MADHU LALWANI V. COMMISSIONER OF INCOME TAX DELHI

W.P.(C)/7336/2008

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The case involves Ms. Madhu Lalwani, the petitioner, who faced a search and seizure operation by the Income Tax Department on her premises in 1993, leading to the seizure of cash and jewellery. Initially, the jewellery was considered unexplained and taxable, but subsequent appeals reduced the tax liability concerning the jewellery, which was eventually returned to the petitioner. However, the issue of returning the jewellery and a refund of Rs. 91,306, which was deposited towards taxes, remained unresolved. The petitioner approached the court after her requests were denied by the Commissioner of Income Tax, leading to this writ petition.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 752242 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 13-01-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANJEEV SABHARWAL
• Assessee Lawyers: PIYUSH KAUSHIK
• Keywords: Assessment Order; Income Tax; Jewellery; Refund; Search and seizure; Unexplained investment
• Section: 143(3); 132; 69A; 132(5)

Judgement Text

"W.P.(C) 7336/2008 Page 1 of 6 42. * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 7336/2008 MADHU LALWANI ..... Petitioner Through Mr. Piyush Kaushik, Advocate. versus COMMISSIONER OF INCOME TAX DELHI ..... Respondent Through Mr. Sanjeev Sabharwal, Advocate. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA O R D E R % 13.01.2011 CM No. 372/2011 This is an application for restoration of the Writ Petition (Civil) No. 7336/2008. Mr. Sanjeev Sabharwal, learned counsel for the Revenue Department has no objection. In view of the aforesaid, the application stands allowed and the writ petition is directed to be restored to file in its original number. The application is accordingly disposed of. W.P.(C) No. 7336/2008 As we have restored the matter, we have taken up the writ petition for hearing. W.P.(C) 7336/2008 Page 2 of 6 2. Heard Mr. Piyush Kaushik, learned counsel for the petitioner and Mr. Sanjeev Sabharwal, learned counsel for the Revenue Department. 3. On 19th August, 1993, the Income Tax Department conducted search and seizure operation under Section 132 of the Income Tax Act, 1961 (Act for short) at the residential premises of Ms. Madhu Lalwani, the petitioner and seized cash and jewellery aggregating to Rs.2,07,887/-. 4. On 16th December, 1993, the Assistant Commissioner of Income Tax passed an order under Section 132(5) of the Act treating jewellery worth Rs.1,81,614/- as prima facie unexplained and taxable in the financial year ending 31st March, 1994. With regard to the cash of Rs.1,11,300/-, it was held that the same was unexplained. However, this was without prejudice that the cash could be assessed in the hands of another person. Cash of Rs.1,11,300/- was treated as unexplained in the hands of the petitioner on protective basis. It was accordingly directed that the seized assets worth Rs.2,07,887/- should not be released till assessments order was finalized. It may be noted that no third person had/has challenged or claimed any right to the jewellery. 5. The petitioner filed return for the year ending 31st March, 1994 on 31st March, 1995, declaring a total income of Rs.2,75,340/-. After scrutiny, the Deputy Commissioner of Income Tax passed an assessment W.P.(C) 7336/2008 Page 3 of 6 order under Section 143(3) of the Act assessing her total income at Rs.4,56,950/- after making a singular addition of Rs.1,81,614/- on account of unexplained investment in jewellery, under Section 69A of the Act. The said addition was not on protective basis. The assessment order does not relate to and deal with cash of Rs. 1,11,300/-. We are not concerned with the cash of Rs. 1,11,300/-. 6. The petitioner filed an appeal and vide order dated 24th March, 1999, addition under Section 69A of the Act on account of unexplained jewellery was reduced to Rs.56,614/-. 7. On further appeal, the Income Tax Appellate Tribunal deleted the entire addition under Section 69A of the Act vide order dated 19th May, 2003. The said order has attained finality. 8. Petitioner accordingly approached Commissioner of Income Tax, Delhi (Central)-III vide her application dated 22-23rd April, 2008 for return of jewellery. She also made a prayer for refund of Rs. 91,306/- which was deposited towards taxes vide two challans after the assessment order making addition of Rs. 1,81,614/- was passed. The request has been rejected and denied vide order dated 21-23rd May, 2008, which reads as under:- “2. Your request for release of Jewellery made in letter dated 14.01.2008 has been considered. After W.P.(C) 7336/2008 Page 4 of 6 hearing your Authorized Representative and considering his letters dated 22nd April 2008 filed on 23.04.2008 and 23rd April, 2008 filed on 28.04.2008 your request for release of jewellery, seized during search & seizure operation on 19.09.93 in the Prince Gutka group, is hereby rejected. The said jewellery has been held to belong to the family and not just the present assessee alone. Since the appeals in other cases are still pending for decision, the said jewellery cannot be released presently.” 9. The aforesaid order does not deal with the question of refund of Rs.91,306/-. In the counter affidavit it is submitted that no such refund is pending in the case of the petitioner. However, when and how the amount was adjusted is not stated. It is not denied in the counter affidavit that the said payments were made by the challans concerned. The respondent has not filed any computation chart to show and establish that the refund has been adjusted. It is therefore, appropriate and necessary that the respondent should examine the case of refund of Rs.91,306/- deposited/paid by the petitioner and pass a speaking order. In case any amount is refundable, the same shall be refunded and paid to the petitioner in accordance with law. 10. Even with regard to jewellery, it is noticed that in the order under Section 132(5) of the Act dated 16th December, 1993, the jewellery has been treated as unexplained investment of the petitioner. In the W.P.(C) 7336/2008 Page 5 of 6 assessment order passed on 31st December, 1998 under section 143(3) of the Act, addition of Rs.1,81,614/- was made on account of the jewellery. Protective assessment was not made. The respondent has not placed on record any order or document to show that the jewellery seized was treated as jewellery belonging to a third person. On the other hand, the Commissioner of Income Tax (Appeals) had reduced the addition on account of unexplained jewellery/investment to Rs.56,614/- but the Tribunal deleted the entire addition on the ground that the jewellery belongs to the petitioner, though it may have been gifted to her on various occasions. The Tribunal has relied upon the affidavit of the petitioner‟s brother that the jewellery was given at the time of marriage by the mother of the petitioner. 11. Learned counsel for the Revenue submitted that in case jewellery is returned to the petitioner, family members of the petitioner may make a claim on the said jewellery. Learned counsel for the petitioner, on the other hand, has submitted that he is ready and willing to furnish „no objection certificate‟ from the family members and indemnity bond to the authorities to the satisfaction of the Income Tax authorities. In these circumstances, the impugned order dated 21-23rd May, 2008 passed by the Commissioner of Income Tax, Delhi (Central)-III is set aside and quashed W.P.(C) 7336/2008 Page 6 of 6 and the matter is remanded to the concerned Commissioner to pass a fresh order on both return of jewellery as well as refund of Rs.91,306/-. The petitioner or her representative will appear before the Commissioner of Income Tax, Delhi (Central)-III on 28th February, 2011 at 3 pm. Commissioner of Income Tax will fix a date for hearing the petitioner or her representative and pass a speaking order on or before 31st March, 2011. Refund, if due, will be paid within 15 days thereafter along with interest, if payable, in accordance with the provisions of the Act. The writ petition is accordingly disposed of. No order as to costs. SANJIV KHANNA, J. CHIEF JUSTICE JANUARY 13, 2011 VKR/NA "