Madras H.C : Whether seized gold belonged to him can be decided at the end of assessment proceeding only

High Court Of Madras

ADIT (Inv.) (Aiu), Chennai Vs. Apparasu Ravi

Assessment Year : 2010-11

Section : 132B,132,6

F.M. Ibrahim Kalifulla And N. Kirubakaran, JJ.

Writ Appeal No. 1205 Of 2010

December  23, 2010

JUDGMENT

F.M. Ibrahim Kalifulla, J. – The Income-tax Department is the appellant. The challenge is to the order of the learned Single Judge dated 13-4-2010, passed in W.P. No. 921 of 2010.

2. By the impugned order, the learned Single Judge set aside the order of the second appellant dated 10-12-2009, passed under section 132B of the Income-tax Act and consequently directed the fourth appellant to return the gold jewellery weighing 9957/430 grams seized from the respondent at the gate of Anna International Airport, Chennai on the night of 13-8-2009/early morning of 14-8-2009.

3. The brief facts which are required to be stated as pleaded by the appellants are that the respondent travelled from Singapore to Chennai on 13-8-2009, with 10 kg of gold. He was intercepted by the Air Intelligence Unit of the Income-tax Department at the Airport after Customs clearance. When he was asked as to whether he was carrying any valuable items from Singapore, the respondent informed that he was carrying 10 kgs of gold jewellery. When he was asked about the purpose of carrying 10 kgs of gold jewellery from Singapore to India, the respondent stated that he does not own 10 kgs of gold, that after obtaining boarding pass at Singapore Airport, when he was ready to enter the check-in area to complete the other formalities, an unknown person approached him with a request to carry 10 kgs of gold jewellery to Chennai. The said person is stated to have offered Rs. 8,000 to the respondent to carry the said gold jewellery to Chennai and hand it over to a person at Chennai at the International Airport arrival. According to the respondent, when he asked him as to how he could identify the receiver of the gold jewellery at the Chennai Airport, the said unknown person informed him that if he furnishes the mobile number, the other person will be able to identify him. The said unknown person also stated to have told him that if the other person at Chennai reveal the respondent’s mobile number furnished by him at the Singapore Airport, he should hand over the 10 kgs of gold to him. The said unknown person is also stated to have given USD 10950 for the purpose of payment of Customs Duty at Chennai Airport and that the sum of Rs. 8,000 would be paid by the person waiting at the Chennai Airport on receipt of 10 kgs of gold jewellery.

4. It is the case of the appellants that when the above information was gathered from the respondent, in order to hold a search on him, they obtained necessary sanction from the Competent Authority and thereafter held the search on the respondent on 14-8-2009.

5. It is stated that in the course of the search on 14-8-2009, the respondent took the very same stand as regards the 10 kgs of gold jewellery carried by him and he also stated that he would be staying in India for about two months and that he has not purchased his return ticket till that point of time. He is also stated to have revealed his place of abode as his ancestral house at No. 4/175, Gandhi Nagar, Thirumallaivasal, Sirkali Taluk, Nagai District.

6. The appellants thereafter, seized the gold jewellery under section 132 of the Income-tax Act. After the seizure, the respondent filed a writ petition in W.P. No. 20083 of 2009 for Mandamus to direct the first appellant to forthwith release the gold jewellery weighing 9957.43 grams, which he imported after paying the Customs Duty thereon, which was seized from him at Anna International Airport in F.No. ADIT/A.I.U./2009-10.

7. The said writ petition was filed by one S. Manikandan son of K. Subramanian claiming himself to be the Power of Attorney Agent of the Respondent. In the affidavit filed in support of the writ petition, the petitioner therein claimed that the respondent had been doing business in gold jewellery in Singapore and that he had brought the jewellery into India as his stock-in-trade of business, which cannot be seized at all under the amended provisions of section 131 of the Income-tax Act.

8. He further claimed that he was coerced by the appellant to admit as though the gold jewellery brought by him belonged to somebody else. The respondent also sent a communication dated 2-9-2009, stating that the jewels belonged to him and that he was a Non Resident Indian and that the jewels should be returned to him.

9. The said writ petition was disposed of by an order dated 20-10-2009, by which, the appellants were directed to complete the enquiry within a period of ten weeks from the date of receipt of a copy of the order and depending upon the out come of the enquiry, the prayer of the petitioner for release of the gold jewellery can also be considered by the appellants. The respondent was directed to extend all his co-operation in completing the enquiry within the stipulated time limit.

10. Thereafter, the second appellant passed an order dated 10-12-2009, under section 132B(1) of the Income-tax Act holding that the passport entries of the respondent revealed that he stayed in India during the period 16-10-2004 to 28-11-2007 more than 365 days apart from 60 days stay in the relevant previous year as stipulated under section 6(1)(c) of the Income-tax Act and that therefore, he was a resident in India and hence his total income was taxable in India.

11. According to the second appellant, as the respondent was a resident of India within the meaning of section 6(1)(c) of the Income-tax Act, a formal notice under section 153A(1)(a) of the Act was also issued to him calling upon him to file his returns of total income for the assessment years 2004-05 to 2010-11. The order also revealed that a notice dated 2-11-2009, was issued to the respondent extending an opportunity to explain the nature and source of acquisition of the jewellery/asset seized from him.

12. It is stated that the respondent did not appear for the hearing fixed on 9-12-2009. On the above statement of facts, the second respondent held that since the nature of source of acquisition of jewellery which was valued at Rs. 1,37,21,202 and the source for purchase of foreign exchange amounting to USD 10950 (Rs. 5,03,700) not having been satisfactorily explained by the respondent, a sum of Rs. 1,42,24,902 would be deemed to be the income of the assessee from the unexplained sources for the financial year 2009-10 (Assessment year 2010-11).

13. It was further held that since the respondent would be an assessee and has not filed his return of income in India for the assessment years 2004-05 to 2010-11, the tax liability is likely to be more than the amount of seized asset, which according to the second appellant worked out to Rs. 58,49,217 and such amount would attract penalty leviable at 200 per cent on the tax sought to be evaded under section 271(1)(c) of the Act in a sum of Rs. 1,16,98,434 in all a sum of Rs. 1,75,47,651.

14. The second respondent thereafter, held that since the tax liability was more than the value of the seized asset, the assessed jewellery would be retained towards the tax liability and the jewellery cannot be released pending finalisation of the assessment and recovery of the entire tax or completion of the assessment.

15. It was further observed that the exemption provided under the Customs Act for acquiring gold jewellery cannot be taken for granted in all circumstances for claiming immunity when it comes to the question of Income-tax Act.

16. As against the said order of the second appellant, the respondent preferred the present writ petition in W.P. No. 921 of 2010. The second appellant has filed a counter affidavit resisting the claim of the respondent for return of jewellery.

17. By the order impugned in this appeal, the learned Single Judge held that the respondent stayed in India for 96 days during the previous year viz., 2009-10 relevant to the assessment year 2010-11.

18. The learned Single Judge also held that admittedly, the respondent was in India for more than 365 days between 17-10-2004 and 28-11-2007 and thereafter from 13-8-2009 onwards on different dates for 96 days. The learned Single Judge also repelled the contention of the appellants that the stay in India in the previous year should be counted only in respect of a voluntary stay and that the respondent had never been in India prior to 13-8-2009 and the 60 days stay in India was only on account of the proceedings initiated by the appellants.

19. The learned Judge however held that the respondent’s case was covered by Explanation (b) to section 6(1)( c) of the Act and since the respondent did not stay in India in the previous year viz., 2009-10 for 182 days, the appellants had no jurisdiction to treat the respondent as a ‘resident’ for the purpose of passing orders under section 132B of the Act.

20. The learned Judge therefore held that the impugned order dated 10-12-2009, was invalid and consequently directed the fourth appellant to return the gold jewellery weighing 9957/430 grams seized from the respondent at the gate of Anna International Airport, Chennai on the night of 13-8-2009/early morning of 14-8-2009.

21. Assailing the order of the learned Single Judge, Mr. J. Narayanaswamy, learned Standing Counsel for the appellants contended that going by the facts revealed, it was brought out that the respondent who initially claimed, prior to the seizure, that 10 kg of gold jewellery brought by him into India along with USD 10950 did not belong to him and that subsequently, he took a contradictory stand that the gold jewellery belonged to him, which he brought for his daughter’s wedding as well as to start gold jewellery business and having regard to the purpose of stay of the respondent during the previous years between 2004-07 and the number of days stay in India in the relevant previous year viz., 2009-10, he was covered by section 6(1)(c) of the Act and consequently liable to payment of tax in India.

22. The learned Standing Counsel would further contend that the search and seizure effected under section 132B of the Act ought not to have been interfered with by the learned Single Judge.

23. According to the learned Standing Counsel the respondent should therefore undergo the assessment proceedings and depending upon the out come of the assessment to be made, the return of jewellery can be decided.

24. As against the above submissions, Mr. B. Kumar, learned Senior Counsel appearing for the respondent submitted that under the Notification No. 31/2003, dated 1-3-2003, issued under the provisions of the Customs Act, exemption was granted in public interest for import of gold bars or gold in any form, at the rate prescribed under the said Notification subject however to the condition that duty should be paid in convertible foreign currency and the quantity of gold imported in any form should not exceed ten kilograms per eligible passenger. The said Notification also provided for such import either by carrying it by the eligible passenger at the time of his arrival in India or by import within 15 days of such arrival in India. The eligible passenger has been explained in the very same Notification by stating that “a passenger of Indian origin or a passenger holding a valid passport, issued under the Passports Act, 1967, who is coming to India after a period of not less than six months of stay abroad and even short visits, if any, made by the eligible passenger during the aforesaid period of six months shall be ignored if the total duration of stay on such visits does not exceed thirty days and such passenger has not availed of the exemption under this Notification at any time of such short visits.”

25. The learned senior counsel for the respondent would further contend that the respondent was an ‘eligible passenger’ since prior to his visit on 13-8-2009 to India, he stayed in abroad for nearly 3 years and therefore he was entitled to bring 10 kg of gold when he visited India on 13-8-2009.

26. The learned senior counsel by referring to yet other directions issued by the Government of India dated 2-3-1995 and 22-4-1992 to the effect that it is not necessary for a passenger to own the gold in order to become eligible to import and that any incoming passenger can import the gold as long as he satisfied the conditions of stay abroad and those relating to payment of duty in foreign exchange and the maximum quantity permitted, as well as that there was no condition that the source of earning from which the gold was purchased be verified. It was therefore contended that the directions therefore made it clear that it would be beyond the jurisdiction of the Customs officials to go into this aspect.

27. The learned senior counsel for the respondent also referred to a further Notification issued under section 3 of the Foreign Exchange Management Act, 1999 by which many constraints in dealing with the money by NRI came to be relaxed.

28. The learned senior counsel then contended that in order to satisfy the stipulations contained in section 6(1)(c) to that the respondent was a ‘resident’ in India, the appellants were bound to satisfy the twin requirement that he stayed in India for 365 days within four years preceding the previous year and that by virtue of the Explanation (b) to section 6(1), he should have stayed in India in that previous year for 182 days.

29. The learned senior counsel therefore submitted that the income-tax authorities cannot place an interpretation under section 6(1)(c) to bring out the situation which the Government of India wanted to avoid and thereby create a friction. According to the learned senior counsel section 6(1)(c) must be dissimulated which will not create a friction.

30. The learned senior counsel contended that if the search and seizure could not have been made on the date of seizure for non-compliance of section 6(1)(c), it cannot be given an extension by taking into account the subsequent event of the respondent’s stay after the seizure.

31. According to the learned senior counsel there was violation of the right to property which is Constitutionally protected under article 300(A) in the absence of any statutory provisions.

32. The learned senior counsel also contended that the search and seizure effected by the appellants was in violation of section 132 of the Act, inasmuch as, there was no prior information available in order to effect seizure and consequently the very seizure was invalid.

33. The learned senior counsel placed heavy reliance upon the decision of the Delhi High Court in Ajit Jain v. Union of India [2000] 242 ITR 302 which was also affirmed by the Hon’ble Supreme Court in the decision in Union of India v. Ajit Jain [2003] 260 ITR 80 . The learned senior counsel further contended that the estimated tax liability and penalty in the order dated 10-12-2009, does not fit into section 132 of the Income-tax Act, which only refers to ascertaining the liability of tax and interest.

34. By way of reply Mr. J. Narayanaswamy, learned standing counsel contended that the decision relied upon by the respondent varies in facts and therefore the same cannot be applied to the case on hand.

35. The learned standing counsel also contended that mere compliance of the Notification issued under the Customs Act will have no bearing on the action taken under the provisions of the Income-tax Act.

36. According to the learned standing counsel going by the version of the respondent himself, there were contradictions as regards the ownership of the gold brought by him and therefore in the present juncture the seizure effected by the impugned order dated 10-12-2009, should not be interfered with. The learned standing counsel contended that if seizure of gold is released as directed by the learned Single Judge, having regard to the fact that the respondent had secured two passports and also taken steps to secure a third passport, the balance of convenience is also not in favour of the release of the gold jewellery seized and that he can very well await the assessment proceedings and depending upon the out come, the appellant can be allowed to decide the disposal of the gold jewellery seized.

37. The learned standing counsel also stated that the appellants are always prepared to conclude the assessment proceedings at any early date even though it has got time till 31-12-2012, to pass the order of assessment.

38. It was lastly contended by the learned standing counsel that since the respondent himself came out with two different statements as regards the ownership, if ultimately some other party claimed ownership for the gold jewellery, the same will create serious implications and therefore the release of the gold jewellery ordered by the learned Single Judge should not be sustained.

39. Having heard the learned standing counsel for the appellants and the learned senior counsel for the respondents, the issues that calls for consideration in this appeal are three fold viz.,

(a) Whether the search and seizure made on 14-8-2009, was in accordance with the provisions of the Income-tax Act ?

(b) Whether the respondent can be held to be a ‘resident’ of India falling under section 6(1)(c) of the Act ? and

(c) Whether the order passed under section 132B of the Act dated 10-12-2009 can be sustained, awaiting the conclusion of the assessment proceedings ?

40. Based on the answers to the above questions, the relief to be granted will have to be decided.

41. As far as the first question is concerned, it is necessary to refer to certain basic facts relating to the search and seizure made on 14-8-2009, based on the original file placed before the Court. The file discloses that on 13-8-2009, a sworn statement was recorded under section 131 of the Income-tax Act after issuing a summons to the respondent at 11.00 pm. After recording the formal identification of the respondent relating to his address, avocation, family set up etc., he was asked as to whether he was carrying any valuable items from Singapore to Chennai. The respondent gave the following answer:

“This 10 kgs gold jewellery is not own to me. After obtaining boarding pass at Singapore Airport, I was ready to enter check-in area to complete other check-in formalities. An unknown person came and approached me at the check-in area with a request to carry 10 kgs of gold jewellery to Chennai. He further instinct me and offered Rs. 8,000 to carry these gold jewellery to Chennai and hand it over to the person known to him (unknown to me) at the International Airport arrival hall in Chennai Airport. I asked him how I will identify the receiver of the gold jewellery at the Chennai Airport, for which he replied that his man in Chennai will easily identify me and ask my mobile number. When his persons reveals my mobile number which I gave him at Singapore Airport, I have to hand over the 10 kgs of gold jewellery. In addition he has given US$10950 for the purpose of customs duty to be paid at Chennai Airport. Further he stated that Rs. 8,000 will be paid by his person waiting at Chennai Airport on receipt of the 10 kgs of gold jewellery at the time of handing over of gold jewellery.”

42. Thereafter, based on the said information, necessary permission was sought for warrant of authorisation under section 132 of the Income-tax Act to make a search on the respondent. Necessary authorisation was secured from the fourth appellant and was issued to the first appellant. Based on the said authorisation, search was conducted on the respondent under section 132 of the Income-tax Act, which resulted in seizure of the gold jewellery worth Rs. 1,37,21,202. The search and seizure was effected on 14-8-2009.

43. In the first instance, when we examine the initial search and seizure effected on the respondents, the contention on behalf of the respondents was that the same was in violation of section 132(1) of the Income-tax Act.

44. According to the learned senior counsel for the respondent in order to effect the search and seizure on the respondent, there should have been prior information about the possession among other items jewellery which would not be disclosed for the purpose of the Act to be dealt with as undisclosed income or property and that there should have been reason to believe such information in order to hold the search and seizure.

45. In support of the said submissions, the learned senior counsel placed reliance upon the decision in Ajit Jain’s case (supra) which was also affirmed by the Hon’ble Supreme Court in the decision in Ajit Jain’s case (supra).

46. The Division Bench decision of the Delhi High Court in Ajit Jain’s case (supra) was a case where the petitioner therein went from Mumbai to Chennai on 9-1-1996, with a sum of Rs. 8.60 lakhs, which was duly reflected in the company’s cash book, in which he was the Managing Director and on reaching Chennai, he stayed in Hotel Chola Sheraton. According to him the said money was to be deposited with a bank for making a bank draft for payment of custom duty on 12-1-1996. While he was staying in the said hotel, a raid was conducted by the officers of the CBI on 11-1-1996 and a sum of Rs. 8.6 lakhs was recovered from him. On the information of the CBI the respondent Nos. 4 and 5 therein viz., the Director of Income-tax (Investigation) and Assistant Director of Income-tax (Investigation) arrived in the room and took into possession of the said amount of Rs. 8.5 lakhs. A statement of the petitioner was recorded on oath by the said respondent No. 5, wherein in answering to a question with regard to the source and purpose for which the money was kept by him, he stated that the money was out of the sale proceeds fully recorded in the books of the company and he was carrying it because the same was to be deposited with the SIB (Customs). The said petitioner was summoned to appear before respondent No. 5 on 12-1-1996, with the proof for the said amount for being reflected in the cash book, which the petitioner claimed to have done by getting copies of cash book and ledger faxed by the Delhi office to respondent No. 4 showing that the money was reflected in the cash book.

47. Thereafter, other proceedings were taken with reference to the said seizure effected on the said petitioner. A challenge was made and the Division Bench of the Delhi High Court in the background of the above facts held that the search and seizure under section 132 to be made, the manner in which the documents and the money seized were in violation of the condition precedent for authorising an action under section 132. The Division Bench also pointed out as to what can be construed as information preceding such search and how the expression ‘reason to believe’ mentioned in section 132(1) to be construed.

48. The Division Bench has held as under as regards “information” and “reason to believe” in the following words :

“…’Information’, in consequence of which the Director-General or the Chief Commissioner, etc., as the case may be, has to form his belief is not only to be authentic but capable of giving rise to the inference that a person is in possession of money, etc., which has not been or would not be disclosed for the purpose of the Act. In other words, it must necessarily be linked with the ingredients mentioned in the section.

In L.R. Gupta’s case (1992) 194 ITR 32 (Delhi), speaking for the Court, B.N. Kirpal, J. (as his Lordship then was), explained the scope of the expression “information” as under (page 45):

“The expression ‘information’ must be something more than a mere rumour or a gossip or a hunch. There must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe that action under section 132 is called for any of the reasons mentioned in clause (a), (b) or (c ). When the action of issuance of an authorisation under section 132 is challenged in a Court, it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under section 132 was called for. The opinion which has to be formed is subjective and, therefore, the jurisdiction of the court to interfere is very limited. A court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under section 132 is called for. But the court would be acting within its jurisdiction in seeing whether the act of issuance of an authorisation under its jurisdiction in seeing whether the act of issuance of an authorisation under section 132 is arbitrary or mala fide or whether the satisfaction which is recorded is such which shows lack of application of mind of the appropriate authority. The reason to believe must be tangible in law and if the information or the reason has no nexus with the belief or there is no material or tangible information for the formation of the belief, then, in such a case, action taken under section 132 would be regarded as bad in law.”

By now it is well-settled that while the sufficiency or otherwise of the information cannot be examined by the Court in writ jurisdiction, the existence of information and its relevance to the information of the belief is open to judicial scrutiny because it is the foundation of the condition precedent for exercise of a serious power of search of a private property or person, to prevent violation of privacy of a citizen. In Bahwant Singh v. R.D. Shah, Director of Inspection [1969] 71 ITR 550 , a Division Bench of this court, while reiterating that the High Court cannot test the adequacy or the grounds leading to the satisfaction recorded, under section 132 of the Act, observed that if the grounds on which the belief is founded are non-existent or are irrelevant or are such on which no reasonable person can come to that belief, the exercise of the power under the said section would be bad; short of that, the Court cannot interfere with the belief bona fide arrived at by the Director or Inspection. But the court could examine whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and a search warrant could not be issued merely with a view to making a roving or fishing enquiry.

The expression “reason to believe” has been explained in various decisions by the Apex Court and High Courts while dealing with sections 132 and 148 of the Act. It has been held that the words “reason to believe” means that a reasonable man, under the circumstances, would form a belief which will impel him to take action under the law. The formation of opinion has to be in good faith and not on mere pretence. For the purpose of section 132 of the Act, there has to be a rational connection between the information or material and the belief about undisclosed income, which has not been and is not likely to be disclosed by the person concerned.” [Emphasis supplied]

49. Applying the above principles to the case on hand we find that unlike the facts involved in Ajit Jain’s case (supra), in the case on hand, the first appellant could gather the information from the respondent himself based on the statement made by him with reference to 10 kgs of gold jewellery in his possession brought by him from Singapore to India. In the statement recorded on 13-8-2009, at 11.00 pm to a question as to whether he was carrying any valuables from Singapore to Chennai, the said information was furnished by the respondent himself and consequently he also stated that the said ornaments weighing 10 kgs do not belong to him and was handed over to him at Singapore Airport at the check-in counter by an unknown person to be handed over to another unknown person in Chennai. He also stated that, that unknown person gave USD 10950 for the purpose of payment of Customs Duty. The further information was that for carrying the said job, he would be paid a sum of Rs. 8,000 at the destination.

50. When the above piece of information was gathered from the respondent, according to the appellants, they had reason to believe that the respondent who was in possession of such large quantities of gold, which had not been or would not have been disclosed for the purpose of the Act and consequently took the next step of getting the authorisation from the competent authority to effect the search. Thereafter, the search was effected on the next day viz., 14-8-2009. Once again, the respondent reiterated what he stated on the previous day viz., 13-8-2009, as to how he brought 10 kgs of gold jewellery from Singapore to India.

51. In the decision of the Delhi High Court, wherein an earlier decision of the same High Court in L.R. Gupta v. Union of India [1992] 194 ITR 32 3, has been pointed out wherein it is stated that there must be some material which can be regarded as information which must exist on the file and that the authority cannot proceed based on mere rumour or a gossip or a hunch. In the case on hand, the concrete information was furnished by the respondent himself which was exclusively known to him was revealed to the first appellant. Therefore it will have to be found out whether based on the said information he had sufficient reason to believe for initiating an action under section 132.

52. In that respect in that very decision it is pointed out that the opinion which has to be formed by the officers is subjective and the jurisdiction of the Court to interfere is very limited and that the Court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under section 132 was called for.

53. The only other aspect which the Court can examine would be whether the reason to believe was tangible in law and if the information or the reason had no nexus with the belief or there was no material or tangible information for the formation of the belief, only then an action taken under section 132 would be regarded as bad in law.

54. Applying the above well laid down principles, when we examine the case on hand, there was an information and the first respondent who after collecting the information by recording it in the form of statement, approached the competent authority for necessary authorisation to effect a search and thereafter made a search on the respondent and finding that the respondent was categoric in his information revealed earlier and having found the gold jewellery weighing 10 kgs held by him proceeded to seize the same under section 132.

55. We are therefore convinced that there was absolutely no flaw in the action taken by the first appellant in effecting the search and seizure under section 132 who had the necessary information and the said information had every nexus for formation of the belief.

56. Since the sufficiency or otherwise of the information cannot be examined by the Court in the writ jurisdiction, there is no scope to dissect the information which existed with the first appellant which formed the basis for his reason to believe that the respondent has not been or would not been disclosed for the purposes of the Act.

57. Therefore the submissions made by the learned senior counsel on behalf of the respondent on that score cannot therefore be countenanced. On the first issue, we hold that the search and seizure was validly made.

58. With this, when we proceed to examine the second question viz., whether the respondent can be held to be a ‘resident’ in India as per section 6(1)(c) of the Act. In order to bring an individual as a resident in India as per section 6(1)(c), the said individual having been in India for a period of 365 days or more within 4 years preceding the previous year should also remain for a period of 60 days or more in that previous year. The Explanation (b ) to section 6(1) stipulates that being a citizen of India who being outside India comes on a visit to India in any previous year in that case instead of 60 days of stay in India, such stay should be for 182 days.

59. Keeping the above statutory requirement of number of days stay in India, when we find out the actual number of days stayed by the respondent in India in the four years preceding the previous year viz., 2009-10 and the number of days stayed in that previous year, it is not in dispute that between 16-10-2004 and 28-11-2007, the respondent stayed in India for more than 365 days and in that previous year viz., 2009-10, the respondent stayed in India for 96 days.

60. Only other contention on behalf of the respondent was that he would be governed by the Explanation (b) to section 6(1)( c) and therefore stay in India in that previous year should be 182 days and not 60 days. The said contention of the respondent found in favour with the learned Single Judge and consequently the learned Judge held that the search and seizure made under section 132 lacked jurisdiction.

61. Therefore the issue depends upon the interpretation of Explanation 6(1)(c). The said Explanation reads as under:

“Explanation (b) to section 6(1)( c): being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted.”

62. While trying to find out whether the respondent would be governed by the said explanation, it will be necessary to refer to certain entries found in the respondent’s passport. The entries contained in the passport have been listed out in the Annexure to the Reply Rejoinder Affidavit of the first appellant dated 8-9-2010, filed in M.P. No. 1 of 2010 in this writ appeal. The said Annexure contains the details of the entries between 19-5-2000 and 5-7-2008. On 19-5-2000, the respondent left India from Chennai airport and arrived at Singapore on 21-5-2000 and he was permitted entry into Singapore for 14 days only for social visit.

63. The said visit pass was extended by Singapore Immigration on 1-6-2000, till 18-6-2000. It was again extended on 13-6-2000, till 2-7-2000. After short stay in Malaysia in the same month, the respondent got the visit pass extended till 17-7-2000. Thereafter, the respondent appeared to have returned back to continue once again on 21-9-2000. He got his visit pass extended on some condition up to 9-12-2000. Such extension of visit pass continued till the end i.e., till 4-1-2009. In between the respondent had come to India and visited Singapore not less than four occasions. In fact on 23-2-2001, when the visit pass was issued to enter Singapore, it was specifically entered therein that the respondent was not permitted to engage in any business, profession or occupation without a valid work permit till 9-3-2001. Similarly in the visit pass that enabled him to enter Singapore on 29-1-2007, it was specifically mentioned that it was for social visit only that too for 30 days.

64. Again in the visit pass issued on 8-1-2008, an endorsement was specifically made to the effect that he was not permitted to work or engage in any business, profession or occupation without a valid work pass. Similarly, such entry was noted in the visit pass issued on 5-7-2008.

65. Therefore, going by the entries found in the passport it is revealed that the respondent was visiting Singapore from India and it was therefore quite apparent that the statutory documents viz., the passport which can be relied upon as against any other claim made on behalf of the respondent, whatever be the period of stay in the foreign countries, the respondent’s stay therein was only as a visitor. In other words, being an Indian resident, he was permitted by those foreign countries to visit those countries viz., Singapore and Malaysia and that on expiry of such visit pass, the respondent came back to India being an Indian citizen.

66. In this context, it will be quite necessary to make a reference to the stress laid by the learned standing counsel for the appellants on the letter dated 9-10-2009, issued by the Passport Officer of Tiruchirappalli, which discloses that the respondent was originally possessing a passport bearing No. A6521094, which was renewed bearing No. G5949508 by mentioning his name as Ravi Apparasu. The said letter dated 9-10-2009, also revealed a starling fact that the respondent secured another passport bearing No. T682235, issued on 7-3-1995, which expired on 6-3-2005, mentioning his father’s name as Vaithilingam and his wife’s name as Ponni and certain other details relating to his address, name of his mother etc.

67. In one of his statements, the respondent revealed his wife’s name as Pushpalatha, who is stated to be living in Singapore. The learned senior counsel appearing for the respondent fairly submitted before us that the respondent got a second wife who is living in India.

68. Another fact was that the respondent tried to obtain yet another passport with reference No. A011326/99 in the name of Ravi, father’s name as Vaithilingam, mother’s name as Radha claiming his date of birth as 20-7-1960, as against 15-1-1959 mentioned in the passport dated 7-3-1995. The Passport Officer however stated that no passport was issued in 1995 and the file was closed.

69. Keeping the above details furnished by the passport officer in mind, when we examine the details of the respondent’s visit to Singapore and Chennai on various dates, it will have to be held that the conclusions of the appellants that the respondent was not governed by the Explanation (b) to section 6(1)(c) and was governed only by section 6(1)(c) alone cannot be faulted. The conclusions of the appellants that the respondent was not visiting India but was only visiting foreign countries is fully supported by the above valid materials and the said conclusion reached by the appellants cannot be easily assailed in the absence of any other legally acceptable material. There was no material to support the claim of the respondent that he was living in foreign countries on some other avocation, job or business and that he was only visiting India for a sojourn.

70. We therefore hold that the Explanation (b) to section 6(1)( c) is not attracted in the case of the respondent. Therefore when the respondent has satisfied the criteria namely 365 days in the preceding four years of the previous year 2009-10 and remained in India for 96 days, in that previous year the consequent search and seizure effected on him by invoking section 132(1) of the Act was well within the jurisdiction of the appellant.

71. Once we are able to reach the above conclusion, the only other question is the validity of the order dated 10-12-2009, passed under section 132B of the Act. When the appellants had every jurisdiction to invoke section 6(1)(c) of the Act on the respondent, the respondent having filed his return of income, it is for the respondent to participate in the assessment proceedings and work out his remedies. While dealing with the said issue, the apprehension expressed by the learned standing counsel for the appellants cannot be brushed aside.

72. As rightly pointed out by the learned standing counsel there were contradictions in the statements of the respondent as regards the ownership of the 10 kgs gold seized from him. The contention about coercion etc., does not impress on us, inasmuch as, we find that the respondent in his letter dated 2-9-2009, addressed to the first appellant, the whole content was written by him in English pointing out all the legal implications relating to section 132 of the Income-tax Act. Therefore, the statement that he was not conversant with English, etc., were purely an after thought.

73. Moreover, when he appeared for an enquiry before the first appellant in the proceedings initiated under section 132B of the Act, he categorically admitted that he had not obtained any licence for doing any business in Singapore, that he came to India with such large quantities of gold to start a jewellery business but yet he was not even aware of the caret value of the jewellery brought by him, while as per his original statement, the whole jewellery brought by him belonged to somebody else.

74. Therefore, it is not known whether the jewel really belonged to the respondent or to somebody else and therefore the relevance of the gold jewellery cannot be made in the present juncture. If really the respondent is interested in getting back the jewellery, he will have to necessarily await the conclusions of the assessment proceedings.

75. The contentions of the learned senior counsel for the respondent by relying upon the Notification issued under the Customs Act providing for exemption for bringing gold up to 10 kgs subject to payment of duty in foreign currency and based on mere six months stay in abroad will hold good only for the purpose of the provision contained in the Customs Act.

76. As rightly contended by the learned standing counsel for the appellants in the absence of any provision contained in the Income-tax Act or Customs Act providing for extension of such benefits to be applied while initiating proceeding under the Income-tax Act there is no scope to countenance such a contention made on behalf of the respondent, based on the Notification issued under the Customs Act. The said contention therefore is to be rejected in limine.

77. The contention of the learned senior counsel for the respondent that the period of 60 days or 182 days should be counted as on the date the respondent arrived in India i.e., on 13-8-2009, is concerned, the same was rejected by the learned Single Judge. In any event going by the provisions contained in section 6(1)(c), the said provision does not state that calculation of stay in the relevant previous year should be made only by keeping the date of arrival in India. What has not been specifically provided in the statute cannot be inferred as put forth by the learned senior counsel for the respondents. It was not the case of the respondent that the appellants forced the respondent to stay back in India after 13-8-2009.

78. In fact the respondent was freely travelling between Chennai and Singapore even after 13-8-2009 and therefore nothing prevented the respondent from staying back from India in order to ensure that 60 days period was not complied with. Therefore the said contention does not merit any consideration.

79. For all the above stated reasons, we hold that the order of the second appellant dated 10-12-2009, passed under section 132B of the Act cannot be interfered with and the order of the learned Single Judge in having set aside the same cannot therefore be sustained.

80. In order to enable the respondent to ascertain the tax liability, we only direct the appellants to conclude the assessment proceedings expeditiously preferably within three months from the date of receipt of a copy of this judgment and it is open to the respondent to participate in the assessment proceedings and vindicate his stand.

81. The writ appeal stands allowed and the order of the learned Single Judge is set aside and the order of the second appellant dated 10-12-2009, stands restored.

[Citation : 332 ITR 497]

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