HEMANT KUMAR SINDHI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The petitioners have sought to question the legality of an order dated January 1, 2014 passed by the Assistant Director of Income-tax (Investigation), Allahabad. By the order which is impugned in these proceedings, the request made by the petitioners for the sale of gold bars weighing 6 kilograms seized on December 10, 2013, for adjustment "towards the automatic tax liability" of the first petitioner has been rejected. The Assessing Officer, while rejecting the application, has observed that such action can be taken only after the assessment is completed and a demand has been quantified against the petitioners.

(2.) A search took place at the business and residential premises of the petitioners on December 5, 2013. Gold bars were seized from the locker of the second petitioner. According to the petitioners, the first petitioner has voluntarily disclosed an undisclosed income of Rs. 12.01 crores during the course of the search. The locker was opened on December 10, 2013, in continuation of the search proceedings when gold bars weighing about 6 kilograms were found. These gold bars, according to the petitioners, are of a value of Rs. 1.81 crores. The gold bars have been seized under a panchnama. The petitioners moved the Assessing Officer on December 14, 2013, with an application for the sale of the gold bars and for adjustment of the proceeds against the tax liability. The case of the petitioners is that once they have disclosed an undisclosed income of Rs. 12.01 crores, the tax liability would work out to Rs. 3.60 crores being 30 per cent, of the surrender amount and after adjusting the value of the gold bars a balance of Rs. 1.78 crores would be the balance and payable to the Revenue towards tax and undisclosed income. According to the petitioners, the sale of the gold bars would obviate their liability to pay interest under section 234B and section 234C of the Income-tax Act.

(3.) The Assessing Officer, by his communication dated January 1, 2014, has dismissed the application. According to the Assessing Officer, the tax liability can be determined only after the block assessment is completed. Hence, it is only when the assessment is completed and a demand is crystallised that the recovery can be initiated by the sale of the gold bars.