Case Law Details
H. K. Jewels Private Limited & Anr. Vs ADIT Investigation & Ors. (Bombay High Court)
Bombay High Court, in H.K. Jewels Private Limited & Anr. v. ADIT Investigation & Ors., addressed the legality of gold and jewellery seized at Bhubaneswar Airport on May 12, 2024. The petitioners argued that the seizure was unlawful under Section 132(1)(iii) of the Income Tax Act, 1961, which prohibits the seizure of stock-in-trade during a search, allowing only an inventory to be recorded. They sought a writ of mandamus for the release of the seized items.
The Revenue, represented by its counsel, countered that the petitioners had an alternate remedy under Section 132B of the Act. The court noted a dispute regarding the exact date of seizure—May 12 as claimed by the petitioners versus June 1 as per the Revenue. However, it found the core issue to be the legality of the seizure rather than the date. The petitioners had submitted clarifications on July 10, 2024, concerning statements recorded under Section 131(1-A), but had not explicitly raised the argument of seizure being ultra vires the Act.
Citing procedural requirements, the court emphasized that a writ of mandamus could only be issued if the petitioners had made a formal demand for the return of the seized assets and faced refusal. Since no such demand was evident, the court allowed the petitioners a week to submit a detailed representation, including legal provisions they relied upon. The Income Tax Department was directed to review and respond to this representation within two weeks, ensuring a hearing and issuing a reasoned order.
By setting clear procedural steps, the Bombay High Court ensured that the petitioners’ concerns would be addressed by tax authorities before judicial intervention. This case highlights the importance of procedural compliance in tax disputes, reinforcing the principle that stock-in-trade should not be seized under Section 132(1)(iii) while also ensuring due process.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. The petitioners’ contention is that its gold and jewellery seized at Bhubaneswar Airport on 12 May 2024 is illegal and ultra vires given the provisions of Section 132(1)(iii) of the Income Tax Act, 1961 (‘the Act’). He submitted that in terms of this provision, bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business.
3. Chatterjee, learned counsel for the revenue submitted that the petitioners have alternate and efficacious remedy under Section 132B of the Act. He referred to paragraph 6 of the affidavit filed on behalf of the revenue in which such a plea was raised.
4. Jain, learned counsel for the petitioners disputes the applicability of Section 132B in the peculiar facts of this case. He submits that this is a jurisdictional issue and, therefore, this Court should issue a writ of mandamus to the respondents to release the seized gold and jewellery.
5. There is a dispute regards the date of seizure. According to the petitioners, the seizure was on 12 May 2024 whereas according to the revenue, seizure was on 1 June 2024. However, considering the main contention raised by the petitioners, the date of seizure may not be very important.
6. By communication dated 10 July 2024, the petitioners submitted certain clarifications regarding the statement recorded under Section 131(1-A) of the Act. However, in the clarification, no specific plea is raised regards seizure being ultra vires the provisions of Section 132(1)(iii) proviso of the Act. If the petitioners seek writ of mandamus, it is important that the petitioners demand justice from the authorities and this is followed by refusal. The issue of seizure being ultra vires Section 132(1) does not appear to have been raised by the petitioners and based upon the same, there is no demand of return of the gold and jewellery.
7. Mr. Jain submits that he would obtain instructions whether such demand is made. If such demand is indeed made, then, the petitioners must point out such demand to the respondents so that the respondents can deal with such demand. If no demand is made, we grant the petitioners a week’s time to make such demand by giving full particulars and also, by referring to the relevant legal provisions upon which the petitioners seek to rely upon. Within two weeks from receipt of such demand/application/representation, the concerned respondents must deal with such demand/ application/representation and dispose of the same in accordance with law. The petitioners must be given an opportunity of hearing and a reasoned order must be passed dealing with all the petitioners’ contentions, including the contention based on the proviso to Section 132(1)(iii) of the Act. All contentions of the parties are however, left open to be decided by the concerned respondents in the first instance.
8. With the above directions, this petition is disposed of.
There shall be no order as to costs. All concerned to act on the authenticated copy of this order.
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