Ashish Jayantilal Sanghavi Vs ITO (Gujarat High Court)
Summary: The Gujarat High Court allowed the writ application and directed the Income Tax Department to hand over seized diamonds to the writ applicant within four weeks. The diamonds, valued at Rs.92,09,550/-, had been seized during a search conducted on 8 August 2019 at the premises of Akash Diamonds Pvt. Ltd., where the writ applicant’s employee, Parin N. Sheth, was present. The writ applicant claimed that the diamonds belonged to his proprietary concern, M/s. Vir Impex, and sought their release under Section 132B(1)(i) of the Income Tax Act, 1961. The Department did not respond to the applications and reminders seeking release.
The writ applicant relied upon the statutory time limit under the second proviso to Section 132B(1)(i). It was submitted that the prescribed 120-day period had expired on 6 December 2019. The Revenue opposed release on the ground that the diamonds had been seized from Parin N. Sheth, who had initially stated that they belonged to him, and that assessment proceedings concerning him were pending.
The High Court held that the statutory mandate under Section 132B was clear and that the prescribed time frame was mandatory rather than directory. Following Nadim Dilipbhai Panjvani vs. Income Tax Officer, Ward No.3, (2016) 383 ITR 375 (Gujarat), the Court observed that considerable importance must be attached to the time limits under Sections 132A and 132B where retention of seized assets is concerned. Treating the prescribed period as merely directory would give the Assessing Officer unbridled authority to retain seized assets indefinitely while awaiting determination of possible future liability.
