IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH FRIDAY, THE 25TH JANUARY 2008 / 5TH MAGHA 1929 W.A.No. 168 of 2008 --------------------------------------- AGAINST THE JUDGEMENT IN WPC.24585/2007 Dated 22/08/2007 .................... APPELLANTS/PETITIONERS: ---------------------------------------- 1. PRAKASH GOLD PALACE (P) LTD., 39/358 B, POOTHULIL HOUSE, IIND FLOOR, MONASTERY ROAD, COCHIN - 11, REPRESENTED BY THE AUTHORISED SIGNATORY SHRI S.K. CHAKRABORTY. 2. KARUNDUTT SINGH ALIAS RINKU SINGH, POOTHULIL HOUSE, MONASTERY ROAD, COCHIN-11. BY ADVOCATES SHRI T. N. SEETHARAMAN & SHRI ARUN RAJ S. RESPONDENTS/RESPONDENTS: ---------------------------------------------- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I, ERNAKULAM. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, I.S. PRESS ROAD, ERNAKULAM. 3. THE CHIEF COMMISSIONER OF INCOME TAX, COCHIN. BY STANDING COUNSEL SHRI GEORGE K. GEORGE THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 25/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L. DATTU, C.J. & K. M. JOSEPH, J. -------------------------------------------------- W. A. NO. 168 OF 2008 --------------------------------------------------- Dated this the 25th January, 2008 JUDGMENT H.L. DATTU, C.J: This Appeal is directed against the orders passed by the learned Single Judge in W.P.(C). No.24585/07 dated 22.8.2007. By the impugned Order, the learned Judge has modified Ext.P9 order passed by the Assistant Commissioner of Income Tax, Central Circle-I, Ernakulam dated 12.7.2007. 2. In this Order of ours, we will be referring the parties as arrayed in the Writ Petition. 3. First petitioner is a manufacturer of gold ornaments. First petitioner claims that the second petitioner is its employee. It is the claim of first petitioner Company that it effects large scale sale of gold ornaments to various reputed gold merchants and traders. It is further stated that it is an assessee under the provisions of the Kerala Value Added Tax Act and Central Sales Tax Act. It is its further case that the gold ornaments are principally manufactured in West Bengal and from their stock, it was transferred to Chennai, and its further case is that the gold ornaments required in Kerala are usually stock transferred from Chennai to Cochin. 4. Case of first petitioner is that the goods sent from Chennai to Kerala through the second petitioner was seized by the Officials of the Income Tax Department. 5. Second petitioner had filed a petition on 23.1.2007, inter alia, requesting the respondents to release the gold ornaments seized on 24.7.2006. 6. The Assistant Commissioner of Income Tax, while entertaining the petition, has directed the second petitioner to furnish sufficient Bank Guarantee of equivalent amount, to release the seized gold ornaments (Ext.P9 order). W.A.NO.168/08 2 7. Aggrieved by the said order passed by the Assistant Commissioner of Income Tax, both the petitioners were before this Court in W.P.(C). No.24585/07. The learned Single Judge by order dated 22.8.2007, has modified the order passed by the Assistant Commissioner of Income Tax and further, has directed the respondents in the Writ Petition to release the entire gold seized, to the petitioners on the petitioners furnishing Bank Guarantee for 70 per cent of the value of the goods and on both the petitioners jointly executing a simple bond without surety for the balance 30 per cent in favour of the first respondent. The Order passed by the learned Single Judge is as under: "Since maximum rate of tax payable is 30% and even if the entire value of goods is treated as escaped income, the maximum tax and equal amount towards penalty will account for 70% of it's value and since first petitioner is an assessee, W.P. is disposed of modifying Ext.P9 directing the first respondent to release the entire goods to the petitioners on petitioners together or first petitioner executing Bank Guarantee for 70% of the value of the goods and on both petitioners jointly executing a simple bond without surety for the balance 30% in favour of the first respondent." 8. Aggrieved by the orders passed by the learned Single Judge, the petitioners are before us in this Writ Appeal. 9. Shri T.N. Seetharaman, learned counsel appearing for the appellants, after arguing the matter for quite some time, may be knowing the mind of the court, would submit that the first petitioner shall deposit a sum of Rs.24 lakhs for the present and that amount may be adjusted towards the tax liability that may be determined by the respondents either against the first or second petitioner and on such payment, this Court may direct the first respondent to release the entire gold seized on 24.7.2006. W.A.NO.168/08 3 10. In view of the aforesaid submission made by learned counsel for the appellant, we had requested Shri George K. George, learned counsel appearing for the Income Tax Department to obtain appropriate instructions from the Officials of the Income Tax Department. 11. Shri George K. George after obtaining instructions would inform us that the Department is prepared to accept a sum of Rs.24 Lakhs (Rupees Twentyfour Lakhs) that may be paid by the first petitioner for and on behalf of the second petitioner, for release of the gold ornaments and the amount so deposited would be adjusted towards any tax liability that may be fastened by the first respondent either against the first petitioner or the second petitioner. He would further submit that liberty may be reserved to the respondents to recover the balance amount that may be found due after the proceedings are completed by the first respondent, either from the first petitioner or from the second petitioner. In view of the submissions so made by both the learned counsels, it may not be necessary for us at this stage to go into the correctness or otherwise of Ext.P9 order passed by the Officers of the Department or the Orders passed by the learned Single Judge. Accordingly, we pass the following: Order (1) The Writ Appeal is disposed of. (2) The first petitioner/first appellant shall deposit a sum of Rs.24 Lakhs (Rupees Twentyfour Lakhs) with the first respondent within fifteen days from today. If such deposit is made, the first respondent is directed to release the gold ornaments seized on 24.7.2006 either in favour of the first petitioner or in favour of the second petitioner. (3) Liberty is reserved to the Income Tax Department to recover any amount that may be found due after completing the assessment proceedings either against the first petitioner or the second petitioner. W.A.NO.168/08 4 (4) First respondent is directed to complete the assessment proceedings initiated against the first or the second petitioner as expeditiously as possible and, at any rate, within six weeks from today. With these observations and directions, the Writ Appeal is disposed of. Ordered accordingly. H.L. DATTU, CHIEF JUSTICE K.M. JOSEPH, JUDGE kbk/DK.