M/S PARAS JEWELERS V. PRINCIPAL DIRECTOR OF INCOME TAX,

WA/160/2024

AI Insights

The case involves M/s Paras Jewelers, represented by its proprietor Inder Chand Jain, appealing against the seizure of jewelry during a search and seizure operation under Section 132 of the Income Tax Act, 1961. The appellant argued that the seized jewelry was part of the stock-in-trade and thus should not have been seized. The Single Bench had directed the appellant to seek relief under Section 132B(i) by applying to the Principal Commissioner Central Circle, which the appellant contested, claiming that the learned Single Bench ignored the specific provision that protects stock-in-trade from seizure. The court, however, found that the appellant did not provide sufficient evidence to prove that the seized items were part of the stock-in-trade, leading to the dismissal of the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747713 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 26-06-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AMIT CHAUDHARI; AJAY KUMRANI
• Assessee Lawyers: APURV GOYAL
• Keywords: Income Tax; Jewellery; Search and seizure; Stock-in-Trade; Valuation report
• Section: 132; 132(4); 132B; 131(1A)

Judgement Text

"1 AFR HIGH COURT OF CHHATTISGARH, BILASPUR WA No. 160 of 2024 M/s Paras Jewelers, Proprietor Inder Chand Jain, Through- Its Sepcial Power Of Attorney Holder Shri Paras Chand Jain, S/o Inder Chand Jain,aged about 50 years having its registered office at 1, SBI Road, Balaji Ward, Jagdalpur, Bastar, C.G. ---- Appellant Versus 1 - Principal Director of Income Tax, Investigation, Raipur, C.G. 2 - Additional Director Income Tax (Investigation Unit 3), Raipur Branch (C.G.). 3 - Deputy Director of Income Tax (Investigation Unit 3), Raipur, C.G. ---- Respondents ______________________________________________________________ For Appellant : Mr. Apurv Goyal, Advocate. For Respondents : Mr. Amit Chaudhari, along with Mr. Ajay Kumrani, Advocates. ______________________________________________________________ Hon’ble Shri Justice Goutam Bhaduri Hon'ble Smt. Justice Rajani Dubey Judgment on Board Per Goutam Bhaduri. J. 26.06.2024 Heard. 1. (i) The present appeal is against the judgment dated 29.02.2024 passed by the learned Single Bench, wherein the writ petition challenging the seizure of jewellery which was said to be stock-in-trade by the petitioner was refused to be handed over from seizure. The premises of the case would emerge from the facts that on 19.10.2023, a search and seizure action under Section 132 of the Income Tax Act, 1961 was conducted at the residence-cum-business premises of appellant M/s Paras Jewelers at Jagdalpur. On the same date, the preliminary statement of Paras 2 Chand Jain was recorded under Section 131 (1A) of the Act of 1961. (ii) Subsequent to it, the Government Approved Valuer prepared a valuation report for the gold ornaments and silver ornaments found in the residence of Shri Inder Chand Jain. On 20.10.2023 and 21.10.2023, statement of Paras Chand Jain was recorded under Section 132 (4) of Act of 1961, subsequent thereto Government Approved Valuer prepared a valuation report of the gold ornaments and the silver ornaments found in the showroom of the appellant firm. The application was submitted by the petitioner submitting that on 22.10.2023, the search team concluded their investigation and departed from the residential-cum-business premises, marking the termination of the investigation proceeding at the said location. (iii) The appellant states that he has paid an advance tax of Rs. 75,00,000/- (Rupees seventy five lakhs) on 15.12.2023. Subsequently, on 29.12.2023, the firm lodged a representation seeking release of the jewelry discovered within the bedroom of Inder Chand Jain on the ground that it was a stock-in-trade of the jewelry shop and asked for release of the same. On 16.01.2024, the appellant firm voluntarily submitted a letter of disclosure depicting additional business income out of unaccounted business transactions for a total amount of Rs. 8,76,96,000/- (Rupees eight crores seventy six lakhs ninety six thousand). It was contended that the stock-in-trade could not have been seized and the business could not have been closed. The said application was rejected by the Revenue on 25.01.2024, the subsequent representation was also stand rejected. 3 (iv) Eventually, the writ petition bearing No. W.P. (T) No. 27 of 2024 was filed wherein jewellery which was seized for the reason that said jewellery is part of stock-in-trade was sought to be released. The learned Single Bench dismissed the petition on the ground that the appellant may avail the remedy under Section 132B (i) of Income Tax Act, 1961 and apply before the Principal Commissioner Central Circle for release of the gold & other ornaments. 2. Learned counsel for the appellant would submit that as per Section 132 (1) (iii) if the goods which are seized form part of stock-in-trade, then they could not be seized at all. He would submit that learned Single Bench completely ignored this provision and went upon Section 132-B (i) to say that the appellant can apply for release of the goods on payment of tax. He would further submit that direction ipso facto would lead to admission of the fact that they were unaccounted, but the law as provided under Section 132 (1) (iii), is that the stock-in-trade could not be seized at all. The Department of Revenue can only prepare the inventory. He further submits that when the things moved are in the stock-in-trade whether it will be accounted for or not, it would not affect the status. 3. Ex adverso, learned counsel for the respondents would submit that the order to affirm certain goods were under stock-in-trade, it has to be prima facie established. He would refer to the statement made on oath under Section 132 (4) of the Act of 1961 to submit that the appellant admitted the fact that they do not have any record or invoices for such goods which were found in the residence to show that it was stock-in- 4 trade. Therefore, in order to avail the benefit of Section 131 (iii) this fact is required to be established that it was the part of the stock-in-trade. Accordingly, the Writ Appeal do not have any merit and is liable to be dismissed. 4. We have heard the counsel for both the parties and have gone through the record and also the order of learned Single Judge. 5. The reason assigned in the order of the learned Single Judge primarily travels on Section 132B of the Act of 1961 which leads to a situation wherein assessee will have to admit the fact that he wants to pay the tax. By the judicial order, the assessee cannot be compelled to make such admission by resorting to such provision. We may not agree with the reason assigned by the learned Single Bench, however event of facts demonstrates that though appellant claimed the goods under stock- in-trade, but in order to put the goods which in such basket as stock-in- trade were seized, as stock-in-trade, prima facie it requires that it is to be proved as stock-in-trade by supporting documents. The stock-in-trade has not been defined under the Income Tax Act, 1961. It is a general parlance, the definition by meaning how it attributes the goods purchased or procured and put into stock of running business and ignorance may be ominous to draw adverse inference. 6. When the appellant itself has stated in the statement (question 17 and 18) recorded under Section 132 (4) of the Act of 1961 that they do not possess any bill or invoices, prima facie by making such statement it appears that goods so seized by the stock-in-trade will not take it within its sweep of definition so as to insulate it with the proviso of Section 132 5 (1) (iii) which reads as under:- (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: [Provided that 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;] 7. Therefore, both the statements recorded under Section 132 (4) we do not find that prima facie, the appellant was able to establish the goods so seized apart from the showroom, were part of the stock-in-trade meaning thereby it was in the pipeline of the business transaction by mere turn of phrase. 8. Accordingly, we are not inclined to interfere into the acts of the Revenue resulting into dismissal. 9. Ex consequenti, the Writ Appeal sans substratum, is liable to be and is hereby dismissed. Sd/- Sd/- (Goutam Bhaduri) (Rajani Dubey) Judge Judge Uttej "