R SESHAMMAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner, Seshammal, the widow of late Rathinaswamy Chettiar, has prayed for the issue of a writ of mandamus directing the respondents to release 21, 660 gms. of gold jewellery seized from her residence on September 3, 1972.THE facts of the case may be briefly set out as follows. THE late Rathinaswamy Chettiar was carrying on business in gold and gold jewellery under the name and style of Sri Nataraja Vilas Jewellery Hall at Chidambaram. He died on November 7, 1971. THEreafter, the business was being carried on by his legal heirs. On September 3, 1972, the intelligence wing of the I. T. Dept. searched the residence and business premises of the petitioner. THEy seized about 21 kgs. of old and new gold jewellery and primary gold worth about Rs. 4, 48, 319. THE ITO thereafter passed a summary order under s. 132 (5) of the I. T Act. He determined the total income at Rs. 6, 90, 390 and the tax liability at Rs. 6, 30, 775. While so, on October 8, 1975, the President of India promulgated the Voluntary Disclosure of Income and Wealth Ordinance, 1975. THE Ordinance was subsequently replaced by the Voluntary Disclosure of Income and Wealth Act, 1976 (8 of 1976) (hereinafter referred to as "the Act"). THE petitioner filed voluntary returns as per ss. 14 (1) and 15 of the Act. She also filed the necessary declarations in Forms B and C to the Commissioner of Income-tax, Tamil Nadu-V. THE petitioner paid a sum of Rs. 3, 11, 740, being the tax thereon as provided under s. 5 of the Act, i.e., 50% before March 31, 1976, and the balance on April 19, 1976.

(2.) THE petitioner also informed the Asst. Collector of Central Excise, Pondicherry, and forwarded to him extracts of the entry in G. S. 10 regarding the gold and gold ornaments owned or possessed by her and declared under the Act. THE petitioner further complied with all the formalities required under s. 16A of the Act. THE petitioner then requested the Deputy Director of Inspection, I. T., to release the gold and gold jewellery seized from her premises. On December 18, 1976, the Deputy Director of Inspection wrote to the petitioner that the gold and gold jewellery would be released on January 3, 1977. However, the gold and gold jewellery were not released. When the petitioner's representative met the Deputy Director of Inspection, I. T., he was told that the second respondent, viz., the Collector of Central Excise (Gold), Madras, had not given his concurrence for the release. In these circumstances, the petitioner has filed this writ petition for the issue of a writ of mandamus to the respondents directing them to release the gold and gold jewellery seized from her.THE first respondent, Commissioner, has stated that there was a search of the petitioner's premises on September 3, 1972, by the intelligence wing of the I. T. Dept. During the search, jewellery of the value of Rs. 4, 28, 319 and cash of Rs. 20, 000 were seized. THEreafter, an order was passed by the ITO, Circle-I, Cuddalore, by which he determined the total income at Rs. 6, 90, 000 and tax demanded at Rs. 6, 30, 775. THE first respondent has categorically admitted that the petitioner did file a declaration have been paid by the assessee.

(3.) THEREFORE, from the mere fact that the gold and gold jewellery had been seized in 1972, long prior to the promulgation of the Act, it could not be said that the petitioner could not have made any voluntary disclosure as provided under the Act. Further, when once the first respondent has accepted the disclosure made by the petitioner and passed appropriate orders it would not be open to the second respondent to contend that there has not been any valid disclosure by the petitioner in terms of the Act.The next point that arises for consideration is whether the petitioner will be entitled to immunity from penalty, prosecution, etc., under the provisions of the Gold (Control) Act and the Customs Act. Mr. Balasubramanian argued that the gold and gold jewellery seized by the I. T. Dept. would be liable for confiscation both under the provisions of the Gold (Control) Act and the Customs Act. Section 16 (1) of the Act reads as follows : ".16. Immunity from penalty, prosecution, etc., under certain Acts. -(1) Where -(a) the voluntarily disclosed income declared under sub-section (1) of section 3 or any part thereof, or(b) the net wealth, or the assets the value whereof is, declared undersub-section (1) of section 15 or any part of such net wealth or assets,is or are represented by gold, then, notwithstanding anything contained in the Customs Act, 1962, or the Gold (Control) Act, 1968, such gold shall not be liable to confiscation under either of the said Acts and the person making the declaration shall not be liable to imposition of any penalty or infliction of any punishment under either of the said Acts for any act or omission in relation to such gold, if he fulfils the following conditions, namely :-(A) in a case where the gold is owned, possessed, held or controlled by the person making the declaration (such gold being owned, possessed, held or controlled by him in his capacity as a licensed dealer), necessary entries are made by him in the accounts, registers and documents maintained under the Gold (Control) Act, under intimation to the Gold Control Officer of the rank of an Assistant Collector of Central Excise or of Customs before the 1st day of February, 1976, and such other steps as are necessary for him to comply with the requirements of that Act in relation to such gold are taken by him before that date(B) in any other case, -(i) where the gold is an article or ornament or both and the weight of such article or ornament, or the aggregate weight of both, together with the weight of any other gold (being an article or ornament) owned, possessed, held or controlled by him, exceeds the limits specified in sub-section (5) of section 16 of the Gold (Control) Act, such article or ornament or both, as the case may be, is or are declared in the form prescribed under sub-section (1), and in the manner specified in sub-section (8), of that section before the 1st day of February, 1976.(ii) where the gold is primary gold, such gold is either sold to any licensed dealer under intimation to the Gold Control Officer of the rank of an Assistant Collector of Central Excise or of Customs before the 1st day of February, 1976, or is made into ornaments and a declaration in this behalf is made in the form prescribed under sub-section (1), and in the manner specified in sub-section (8), of section 16 of the Gold (Control) Act, before that day." *From the above, it can be seen that s. 16 (1) (A) applies in the case of licensed dealers and s. 16 (1) (B) (i) and (ii) applies in all other cases, and in order to get immunity from penalty, prosecution, etc., under the Customs Act and the Gold (Control) Act, a licensed dealer should satisfy the following conditions : (1) he must have made a voluntary disclosure of his income under s. 15 (1) of the Act. (2) The gold in respect of which the declaration is made must be owned, possessed or controlled by him in his capacity as a licensed dealer. (3) He must have made necessary entries in the accounts, registers and documents maintained under the Gold (Control) Act. He must have been given intimation to the Gold Control Officer of the rank of Asst. Collector of Central Excise or of Customs before the 1st day of February, 1976. He must have taken steps as are necessary to comply with the requirements of the Act before the 1st February, 1976. Further, the dealer has also to comply with the requirements of the Gold (Control) Act provides as follows :Section 16 (1) of the Gold (Control) Act provides as follows :"Save as otherwise provided in this Chapter, every person who owns, or is in possession, custody or control of, any article or ornament at the commencement of this Act, or acquires the ownership, possession, custody or control of any article or ornament thereafter, shall make, within thirty days from such commencement or from such acquisition, as the case may be, or within such further period as the Administrator may, on sufficient cause being shown allow, a declaration in the prescribed form as to the quantity, description and other prescribed particulars of any article, or ornament, or both, owned, possessed, held or controlled by him." *(proviso omitted)Section 16 (8) of the Gold (Control) Act reads as follows :"Every declaration made under this section shall be made in triplicate, of which one copy shall be authenticated and signed by the Gold Control Officer and thereafter shall be returned to the person making the declaration and the copy so returned shall be retained by such person as evidence of the declaration made by him under this section."Section 16 (9) of the Gold (Control) Act reads as follows :" Every declaration made under this section shall be kept by the Gold Control Officer in safe custody and the particulars thereof shall be entered in a register to be maintained for this purpose."Section 16 (11) of the Gold (Control) Act read as follows :" No person shall own or have in his possession, custody or control any quantity of gold which is required to be included in a declaration unless such gold has been included in a declaration or further declaration, as the case may be :Provided that nothing in this sub-section shall apply until the expiry of the period within which a person is entitled to made a declaration or further declaration." *It is, therefore, seen that in order to get immunity from the penal provisions of the Gold (Control) Act, it is necessary for a person who takes advantage of the Act not only to make a declaration under s. 16 of the Act but also comply with the requirements of the Gold (Control) Act, that is to say, he or she will have to make a declaration in accordance with s. 16 (8) of the Gold (Control) Act.Rule 4 of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968, reads as follows :". 4. (1) The declaration or further declaration, referred to in section 16, shall be in Form No. G. S. 3.(2) The register referred to in sub-section (9) of section 16 shall contain the following particulars, namely :-1. Serial number. 2. Date of receipt of the declaration. 3. Name and address of the person making the declaration. 4. Quantity of gold declared (including previous declaration, if any)." *From No. G. S. 3 prescribed says that the form is only intended for being used by persons other than licensed dealers. The learned Central Government standing counsel was not able to draw my attention to any prescribed form which has to be used by a licensed dealer for making a declaration under s. 16 (8) of the Gold (Control) Act. No form other than G. S. 10 and 17 to be filed by a licensed dealer has been brought to my notice by the learned Central Government standing counsel.The question for consideration is whether the petitioner herein has complied with all the requirements of s. 16 of the Act as well as s. 16 (8) of the Gold (Control) Act. On January 5, 1976, the petitioner's son, Balasubramanian, wrote a letter to the Asst. Collector of Central Excise, Pondicherry, enclosing the return in Form No. G. S. 17 for the quarter ending December 31, 1975.