What did the High Court hold?

The High Court allowed both petitions, setting aside the rejection order. The department agreed to release the seized jewellery upon the petitioner furnishing a bank guarantee equivalent to its value.

The petitioner sought the release of seized gold jewellery by furnishing a bank guarantee. The Income Tax Department initially rejected this request but later reconsidered its stand.

What were the issues?

Whether the seized stock of gold jewellery could be released upon furnishing a bank guarantee, and if the department's rejection order was justified.

S S Jewellery vs Deputy Director of Income Tax | Karnataka High Court 2021

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 15TH DAY OF SEPTEMBER 2021

BEFORE

THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV

WRIT PETITION No.6016/2021(T-IT) C/W WRIT PETITION No.6049/2021 (T-RES)

In W.P. No.6016/2021

Between:

S.S. Jewellery, Partnership Firm, No.74-A, Sheik Memon Street, 2nd Floor, Opposite Hotel Bhagat Tarachand, Zaveri Bazar, Mumbai - 400 002 Represented by its Partner Divesh Prakashchandra Jain.

Branch office at: No.934, Shop No.34, 2nd Floor, Sri Purandara Dharmaraya Swamy Temple Road, Nagarthpet, Bangalore - 560 002.

… Petitioner

(By Sri Kiran S. Javali, Advocate for Sri Madhu N. Rao, Advocate)

And:

Deputy Director of Income Tax (Investigation), Unit-3(3), CR Building,

2 Queens Road, Bangalore - 560 001.

... Respondent

(By Sri Dilip, Advocate for Sri K.V. Aravind, Advocate)

This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to set aside and quash the impugned order dated 26.02.2021 passed by the respondent vide Annexure-A and etc.

In W.P. No.6049/2021

Between:

S.S. Jewellery, Partnership Firm, No.74-A, Sheik Memon Street, 2nd Floor, Opposite Hotel Bhagat Tarachand, Zaveri Bazar, Mumbai - 400 002 Represented by its Partner Divesh Prakashchandra Jain.

… Petitioner

(By Sri Kiran S. Javali, Advocate for Sri Madhu N. Rao, Advocate)

And:

Deputy Director of Income Tax (Investigation), Unit-3(3), CR Building, Queens Road, Bangalore - 560 001.

... Respondent

(By Sri Dilip, Advocate for Sri K.V. Aravind, Advocate)

This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to direct the respondent to release the seized Stock of Gold jewellery by acceptance of Bank Guarantee as claimed in letter dated 19.02.2021 vide Annexure- 'M' etc.

3 These Writ Petitions coming on for orders this day, the Court made the following:

ORDER

With the consent of the parties, both W.P.No.6016/2021 and W.P.No.6049/2021 are taken up together and are disposed off by a common order.

In W.P.No.6049/2021 the petitioner has sought for issuance of a writ of mandamus or any other appropriate writ, or direction directing the respondent to release the seized stock of gold jewellery by acceptance of Bank Guarantee in terms of their letter dated 19.02.2021 at Annexure-'M'.

In W.P.No.6016/2021 the petitioner has sought for setting aside the order dated 26.02.2021 at Annexure-'A', whereby the request made by the petitioner for release of gold jewellery that was seized has been rejected.

The petitioner submits that while W.P.No.6049/2021 has been filed seeking consideration of

4 the request of 19.02.2021, during the pendency of the said writ petition, the Department had rejected the representation which had been challenged in W.P.No.6016/2021.

Upon notice, the learned counsel appearing for the Department Sri.K.V.Aravind upon instructions submits that the Department has reconsidered their stand as per Annexure-'A' to the limited extent that the request of the petitioner in W.P.No.6049/2021 in terms of their representation dated 19.02.2021 could be granted by permitting release on furnishing of bank guarantee subject to condition that the question of adjudication relating to ownership of the stock of gold jewellery which is the subject matter of this proceedings is a matter that is to be decided by the Assessing Officer and the order passed herein may adjudicate such aspect.

In light of the stand taken by the learned counsel for the respondent, both the petitions are allowed. The order at Annexure-'A' in W.P.No.6016/2021 is set aside. The

5 respondents undertake to honour the request of the petitioner as per the representation at Annexure-'M' dated 19.02.2021 which is a part of W.P.No.6049/2021 upon furnishing of Bank Guarantee equivalent to the value of seized gold jewellery. It is however made clear that the relief granted for setting aside of Annexure-'A' in W.P.No.6016/2021 is by consent without any reference to the legal contentions of the respondent. All contentions are kept open.

Accordingly, both W.P.No.6016/2021 and W.P.No.6049/2021 are disposed off. The respondent to take necessary action as per their undertaking expeditiously.

Sd/- JUDGE

Np/-

S S JEWELLERY vs. DEPUTY DIRECTOR OF INCOME TAX

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