Shri Prakash Chand Dhadda V. The Union of India & Ors.

CW/10456/2008

AI Insights

The case involves Shri Prakash Chand Dhadda, the petitioner, who sought the release of his stock held by the Income Tax Department. The stock was valued at Rs.45,03,226 by the Departmental Valuation Officer. Initially, the Income Tax Department required a bank guarantee for the release of the stock, as per their offer dated 18.09.2008. However, the petitioner proposed an alternative arrangement to deposit the full amount in cash, which the court found to be a better option than a bank guarantee. The court's decision was based on the fairness of the petitioner's proposal and the lack of any objection or detriment to the Department's interests.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 803051 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 17-02-2016
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ANIL MEHTA
• Assessee Lawyers: N M RANKA; NK JAIN
• Keywords: Bank guarantee; Income Tax Department; Release of stock; Valuation of stock

Judgement Text

"S.B. CIVIL WRIT PETITION NO.10456/2008 (Shri Prakash Chand Dhadda Vs. The Union of India & Ors.) (1) IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JAIPUR O R D E R IN S.B. CIVIL WRIT PETITION NO.10456/2008 (Shri Prakash Chand Dhadda Vs. The Union of India & Ors.) Date of Order : 17.02.2016 HON'BLE MR. JUSTICE ALOK SHARMA Mr. N.M. Ranka, Sr. Advocate with Mr. N.K. Jain, for the petitioner. Mr. Anil Mehta, for the respondents. BY THE COURT 1) Counsel for the parties have limited their arguments to the question of release of the stock of the petitioner in the custody of the Income Tax Department against the submission of a bank guarantee in terms of the offer made by the Commissioner of Income Tax (Central), Jaipur vide letter dated 18.09.2008. 2) On the matter coming up before this Court on 11.03.2011, this Court had directed that an approximate valuation be made by the Departmental Valuation Officer of the seized stock such that it would facilitate the Court in passing an appropriate order. 3) It appears that the valuation of the stock of the petitioner in custody of the Income Tax Department has since been carried out on 23.03.2011 (Kailash Chauhan) valuing it at Rs.45,03,226/-. A copy thereof has not been filed albeit passed over in the course of hearing of this petition. Mr. Anil Mehta, appearing for the Income Tax Department admits that the stock of the petitioner in the custody of the Income Tax Department is indeed valued at Rs.45,03,226/-. The copy of the valuation report is taken on record. S.B. CIVIL WRIT PETITION NO.10456/2008 (Shri Prakash Chand Dhadda Vs. The Union of India & Ors.) (2) 4) Mr. N.M. Ranka, Sr. Advocate appearing with Mr. N.K. Jain, appearing for the petitioner submits that better than the bank guarantee sought by the Income Tax Department under its letter dated 18.09.2008, the petitioner would be willing to deposit the amount of Rs.45,03,226/- (as per valuation of stock) in cash in the manner following : (i) that the petitioner would execute a bank guarantee of Rs.25 lacs in favour of the Income Tax Department valid for a period of six months for release of 50% of the stock in its custody. The 50% of the stock would be released within seven days of submission of a valid bank guarantee. Within 45 days, the stock released would then be sold and a sum of Rs.23 lacs would be deposited with the Income Tax Department. Non-deposit of Rs.23 lacs within 60 days of the release of the stock would entail encashment of the petitioner's bank guarantee of Rs.25 lacs. (ii) that in the event of deposit of the aforesaid amount of Rs.23 lacs from the sale of release of 50% of the stock within prescribed time aforesaid, the Income Tax Department would then release within seven days, the remainder stock to the petitioner under the operative bank guarantee of Rs.25 lacs. The petitioner within a period of 45 days following the release of the aforesaid stock would dispose it of and deposit the remainder amount of Rs.22,03,226/- with the Income Tax Department. Non-deposit would entail immediate encashment of the bank guarantee. (iii) that on the sum of Rs.45,03,226/- being deposited in cash by the petitioner with the Income Tax Department as aforesaid, the bank guarantee would be returned to the petitioner and stand discharged. S.B. CIVIL WRIT PETITION NO.10456/2008 (Shri Prakash Chand Dhadda Vs. The Union of India & Ors.) (3) Considered. The mechanism suggested by Senior Counsel appears to be fair. Nothing objectionable thereto via a vis the Department's own offer under its letter dated 18.09.2008 is evident. Nor has counsel for the Department pointed out any detriment to the Department therefrom. In fact cash is superior to a bank guarantee for safeguarding the Department's interest. The writ petition is accordingly disposed of in terms of para 4(i) to (iii) above. Petitioner to strictly comply therewith. (ALOK SHARMA), J MS/-175 All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.- Manoj Solanki, P.A. "