VISHWANATH KHANNA Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner is a proprietor of M/s Foto Traders, a firm started in the year 1993 to trade in gold, silver and bullion. Income Tax Department conducted a search and seizure operations on 04.02.1995 whereby cash and silver were restrained initially but subsequently seized as under: Cash Rs.49,86,500/- Silver 222 bars of total weight 70003.859Kgs. Having market value estimated at Rs.4,44,66,395/- by the Income Tax Department.

(2.) THE Assistant Commissioner of Income Tax, Investigation Circle (20)(1), New Delhi passed order under Section 132(5) of the Income Tax Act (hereinafter referred to as ,,the Act) dated 02.06.1995 declaring that cash found during search as unexplained and hence, cash seized of Rs.49,86,500/- was retained and not released. Subsequently, vide another order under Section 132(5) dated 19.06.2005, various disputed additions were made and tax and penalty @200% were raised. THErefore, entire silver seized valuing Rs.4,44,66,395/- was retained and not released. We may mention at this state that the Income Tax Department disputed the status of M/s Foto Traders, as according to it, it was an unregistered partnership firm. THErefore, the Department intended to tax income in the hands of this firm. THE concerned Assessing Officer (AO) passed the assessment order under Section 143(3) in the name of M/s Foto Traders after making huge additions of Rs.10,49,53,527/- on protective basis. In the appeal filed against the said order, additions of Rs.6,32,84,274/- were deleted and rest additions were confirmed. We may also mention at this stage that in the meantime and before the aforesaid protective assessment orders were passed in the case of M/s Foto Traders, the petitioner had approached the Department to allow him to sell the seized silver after deposing the amount of equal value. As no heed was paid to this request, the petitioner filed Writ Petition (Civil) No.4767/1998 in this Court. While disposing of the writ petition, this Court directed the Department to release seized silver after depositing rotational deposits of Rs.50 lacs or equal amount of silver to be released. In this manner, the Department released silver in installments against deposit of Rs.50 lacs each time. THE entire silver was, thus, released against total payment of Rs.4,20,50,000/- deposited by the petitioner from time to time on the sale of released silver. Details of this deposit are as under:

(3.) LETTER dated 11.02.2002 was written by the Department stating that the aforesaid amount would be adjusted in P.D. account with which deposit of the petitioner was lying. The petitioner objected to levy of these interest & demand and filed rectification application under Section 154 of the Act in respect of these assessment years.