Karnataka HC Lets Families With Tax Appeal Relief Seek Seized Jewellery Back, Requires Tax Chief To Decide Applications Within 2 Months

In brief

The question

Whether the Court should direct release of the seized articles before the Assessing Officer passes the statutory “giving effect to” orders, given the possibility of enforcement under Section 132B of the Income Tax Act, 1961.

The court held

The petitions were disposed of without deciding the challenges to the CBDT instruction, assessment order or corrigendum.

It also directed

The petitioners were granted liberty to apply to the Principal Commissioner for release of seized articles that may not be required for enforcement, having regard to the appellate relief and the Revenue’s grievance.

If applications were filed within one week of receiving a certified copy of the order, the Principal Commissioner was directed to consider them in accordance with the Court’s observations and communicate the decision within two months of receiving the certified copy.

The petitioners could also submit the order to the jurisdictional Assessing Officer for the “giving effect to” proceedings.

01Facts

The petitioners sought release of gold, silver and diamond articles seized during Income Tax Act searches conducted on 23–25 June 2022.

pp. 14–17

Their petitions also challenged a CBDT instruction governing release of seized jewellery; one petitioner additionally challenged an assessment order and corrigendum.

pp. 14–17

During the writ proceedings, the petitioners obtained substantial relief from the CIT (Appeals) and the Income Tax Appellate Tribunal.

pp. 14–17

The Assessing Officer still had time under the statute to pass orders giving effect to those appellate decisions, and the Revenue might appeal.

pp. 14–17

The petitioners’ stated concern was that the Revenue would not decide on release until any such appeal was resolved.

pp. 14–17

02Issues

i.Whether the Court should direct release of the seized articles before the Assessing Officer passes the statutory “giving effect to” orders, given the possibility of enforcement under Section 132B of the Income Tax Act, 1961.

pp. 17–18

ii.Whether the petitioners should be permitted to apply to the Principal Commissioner for release of articles not required for enforcement, in light of the relief granted by the appellate authorities and the Revenue’s position.

pp. 18–19

03Law Applied

Section 132B of the Income Tax Act, 1961 was the relevant provision concerning enforcement against seized assets.

pp. 17–18

The Court held that it could not direct release of the seized articles before the Assessing Officer passed the “giving effect to” orders, particularly because the articles might be required for enforcement under that provision.

pp. 17–18

The statutory time available to the Assessing Officer to pass those orders could not be curtailed by the Court.

pp. 17–18

No precedent was cited or applied.

pp. 17–18

Provisions in the judgment · 2

Income Tax Act, 1961 Section 132Section 132B

04Reasoning

The Court declined to order immediate release because the appellate relief had not yet been implemented through “giving effect to” orders, and the seized articles could be needed for enforcement under Section 132B.

pp. 17–19

At the same time, the Court considered it appropriate for the Principal Commissioner to assess whether any articles could be released, taking account of the relief granted by the CIT (Appeals) and the Tribunal and the extent of the Revenue’s grievance.

pp. 17–19

The Court expressly left the petitioners’ other grounds undecided.

p. 20