CMM (HINDUSTAN) GOLD PRIVATE LIMITED V. THE CHIEF COMMISSIONER

WP/10845/2023

AI Insights

The case involves CMM (Hindustan) Gold Private Limited, the petitioner, who sought to quash an order and a notice of demand issued by the Income Tax Department following a search under Section 132 of the Income Tax Act, 1961. The search, conducted on 02.12.2021, led to the seizure of gold, cash, and books of accounts. The petitioner contested the retention of these seized items beyond the statutory period of thirty days as stipulated under Section 132(8) of the IT Act. The respondents argued that the assessment for the relevant year was not due until 31.03.2024, and thus, the period for retaining the seized items should be calculated from this date. The court did not directly address the quashing of the order but provided a pathway for the petitioner to seek the release of the seized assets under specific conditions set by the Income Tax Department.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 726305 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 05-10-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND; DILIP M
• Assessee Lawyers: MALLAHA K
• Keywords: Assessment Order; Income Tax; Search and seizure; Seized assets; Writ petition
• Section: 132; 132(8)

Judgement Text

" - 1 - NC: 2023:KHC:36141 WP No. 10845 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF OCTOBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 10845 OF 2023 (T-IT) BETWEEN: CMM (HINDUSTAN) GOLD PRIVATE LIMITED NO 1/1, 1ST FLOOR 2ND MAIN,OPP TO SHANTHI SAGAR HOTEL, R T NAGAR BENGALURU560032 KARNATAKA, INDIA PAN NO AAHCC3154B. …PETITIONER (BY SRI. MALLAHA RAO K.,ADVOCATE) AND: 1. THE CHIEF COMMISSIONER OF INCOME TAX BENGALURU C R BUILDING NO 1 QUEENS ROAD BENGALURU 560001. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX BENGALURU 3 C R BUILDING NO 1 QUEENS ROAD BENGALURU 560001. 3. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(3) Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:36141 WP No. 10845 of 2023 CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU 560001. …RESPONDENTS (BY SRI.K.V. ARAVIND.,ADVOCATE A/W SRI. DILIP M, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER PASSED BY THE 3RD RESPONDENT ALONG WITH THE NOTICE OF DEMAND VIDE DIN AND ORDER NO ITBA/AST/S/144/2022-2023- 1048346065(1), BOTH DATED 29/12/2022 VIDE ANNEXURE-F; DIRECTING THE RESPONDENT AUTHORITIES NOT TO INITIATE ANY RECOVERY BASED ON THE IMPUGNED ORDER PASSED BY THE R3 AND THE NOTICE OF DEMAND VIDE ANNEXURE-F DATED 29/12/2022 AND NOT TO RESORT TO SUCH OTHER MEASURES PENDING DISPOSAL OF THIS WP. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner whose premises is searched under the provisions of Section 132 of the Income Tax Act, 1961 [for short, the ‘IT Act’] has filed this petition for the following reliefs: - 3 - NC: 2023:KHC:36141 WP No. 10845 of 2023 “[i] For quashing the third respondent’s order and the notice of demand vide DIN & Order No.: ITBA /AST /S/144/2022- 2023/1048346065(1), both dated 29.12.2022 [ANNEXURE-F]; [ii] For direction to the respondent -authorities not to initiate any recovery based on the impugned order dated 29.12.2022 or to resort to such other measures pending disposal of this writ petition. [iii] For direction to the respondent - authorities to release the seized gold and cash and books of accounts as mentioned in the list of inventories vide Annexure-C to Annexure-C2, Annexure-D to Annexure - D2, Annexure - E to Annexure- E1” 2. Sri Mallaha Rao K, the learned counsel for the petitioner, submits that the petitioner would confine the petition to the third relief inasmuch as the petitioner has availed statutory remedy as against the impugned assessment order dated 29.12.2022. - 4 - NC: 2023:KHC:36141 WP No. 10845 of 2023 As regards the third prayer, Sri Mallaha Rao K submits that the third respondent – the Assessing Officer - cannot retain the seized material beyond a period of thirty days contemplated under the provisions of Section 132(8) of the IT Act. 3. In response, Sri K. V. Aravind, the learned Counsel for the respondents, submits that the search is on 02.12.2021, the relevant assessment year is 2022-23, the assessing officer will have time till 31.03.2024 to complete the assessment and the period that is contemplated under the provisions of Section 132(8) of the IT Act will have to be necessarily reckoned from 31.03.2024. This submission is formidable and must be accepted. However, Sri K.V. Aravind submits that even during the pendency of the assessment proceedings, in view of the Instruction dated 21.11.2009 in Instruction F No.286/6/2008-IT, it would be open to the assessing officer to consider the release of the seized assets - 5 - NC: 2023:KHC:36141 WP No. 10845 of 2023 subject to the conditions mentioned in the Instructions after obtaining approval from either the Commissioner of Income-tax or the Chief Commissioner of Income-tax. 4. Sri K. V. Aravind relies upon the following in the Instruction dated 21.01.2009: “[d] The seized assets can also be released, at any time, with the approval of the Commissioner of Income Tax or Chief Commissioner of Income Tax provided: [i] the assessee unconditionally accepts the ownership and the valuation of the seized assets determined at the time of search and seizure operation; and [ii] makes a written request to release the seized assets and provides unconditional and irrevocable bank guarantee to the extent of the value of seized assets.” If it is permissible in law for the petitioner to avail remedy that could be under the Instruction referred to above, this Court is of the considered view that the petition must be disposed of reserving liberty to the petitioner to file such application calling upon the - 6 - NC: 2023:KHC:36141 WP No. 10845 of 2023 first respondent to consider the same strictly in accordance with law. Hence, the following ORDER The petition is disposed of giving liberty to the petitioner to file a fresh application enclosing a certified copy of this order with the first respondent for release of the seized assets in terms of the Instruction dated 21.11.2009 in No.286/6/2008-IT, and the first respondent is called upon to consider the same strictly in accordance with law but within a time frame of four [4] weeks from the date of receipt of the application. Sd/- JUDGE NV "