UNION OF INDIA Vs. PRADIP KUMAR SARAF

JUDGEMENT

(1.) This is an appeal against the order and judgment passed by K.M. Yusuf J., in C. O. No. 10358(W) of 1990. By the said order the learned trial judge directed the respondents to release the goods seized under Section 132(1) of the Income-tax Act, 1961, and retained pursuant to the order passed under Section 132(5) of the said Act.

(2.) The facts of this case are that, in connection with search and seizure made in respect of the goods of the respondent, National Forest and General Mills Pvt. Ltd., under Section 132 of the Income-tax Act which was carried out on January 12, 1990, and partly concluded on January 14, 1990. In the course of search and seizure action, the authorised officer seized under Section 132 of the Income-tax Act, 569 metric tons of imported CRCA sheets/coils found in the premises of the assessee, Messrs. National Forest and General Mills Pvt. Ltd., Bombay. The search was concluded on January 31, 1990, and a further quantity of 321.321 metric tons of CRCA imported sheets/coils were found in the said premises. The total quantity of the goods was 890.321 metric tons during the course of search under Section 132(1) and the stock of CRCA sheets/coils of about 569 metric tons and 321.321 metric tons was seized on January 14, 1990, and January 31, 1990, respectively. Thereafter, the Assistant Commissioner (Investigation) Circle 3(1), Bombay, passed an order under Section 132(5) of the Income-tax Act, dated May 7, 1990, retaining 643.221 metric tonnes of seized goods out of the total seizure of 890.321 metric tonnes of goods. In the said order under Section 132(5) CRCA sheets weighing 643.221 metric tonnes were held to belong to the assessee within the meaning of Section 132(4A) of the said Act and the value thereof worked out at Rs. 1,28,66,420 was held to be income of the assessee for the accounting year 1990-91. The Assistant Commissioner (Investigation), Bombay, also estimated the other business income of the assessee and since the value of unexplained seized CRCA sheets worked out at Rs. 128.66 lakhs was less than the tax liabilities of Rs. 198.78 lakhs, the unexplained seized CRCA sheets of 643.221 metric tons were retained under Section 132(5) of the said Act. It was found that in respect of the total seizure of 890.321 metric tons of CRCA sheets, ownership was claimed by five different parties. The Assistant Commissioner (Investigation), Bombay, however, accepted the explanation of only one party, viz., Messrs. Twin Star Industries. According to the Assistant Commissioner (Investigation), the four other parties could not produce any evidence to prove that the goods belonged to them and also details about transportation of goods to the assessee's premises. According to the said authority, the goods were claimed to be owned by those four parties merely on the basis of income declared under Section 132(4). In the declaration under Section 132(4), according to the Assistant Commissioner (Investigation), these parties have not adduced any evidence about the exact source of income to them. It was further found by the said authority that Shri Rajib Ghai had given two contradictory statements and, therefore, held that CRCA sheets were found in the premises of the assessee and the same had to be considered by him in the case of this assessee while passing the order under Section 132(5) of the said Act.

(3.) Against the said order under Section 132(5) of the Income-tax Act, an objection was filed before the Commissioner of Income-tax under Sub-section (11) of Section 132 of the said Act and, on receipt of the said application, the Commissioner of Income-tax, Bombay City III, Bombay, after giving the applicant an opportunity of being heard, passed an order on June 9, 1990, under order No. BC III/S & S/143 of 1990-91. In the said order, the Commissioner of Income-tax, Bombay, held that the Department had no evidence except saying that goods were kept in the godown by the assessee, whereupon the said order under Section 132(5) of the Income-tax Act was passed. It was found that action under Section 132 was taken in the case of this assessee. The search started on January 12, 1990, and with some break continued up to January 14, 1990. It was also found that the four persons were even not served with any notice under Section 143(1). However, the statements were taken under the provisions of the Income-tax Act. The persons who gave the statements owned up the goods. Out of the four persons, three have paid the taxes as well. The Commissioner of Income-tax, Bombay City III, Bombay, after considering the facts and circumstances by the said order dated June 9, 1990, held : "The fact, however, remains that the fourth person, Shri Mahendrakumar Choudhury, also made a statement accepting a part of the goods belonging to him. I also find that, in the case of Shri P.K. Saraf and Messrs. Subkaran and Sons, orders under Section 132(5) were passed and, on the basis of that order, the Commissioner of Income-tax, West Bengal-9, passed an order on March 20, 1990. In the case of Messrs. Subkaran and Sons, the release order was passed by the Assistant Commissioner (Investigation). In view of the statements of the persons concerned, I do not see any reason not to accept the assessee's case that the goods in question belong to different parties and not to it. I am, therefore, of the opinion that the goods that have been owned up as belonging to different parties and on which the taxes have been paid should be accepted to be belonging to those persons. However, if the assessee or any other person produces evidence before the Assessing Officer to prove that even Shri Mahendrakumar Choudhury has made the tax payment, then the goods said to be belonging to him should be released. Otherwise, the same may be treated as belonging to this assessee. Under the circumstances, I direct that the goods which have been owned by the following persons :