Case Law Details
Harshvardhan Chhajed & Others V. DGIT & Others (Rajasthan High Court)
Seizure under Income Tax has to be conducted after due care and caution. Merely on account of reasons to suspect, seizure of goods ought not to be undertaken. In fact the investigation wing has to show reason to believe that a person is carrying undisclosed asset.
However, if the concerned person has shown documents in order to explain the goods which he is carrying and also gives a statement like in the present case that the articles were belonging to a firm and were part of stock-in-trade. Before seizure is conducted explanation ought to be taken from the concerned firms and if they are able to produce the related books of account and necessary proof of articles which may include sale details, purchase details, stock register, audit reports, income tax returns etc, the Income Tax Authorities ought to take a decision at this stage and ought not to be allowed to seize the goods for years together to await for the assessment order to be passed in relation to concerned employee.
In view thereof, as the claim of the goods in terms of Section 132(1)(iii) of the Act of 1961 has been made by the petitioner Nos.1 and 2 as the jewellery seized in stock-in-trade and required material has already been placed before the Income Tax Authorities. The same was required to be released as the seizure itself is found to be unjustified and illegal. Non mentioning of price of the goods in the challan would not construe that the goods are not part of stock-in-trade.
Keeping in view, this Court holds that the seizure itself was wholly illegal and all consequential actions based on such seizure are illegal and contrary to the provision of Section 132(1)(iii) of the Act of 1961. Hence, the petitioners were entitled to receive back the goods from the respondents as more than one year and six months have lapsed. The petitioners would also be entitled to interest of a sum of Rs.1 lakh which was paid as a gross amount towards retention of the jewellery which is stock-in-trade and is marketable.
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