIL./ TRUE COPY /P.S. TO JUDGE K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - -W.P(C) Nos.11000 of 2010 &16554 of 2014 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 9[th] day of July, 2014 J U D G M E N T The petitioner, in the writ petitions, a native ---------------------------------------- P34:COPY OF THE REPLY DATED 15/3/14 SUBMITTED TO THE INTELLIGENCE OFFICER, SQUAD NO.IV, ERNAKULAMOFFICER, SQUAD NO.IV, ERNAKULAM P35:COPY OF THE ORDER NO.CR30/(35)/TECH/CIT(C)-CHN/2013-14/1384 DATED 14/3/14 ISSUED B Y THE COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI.14/3/14 ISSUED B Y THE COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI. RESPONDENTS' EXHIBITS -------------------------------------- NIL./ TRUE COPY /P.S. TO JUDGE K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - -W.P(C) Nos.11000 of 2010 &16554 of 2014 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 9[th] day of July, 2014 J U D G M E N T The petitioner, in the writ petitions, a native of Maharashtra, is running a gold re-cycling unitwithin the State of Kerala, in Kochi. The subjectmatter of the above writ petition is the seizure of6280 grams of gold from the business premises of thepetitioner, by the Shadow Unit of the Kochi CityPolice and the proceedings initiated by the IncomeTax Department as also the Commercial TaxesDepartment of the State, for assessment, deemingsuch possession to be for the purpose of sale withinthe State, thus attracting levy under the Income TaxAct, 1961 as also the Kerala Value Added Tax Act,2003. WPC.11000/2010 &16554/2014 : 2 : 2. On facts; suffice it to say that, on15.01.2010, the shadow unit of the Kochi City Policeconducted a raid in the business premises of thepetitioner, on alleged information, of gold beingpossessed illegally by the petitioner. According to thepetitioner, the raid commenced at 4.00 p.m on15.01.2010. But the mahazar prepared, evidenced byExt.P5 is dated 16.1.2010. This Court is notconcerned with the procedure adopted or the validityof the same. At this point of time, the issue to befocussed upon is, the release of the gold, whichadmittedly, the Income Tax Department has found tobe not owned by the petitioner. Ext.P5 mahazar is tobe looked into, only to ascertain the exact quantity ofthe gold seized from the petitioner and the nature ofthe same. 3. Admittedly, 6280 grams of gold wasseized of which 3000 grams were pure gold bars, WPC.11000/2010 &16554/2014 : 3 : along with an amount of Rs.2,05,500/- from thebusiness premises. The cash so seized wassubsequently adjusted towards the income tax dues,determined on re-opening of assessments for variousyears; pursuant to the seizure effected. Immediatelyafter the seizure, the gold was handed over to theIncome Tax Department, who issued Ext.P14 and P16notices to the petitioner. The petitioner filed Ext.P17,in reply to such notices, taking the contention, at thefirst instance, that the petitioner was not a dealer ortrader in gold or gold ornaments. 4. The petitioner asserted that, thepetitioner was engaged only in the purification ofgold and gold ornaments, on contract with thedealers in gold ornaments, within and outside Kochi.The petitioner also specifically accounted thequantity, seized from the petitioner's premises, byExt.P7 to P13 vouchers issued by various registered WPC.11000/2010 &16554/2014 : 4 : dealers in gold and gold ornaments, within the Stateof Kerala. Exts.P7 to P13 are vouchers evidencingissuance of gold and gold jewelery to the petitioner,for conversion purposes. In fact, the pure gold barscoming to 3000 grams were issued by one dealer, byname Alapat Gold, who had purchased the same onvarious dates from the Bank of Nova Scotia. Ext.P13and P13(a) are receipts issued in lieu of the purchaseof bullion made by the Alapat Gold Den (P) Ltd. Thegold bars are identified by the numbers, given in suchofficial receipts, which according to the petitioner isclearly printed in the bars. WPC.11000/2010 &16554/2014 : 4 : dealers in gold and gold ornaments, within the Stateof Kerala. Exts.P7 to P13 are vouchers evidencingissuance of gold and gold jewelery to the petitioner,for conversion purposes. In fact, the pure gold barscoming to 3000 grams were issued by one dealer, byname Alapat Gold, who had purchased the same onvarious dates from the Bank of Nova Scotia. Ext.P13and P13(a) are receipts issued in lieu of the purchaseof bullion made by the Alapat Gold Den (P) Ltd. Thegold bars are identified by the numbers, given in suchofficial receipts, which according to the petitioner isclearly printed in the bars. 5. The dealers who issued Ext.P7 to P13vouchers supported the case of the petitioner andadmitted, before the authorities that the gold seizedfrom the premises of the petitioner, belongs to them.The petitioner was entrusted with the same fordistillation and conversion even according to such WPC.11000/2010 &16554/2014: 5 : dealers. Petitioner hence approached the Income Tax Department, with an application under section 132Bof the Act, for an expeditious conclusion of theproceedings. 6. The petitioner was anxious for therelease of the gold, which, admittedly, belonged toother dealers and was entrusted to him for distillationpurposes. While so, the Commercial TaxesDepartment also issued Ext.P20 notice, allegingsuppression of sales and threatening penalty forattempt to evade tax at double the tax, so sought tobe evaded. The tax evasion was computed on thebasis of the exact quantity of the gold seized by thePolice and handed over to the Income Taxdepartment. The petitioner approached this Courtwith a specific prayer for release of the gold seized,as also the return of cash seized with interest and fordeclaring the entire proceedings to be vitiated for : 6 : reason of the search and seizure having no sanctionof law. 7. On admission, this Court in W.P(C) No.11000/2010 granted an interim order wherein thepetitioner was permitted to get release of the gold, onfurnishing a bank guarantee. The petitioner being infinancial distress,was unable to furnish the Bankguarantee and hence the gold was retained by theIncome Tax Department. Subsequently, the IncomeTax Department by Ext.P27 series concluded theassessment for various years. 8. For the assessment year 2010-2011,Ext.P27(f) is relevant, insofar as, the seizure, which isthe subject matter of the writ petition, was effected inthe previous year being 2009-2010. The assessmentcompleted for the assessment year 2010-2011,specifically dealt with the said issue as extractedhereunder:- 7.1 The claim of the assessee was verified. The six jewelers have confirmed that the gold seizedbelong to them. The confirmation filed by thejewelers as well their issue register/stock registershowing the issue of gold to the assessee in thequantities claimed by the assessee, has beenplaced on file. So in the matter of gold seized, theclaim of the assessee is accepted. Accordinglyconsequent action as provided in Section 153 Cwill be separately initiated. 9. Hence the proceedings initiated under the Income Tax Act, by the authority under the Act,found the contention of the petitioner to be justifiedand that the gold belonged to third parties who weredealers in gold jewellery. No proceedings to assessthe income, on the basis of the sale of gold seized,was resorted to by the Income Tax Department,though the assessments of the petitioner was re-opened to make additions on the income receivedfrom the business. The Income Tax Department, thus retained no further interest in the gold seized. 9. Hence the proceedings initiated under the Income Tax Act, by the authority under the Act,found the contention of the petitioner to be justifiedand that the gold belonged to third parties who weredealers in gold jewellery. No proceedings to assessthe income, on the basis of the sale of gold seized,was resorted to by the Income Tax Department,though the assessments of the petitioner was re-opened to make additions on the income receivedfrom the business. The Income Tax Department, thus retained no further interest in the gold seized. 10. In such circumstance, the petitionerwas before this Court again claiming release of thegold to the petitioner, un-conditionally. This Court,directed the Commissioner of Income Tax to considerthe said request and the same was considered underExt.P35. Ext.P35 noticed the penalty proceedingsinitiated against the petitioner, by the CommercialTaxes Department of the State and only on thatground, found that the gold bars and gold ornamentscannot be released. The Income Tax Departmentthus retained the gold; only for the purpose ofconclusion of the proceedings by the CommercialTaxes Department. 11. Before Court, at the time of hearing, thelearned Standing Counsel, Government of India(Taxes), would, on instruction from the Income TaxDepartment, submit that they have no subsisting WPC.11000/2010 &16554/2014 : 9 : claim on the gold now retained with them. The onlysubsisting claim hence, if at all, is of the Sales TaxDepartment. 12. The above matter was heard earlier on 13.06.21014 and the matter was adjourned to17.06.2014 for further hearing. At that point of time,the petitioner was issued with an order under Section67(1) of the Kerala Value Added Tax Act, 2003 (forshort “KVAT Act”) wherein the penalty proceedingsinitiated as per Ext.P2 was concluded, imposingpenalty at double the tax attempted to be evaded,which order was produced as Ext.P36 in O.PNo.11000/2010. In the context of that, being anorder passed subsequently, the petitioner rightly fileda further writ petition numbered as W.P(C)16554/2014, challenging the imposition of penalty, bythe order produced as Ext.P18, in the subsequentwrit petition. WPC.11000/2010 &16554/2014: 10 : 13. The pleadings are completed in theearlier writ petition and the only ground on which thesubsequent order is assailed, is of limitation asprovided under Section 67 of the KVAT Act. Thematters were posted together and adjourned at therequest of the State and taken up for hearing, today,on consent of both the parties. 14. As has been noticed earlier, the IncomeTax Department having no subsisting claim, whatwould arise for consideration is the sustainability ofthe final order, passed by the Commercial TaxesDepartment. The penalty proceedings wascommenced on 19.01.2010, by Ext.P22, immediatelyafter the seizure was effected. The Commercial TaxesDepartment and its officers rested contend afterissuance of such notice. The Department then, byExt.P15, dated 10.03.2014 again, issued a notice incontinuance of the earlier proceeding, and without WPC.11000/2010 &16554/2014: 11 : even giving an opportunity for hearing to thepetitioner, concluded the same, by Ext.P18 dated05.05.2014. 14. As has been noticed earlier, the IncomeTax Department having no subsisting claim, whatwould arise for consideration is the sustainability ofthe final order, passed by the Commercial TaxesDepartment. The penalty proceedings wascommenced on 19.01.2010, by Ext.P22, immediatelyafter the seizure was effected. The Commercial TaxesDepartment and its officers rested contend afterissuance of such notice. The Department then, byExt.P15, dated 10.03.2014 again, issued a notice incontinuance of the earlier proceeding, and without WPC.11000/2010 &16554/2014: 11 : even giving an opportunity for hearing to thepetitioner, concluded the same, by Ext.P18 dated05.05.2014. 15. The learned Government Pleader, wouldalertly point out that the subsequent notice, offeredan opportunity for hearing, which the learned counselappearing for the petitioner would counter on thesubmission that he had in fact, sought further timeby Ext.P15, which was not allowed. In any event, thefact remains that the penalty order was hastilyconcluded after the notice issued on March, 2014; inMay 2014. In any event, this Court is not concernedwith any question of violation of principles of naturaljustice nor even with the action of the authority inhaving concluded the proceedings when the writpetition was being heard. The emphasis is only onthe question of limitation, which has to be consideredon the specific words employed in Section 67. 16. The proviso to Section 67(1) reads as follows: Provided that the authority empowered underthis section shall dispose of the case withinthree years from the date of detection ofoffence mentioned under this section exceptwhere the extension of time is granted by theDeputy Commissioner. The three year period was brought in by substitution as per the the Kerala Finance Act, 2005; prior to theseizure of gold, which is the subject matter of the writpetition. There is no contention by the State that atany point of time, extension was granted by theDeputy Commissioner. Ext.P18 definitely is beyondthe period of limitation, as provided in the proviso. Itis also to be noticed that if the State's contention wasthat the petitioner was involved in sale of goldornaments, normally the Department would havetaken up proceedings for the offence of WPC.11000/2010 &16554/2014 : 13 : non-registration of the petitioner as a dealer and forassessment for the years in which the petitioner isdeemed to have engaged in sale of gold or goldornaments. 17. A learned Single Judge of this Courthad, when the limitation period was one year, foundthat the disposal of the penalty proceedings should bemade within the time stipulated, from the date ofdetection of the offence and that the order passedbeyond the period of limitation would be illegal,(Sivan Pillai v. Commercial Tax Officer(AuditAssessment)[(2010) 18 KTR 90 (Kerala). 18. In such circumstance for the short butall encompassing ground of limitation, the orderExt.P18 has to be set aside. The proceedings initiatedby the Commercial Taxes Department having been setaside, no subsisting claim, can be raised on the goldretained by the Income Tax department, by the State. WPC.11000/2010 &16554/2014 : 14 : 17. A learned Single Judge of this Courthad, when the limitation period was one year, foundthat the disposal of the penalty proceedings should bemade within the time stipulated, from the date ofdetection of the offence and that the order passedbeyond the period of limitation would be illegal,(Sivan Pillai v. Commercial Tax Officer(AuditAssessment)[(2010) 18 KTR 90 (Kerala). 18. In such circumstance for the short butall encompassing ground of limitation, the orderExt.P18 has to be set aside. The proceedings initiatedby the Commercial Taxes Department having been setaside, no subsisting claim, can be raised on the goldretained by the Income Tax department, by the State. WPC.11000/2010 &16554/2014 : 14 : 19. The reliefs prayed for in W.P(C)No.11000/2010, with respect to the declaration of theentire proceedings as illegal and without sanction oflaw, need not be considered at this stage, sinceevidently, the seizure has resulted in re-opening ofassessment by the Income Tax department andfurther additions made to the income of thepetitioner. The claim for interest on the cash seizedwould also not survive, since admittedly, suchamounts have been adjusted towards the income taxdues imposed on the petitioner. What remains forconsideration is the release of gold. W.P(C)No.16554/2014 is allowed, setting aside Ext.P18order and the consequential demand made as perExt.P1. W.P(C)11000 of 2010 as a consequence isallowed declaring that admittedly, there is no claimfor the Income Tax Department or the CommercialTaxes Department; over the gold seized by Ext.P5 mahazar. 20. In such circumstance there shall be a further direction in W.P(C)11000/2010 , to theCommissioner of Income Tax, the 4[th] respondent torelease the gold immediately to the petitioner,without fail and within two weeks from the date ofproduction of the certified copy of this judgment. 21. It is pertinent that in Ext.P18, the default of the petitioner in not having takenregistration under Section 15 of the KVAT Act, wasspecifically noticed. The learned Government Pleaderwould point out that the same is a continuing offence.However, when Ext.P18 order has been set aside bythis Court, the said observation is of no consequence.The Department being aware of the seizure of gold inthe year 2010, and having initiated proceedings forpenalty, chose not to take any proceedings againstthe petitioner for assessment or for failure to take WPC.11000/2010 &16554/2014 : 16 : out registration. The penalty proceedings too have been set at naught for reason of the same beingbarred by limitation. Even otherwise, the income taxauthorities having found no sale of gold, beingeffected by the petitioner, it is a moot question as towhether the commercial tax authorities could ferretout a sale from the facts disclosed. In suchcircumstance there is absolutely no reason to takeany proceedings at this point of time, under theKerala Value Added Tax Act, 2003. Writ petitions are allowed, leaving theparties to suffer their costs. Sd/- (K. VINOD CHANDRAN, JUDGE) jma //true copy// P.A to Judge