GOPALDAS UDHAVDAS AHUJA Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal by special leave is directed against the judgment and order of the Division Bench of the Bombay High Court dated 5-1-1994 passed in Appeal No. 19 of 1992, by which the Division Bench allowed the appeal preferred by the respondents, thereby setting aside the judgment and order passed by the learned single Judge dated 11-9-1990 in Writ Petition No. 2406 of 1982 and consequently confirming the orders of the Adjudicating Authorities confiscating the primary gold, weighing 37,398.300 gms. and valued at Rs. 18.70 lacs, under section 71(1) of the Gold (Control) Act, 1968 (hereinafter referred to for the sake of brevity as the 1968 Act) with imposition of penalties on each of the appellants herein under section 74 of the said Act.

(2.) The undisputed facts are as follows:- The appellants are the son and widow respectively of one Udhavdas Ahuja. Udhavdas had married twice - first to the mother of appellant No.1 who died on 19-2-1950 and next to appellant No. 2 on 1-7-1950. Appellant No. 1 was born on 16-2-1950. Udhavs grandmother Bhojibai died on 4-7-1951. On August 28, 1974, the Income-tax Commissioner issued an authorization under section 132 of the Income-tax Act, 1961 authorizing search and seizure at Gopi Kunj, situate at Shivaji Park, Bombay, being the residential premises of appellant No. 1. Pursuant to the authorization, R.D. Mahadeshwar, Asstt. Director of Inspection, Income-tax department conducted the search and recovered primary gold and other gold items, more particularly described in the panchnama (at page 95 of Volume-II). At the time of search, appellant No.1 was present. The primary gold and the gold items collectively weighed 37,398.300 gms. valued at Rs. 18.70 lacs as on August 30, 1974. Thereafter, the Income-tax Authorities intimated the Gold Control Officer appointed under section 4 of the 1968 Act. On August 30, 1974, the said officer attended the Income-tax Officer and in the presence of appellant No.1, who was the Karta of Kewal Ram Ahuja, Hindu Undivided Family, took over the custody of the said gold from the Income-tax department. The Gold Control Officer also prepared the above panchnama. On 20-9-1974, the Gold Control Officer, Bombay served a show-cause notice on the appellants calling upon them to explain why the said primary gold should not be confiscated under section 71(1) of the 1968 Act and also why penalty should not be imposed on each of the appellants under section 74 of that Act. The show-cause notice inter alia alleged contravention of section 8(1) read with section 8(6) and section 16(1) read with section 16(5) inasmuch as the appellants had in their possession primary gold which they failed to dispose of within six months from 1-3-1967 as provided for in Rule 126 H(1)(B) of the Defence of India Rules. By the said show-cause notice, it was further alleged that the appellants had failed to file the declaration in respect of gold articles, other than the gold bars which constituted contravention of Section 16(1) read with Section 16(5) of the said Act. The appellants claimed during the investigation that the seizure was illegal; that taking over of the gold from Income-tax Authorities did not amount to seizure in fact or in law. They contended that there was no contravention of the provisions of the Act as they were not in conscious possession of the said gold recovered from their residence. The appellants claimed that entire gold was recovered from a secret cavity/vault inside the dome of one cupboard in the eastern bedroom and that they were not aware of the secret cavity or the contents thereof. The appellants also claimed that they were not in possession of the keys of the secret vault. In the meantime, on 18-10-1975, Voluntary Disclosure of Income and Wealth Ordinance, 1975 was promulgated. It was replaced by Act No. VIII in 1976. On 27-12-1975, appellant No.1 as Karta filed a declaration under the said Voluntary Disclosure Scheme. To complete the chronology of the events, the Collector of Customs (Preventive), Bombay (hereinafter referred to for the sake of brevity as Authorized Officer) ordered confiscation of the gold bars, gold coins and sovereigns under the provisions of section 71(1) read with section 8(1) of the 1968 Act. However, the appellants were given an option to redeem the gold coins and sovereigns weighing 7,719.90 gms. on payment of fine of Rs. 1.5 lacs in lieu of confiscation. By the said order, the Authorized Officer imposed penalty of Rs. 1 lac on each of the appellants. This order of the Authorized Officer held that the entire gold was seized from one cupboard in the eastern bedroom. The order passed by the Authorized Officer on 26-6-1976 was, however, set aside by the Gold Control Administrator in appeal (hereinafter referred to for the sake of brevity as the Appellate Authority"). By order dated 21-11-1977, the Appellate Authority remanded the case for de novo adjudication by accepting the contention of the appellants herein that the order passed by the Authorized Officer on 26-6-1976 was in breach of principles of natural justice. On remand, the Authorized Officer once again came to the conclusion, after considering the evidence on record, that the gold seized was in conscious possession of the appellants. However, this time, the Authorized Officer held that the gold seized was recovered from cupboard in the eastern bedroom, from the cupboard in the western bedroom and from the cupboard in the telephone room. He, therefore, concluded that the appellants were in conscious possession of the seized gold. The Authorized Officer, therefore, held that there was contravention of section 8(1) read with section 8(6) as far as primary gold was concerned and since the appellants failed to file declaration with regard to other gold items, there was contravention of section 16(1) read with section 16(5) of 1968 Act. Therefore, by his order dated 14/28-2-1980, the Authroized Officer directed absolute confiscation of the primary gold, gold sovereigns, gold coins and other gold items. He also imposed a personal penalty of Rs. 1 lac each on the two appellants. Being aggrieved by the said order, the appellants herein carried the matter in appeal once again to the Gold Control Administrator, New Delhi, being Appeal No. 91 of 1981. It was contended before the Appellate Authority that the entire gold was recovered from one place i.e. from a secret vault inside the dome of the cupboard in the eastern bedroom. The appellants relied upon the statements of two panchas. However, the Appellate Authority vide order dated 5-11-1981 found that the statements made by the officers from the Income-tax department that gold was recovered from different places were truthful. The Appellate Authority rejected the testimony of locksmith and the panchas. On the state of these findings, the Appellate Authority held that the appellants were in conscious possession of the said gold. The order passed by the Authorized Officer confiscating the said gold was upheld. However, the Appellate Authority ordered redemption of gold idols found in the pooja room on payment of Fine of Rs. 5000/-. The Appellate Authority also reduced the personal penalty of Rs. 1 lac imposed on each of the appellants to Rs. 50000/- each. Being aggrieved, the appellants herein preferred Revision application to respondent no.1 which was dismissed on 10-7-1982. At this stage, it may be mentioned that by order dated 5-6-1976, the Gold Control Officer found the appellants declaration under Voluntary Disclosure Scheme unacceptable as according to him the declaration was filed by appellant No.1 as Karta after commencement of proceedings under the 1968 Act. Being aggrieved by the dismissal of revision application filed by the appellants, Writ Petition No. 2406 of 1982 was filed in the Bombay High Court for a declaration that the said gold was unlawfully seized and, therefore, the appellants were entitled to immunity from proceedings for prosecution, confiscation and penalty. The appellants also sought return of the said gold. The said writ petition was filed on 18-10-1982. In the meantime, the appellants who were charged for offences under section 85(1)(ii) read with section 8(1) of the 1968 Act were acquitted by the Addl. Chief Metropolitan Magistrate, Bombay on 24-3-1983. The Criminal Appeal No. 443 of 1983 filed by the Gold Control Authorities against the order of acquittal was dismissed by the Bombay High Court on 8/9-3-1991. By judgment and order dated 11-9-1990, the learned single Judge held in Writ Petition No. 2406 of 1982, mentioned hereinabove, that the appellants were innocent possessors of the said gold. Accordingly, the trial Judge quashed the orders of penalty and confiscation passed by the Gold Control Authorities. Being aggrieved, the department herein, filed Letters Patent Appeal No. 19 of 1992 before the Division Bench of the Bombay High Court. By impugned judgment dated 5-1-1994, the Division Bench allowed the L.P.A. No. 19 of 1992 on the ground that the appellants were in conscious possession of the gold as it was found in several cupboards in the eastern bedroom, western bedroom and the telephone room. The Division Bench held that the findings of the Criminal Court were not relevant for the purposes of adjudicating confiscation under section 71(1) of the said Act. Consequently, the Division Bench confirmed the orders passed by the Gold Control Authorities. Hence the appellants have filed this appeal by way of special leave. Lastly, it may be mentioned that by order dated 7-4-1994, this Court dismissed Special Leave Petition (Criminal) filed by the Assistant Collector of Customs, Bombay against the judgment of the Bombay High Court confirming the acquittal of the appellants by the learned Magistrate.

(3.) Mr. C.A. Sundaram, learned senior counsel appearing on behalf of the appellants submitted that the Gold Control Authorities took over the gold from Income-tax department in contravention of section 132(5) of the Income-tax Act and consequently, there was no seizure in law and, therefore, the appellants were entitled to claim immunity under Voluntary Disclosure Scheme. In this connection, it was urged that in fact there was no seizure as the Gold Control Officer merely took over the gold from Income-tax department and to get over this lacunae, respondent No.2 herein seeks to contend that gold was returned to the appellants by the Income-tax authorities and it was thereafter seized from the appellants by Gold Control Officer appointed under section 4 of the Act. In this connection, reliance was placed on the panchnama dated 30-8-1974 (Vol. II page 95) to show that the gold was seized by the Gold Control Officer from Income-tax department. It was submitted that such seizure was also contrary to section 132(5) of the Income-tax Act. In this connection, reliance was placed on the judgment of this Court in the case of Commissioner of Income-tax vs. Tarsem Kumar, reported in (1986) 3 SCC 489.