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Gauri Shankar And Ors Vs. Director Of Income Tax And Ors
May, 18th 2016
      *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                        Judgment Reserved on: 11th March, 2016
                         Judgment Delivered on: 12th May, 2016

+      W.P.(C) 7978/2010 & CM No. 20590/2010 (stay)
GAURI SHANKAR AND ORS                                  .....Petitioners
                                Versus
DIRECTOR OF INCOME TAX AND ORS                         ...Respondents

Advocates who appeared in this case:
For the Petitioners:     Mr Rakesh Gupta, Ms Poonam Ahuja, Mr Somil
                         Agarwal, Mr Rohit Kumar Gupta and Ms Monika Ghai,
                         Advocates

For the Respondents:     Mr Rahul Chaudhary, Sr. Standing Counsel for ITD
                         Mr Anuj Aggarwal with Mr Shubhanshu Gputa,
                         Advocates for R-2 & R-3


+      LPA 250/2011 & CM Nos.5488/2011 (for stay), 5489/2011
       (for condonation of delay)

DIRECTOR OF INCOME TAX                                 ..... Appellant
                                Versus
GAURI SHANKAR AND ANR.                                 ...Respondents

Advocates who appeared in this case:
For the Petitioners:     Mr Rahul Chaudhary, Sr. Standing Counsel for ITD

For the Respondents:     Mr Rakesh Gupta, Ms Poonam Ahuja, Mr Somil
                         Agarwal, Mr Rohit Kumar Gupta and Ms Monika Ghai,
                         Advocates
                         Mr Rakesh Kumar, CGSC for R-2.




=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 1 of 9
+       LPA 511/2011 & CM No.10888/2011 (for condonation of
        delay)

UNION OF INDIA
THR. ENFORCEMENT DIRECTORATE                            ..... Appellant
                                 Versus
GAURI SHANKAR AND ORS.                                  ...Respondents

Advocates who appeared in this case:
For the Petitioners:      Mr Rahul Chaudhary, Sr. Standing Counsel for ITD
                          Mr Rakesh Kumar, CGSC

For the Respondents:      Mr Rakesh Gupta, Ms Poonam Ahuja, Mr Somil
                          Agarwal, Mr Rohit Kumar Gupta and Ms Monika Ghai,
                          Advocates

                          Mr Akshay Anand, Ms Meena Sabharwal, Ms Sonam
                          Nagrath Kohli and Ms Jacklin, Advocates.


CORAM:
HON'BLE MR. JUSTICE BADAR DURREZ AHMED
HON'BLE MR. JUSTICE SANJEEV SACHDEVA

                            JUDGMENT
SANJEEV SACHDEVA, J

1.      The two appeals (LPA 250/2011 and LPA 511/2011) and the
writ petition (WP(C) 7978/2010) raise common questions of fact and
as such are being taken up for disposal together.




2.      Writ Petition (c) No. 7978/2010 has been filed by Gauri
Shankar Goel in the capacity of Director of M/s J.P. Goel and Sons
Private Limited as also in his individual capacity and by Shri Shankar
=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 2 of 9
Lal Goel seeking quashing and setting aside warrant of authorization
dated 17.07.2009 under Section 132 (A) of the Income Tax Act, 1961
(hereinafter referred to as "the Act").

3.    On 11.07.2005, a search and seizure operation was carried out
at the premises of the Petitioner No. 1 (i.e. Gauri Shankar Goel
Director of M/s J.P. Goel and Sons Private Limited) by the
Enforcement Directorate. Gold weighing 6 Kilograms and Indian
currency amounting to Rs. 1,41,000/- was seized under the Foreign
Exchange Management Act, 1999 (FEMA for short).

4.    The petitioners challenged the seizure and requested release of
the gold and seized Indian currency from the Directorate of
Enforcement.

5.    The Petitioners filed a petition before this Court bearing WP
(C) No. 3908/2008 against the Enforcement Directorate challenging
the seizure of the stock of gold and cash and for release thereof.

6.    It is contended that M/s J.P. Goel and Sons Private Limited is
engaged in the business of gold and bullion since 1999. In WP(C)
No. 3908/2008, Enforcement Directorate filed an affidavit contending
that though the seizure had been made, no case could be made out in
respect of the seized stock of gold bars and the Indian currency and
the matter had been referred to the Income Tax Department for taking
such action as may be deemed fit by them. On 22.07.2009, Income
=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 3 of 9
Tax Department was put to notice in the said WP(C) No. 3908/2008.
The Assistant Director of Income Tax (Investigation) filed an affidavit
contending that warrant of authorization under Section 132 (A) of the
Act had been issued on 17.07.2009 and the warrant of attachment was
executed on 20.07.2009 and stock of 6 Kilograms gold bars were
handed over on 28.08.2009 to the Department and cash of Rs.
6,99,000/- was also handed over on 31.08.2009. The cash of Rs.
6,99,000/- comprised of Rs. 1,49,000/- seized from the petitioner and
Rs. 5,50,000/- seized from one Mr. Tulsi Bhai s/o Sh. Moolgi Bhai,
who happened to be present in the premises of the petitioners during
the search and seizure operation.

7.    By order dated 10.12.2010, a learned single Judge disposed of
Writ Petition (C) 3908/2008 holding that from the affidavit of the
Directorate of Enforcement, it was admitted that there was no legal
justification for seizing the 6 Kilograms of gold from the business
premises of the petitioner by the Enforcement Directorate. There was
no FEMA violation in that regard and with regard to seizure of cash of
Rs. 1,49,000/-, no legal justification has been shown by the
Enforcement Directorate and the case was merely referred to the
Income Tax Department for taking further action nearly four years
after the seizure. It was not understandable as to how, without any
legal justification for detention of the Indian currency amounting to
Rs. 1,49,000/- and 6 Kilograms of gold bars, it was retained by the

=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 4 of 9
Enforcement Directorate till 28.08.2009 for over four years.       The
affidavit confirmed that the seized articles had been handed over to
the Income Tax Department on 28.08.2009. However, there was no
communication as to what the Income Tax Department had done after
issuance of warrant on 17th July, 2009 under Section 132 (A) of the
Act.   The writ petition was allowed with the direction to the
respondent/Income Tax Department to immediately release the 6
Kilograms of gold as well as Indian currency amounting to Rs.
1,49,000/- seized from the premises of the petitioner and his brother,
Shankar Lal Goel, petitioner No. 3 herein. The warrant under Section
132 (A) issued by the Income Tax Department on 27 th July, 2009 was
also quashed. The learned single Judge held that a perusal of Section
137 (A) of the Act showed that Section 37 of the FEMA could not be
invoked to seize Indian currency.

8.     Aggrieved by the order dated 10.12.2010 of the learned single
Judge in WP(C) No. 3908/2008, the two Letters Patent Appeals have
been filed. LPA No. 250/2011 has been filed by the Department of
Income Tax and LPA No. 511/2011 has been filed by the
Enforcement Directorate. The main contention raised by the
Enforcement Directorate is that the findings returned by the learned
single Judge in the impugned order to the effect that Section 37 of the
FEMA could not be invoked to seize Indian currency was erroneous.

9.     On the other hand, the Income Tax Department has impugned
=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 5 of 9
the order in LPA No. 250/2011 primarily on the ground that it was
justified in invoking the powers under Section 132 (A) of the Act and
in executing the warrants of authorization and taking into custody six
kilograms of gold bars and the Indian currency amounting to Rs.
1,49,000/-.

10.     The respondent/Income Tax Department has filed a Counter
Affidavit dated 20th April, 2011 in the present WP(C) 7978/2010. The
respondent/ Income Tax Department with regard to the issue of delay
in release of cash and gold bars has contended that it was only on 15 th
July, 2009 that it was requested by the Directorate of Enforcement to
take appropriate action and immediately thereafter the Income Tax
authorities have taken action for issuance of warrant of authorization.
It is contended that original documents recovered from the petitioners
were sought from the Directorate of Enforcement and the said original
seized material was received on 4.4.2011. It is contended that the
case of Gauri Shankar and Ors, the petitioners herein has been
centralized with ACIT, Central Circle-15, New Delhi in the charge of
Commissioner of Income Tax, Delhi (Central)-II, New Delhi vide
order    No.   F.No./CCIT(Central)/Centralization/2010-11/2984       dt.
25.11.2010 and the factual report by the ADIT has been sent to the
ACIT, Central Circle-15, New Delhi on 06.12.2010. The decision
regarding release of the seized assets can be taken by CIT, Delhi
(Central)-II, New Delhi only. It is contended that the seized material




=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 6 of 9
has been handed over to DCIT, Central Circle on 16.04.2011.

11.   There is no justification forthcoming from the respondent ­
departments as to on what basis and why they are continuing to retain
the seized articles. There is nothing on record to show that any
proceedings for assessment/re-assessment pertaining to the said seized
articles have been initiated against the petitioners.       There is no
material brought on record by the respondents to justify either the
seizure or retention of the said 6 Kilograms of gold bars and Indian
currency amounting to Rs. 1,49,000/- seized from the business
premises of the petitioner.

12.   Additionally, at the time of hearing of the present petition,
learned counsel appearing for the Income Tax Department contended
that it was the case of the petitioners that the seized gold bars and cash
belonged to the company, M/s J.P. Goel and Sons Private Limited. It
is contended that the goods could only be released, if at all, in favour
of M/s J.P. Goel and Sons Private Limited.

13.   In response to the objections raised by the counsel for the
Income Tax Department, counsel for the petitioners stated that the
petitioner No. 1 is Director of M/s J.P. Goel and Sons Private Limited
and is also arrayed as petitioner No. 2. Admittedly, the gold and
currency were seized from the premises of the petitioners.             To
overcome any technical objection, it is contended that the petitioners

=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 7 of 9
are competent to take possession of the seized articles on behalf of
M/s J.P. Goel and Sons Private Limited also and the said goods and
articles may be released to M/s J.P. Goel and Sons Private Limited
through its Director, Mr. Gauri Shankar Goel.

14.   The premises of the petitioners was raided on 11.07.2005 nearly
11 years ago. 6 Kilograms of gold bars and currency was seized
therefrom. Till date, there is no justification forthcoming for either
the conduct of the raid or for seizure of the said articles. There is
nothing on record to show that any proceedings for assessment/re-
assessment were initiated till date against the petitioners in respect of
the articles seized in 2005. We find no justification for any further
retention of the seized gold bars as well as the currency amounting to
Rs. 1,49,000/-. The respondents are accordingly directed to forthwith
release the 6 Kilograms gold bars as also the Indian currency
amounting to Rs. 1,49,000/- in favour of M/s J.P. Goel and Sons
Private Limited through its Director, Sh. Gauri Shankar Goel.

15.   In view of the above, Writ Petition (C) No. 7978/2010 is
allowed in the above terms.        LPA No. 250/2011 filed by the
Directorate of Income Tax is accordingly dismissed.

16.   In LPA No. 511/2011, the only question urged by the
appellant/Enforcement Directorate is that the finding returned by the
learned single Judge that Section 37 of the FEMA cannot be invoked

=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 8 of 9
to seize Indian currency is erroneous. Since, we have found the very
seizure and detention unjustified and directed release of the gold bars
as also the Indian currency, this question need not embroil us any
further and has become purely academic in the facts of the present
case. We, therefore, leave this question of law open for being settled
in appropriate proceedings.    The said LPA No. 511/2011 is also
dismissed leaving the question of law open. There shall be no orders
as to costs.

                                     SANJEEV SACHDEVA, J.


MAY 12, 2016                    BADAR DURREZ AHMED, J.
sk




=====================================================================
WP(C) 7978/2010, LPA Nos.250/2011 & 511/2011              Page 9 of 9

 
 
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