* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 21.10.2016
+ W.P.(C) 7620/2011
SUSHILA DEVI ............Petitioner
Through: Sh. N.P. Sahni, Advocate
Versus
COMMISSIONER OF INCOME TAX-XII ........Respondent
Through: Sh. Ashok. K. Manchanda, Sr. Standing
Counsel.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
MR. JUSTICE S. RAVINDRA BHAT
%
1. The writ petitioner in these proceedings under Article 226 of the
Constitution is aggrieved by the refusal - by the respondents i.e. the income
tax authorities -to release the jewellery - approximately 319. 98 g, seized by
them in the course of search proceedings under Section 132 of the Income
Tax Act, 1961 (hereafter "the Act").
2. On 10th August, 2000, the income tax authorities conducted search and
seizure proceedings in respect of the petitioner's husband's premises and
seized several documents and other materials. On 21st March 2001 a
consequential action by way of search of a locker in the Indian Overseas
Bank (IOB) was conducted. The bank locker contained jewellery. That
jewellery is the subject matter of these proceedings. On 18th June, 2001, the
petitioner's husband requested income tax authorities to release the jewellery
and stated that it belonged to his wife, i.e. the petitioner. On 24th March,
2002 and 4th April, 2002, the petitioner requested the income tax authorities
for release of the jewellery stating that it belonged to her as it was her
W.P.(C) 7620/2011 Page 1
stridhan. The petitioner stated that her daughter too owned the jewellery. It
was further stated in another letter that the jewellery was needed for religious
and family occasions; the petitioner relied upon the contents of guidelines
issued by the Central Board of Direct Taxes to say that the retention of the
jewellery was contrary to the instructions. On 29th August, 2002, the
Assessing Officer (AO) completed his proceedings in respect of the
petitioner's husband and demanded about `1.22 crores as tax towords
undisclosed income. In this order the assessing authority accepted that the
jewellery found in the locker actually belonged to the petitioner as she
claimed.
3. The petitioner relies upon the observations in the assessment order of
the AO. She renewed her request for release of the jewellery but to no avail.
Eventually she even approached the Finance Minister on 30th January, 2008
requesting him to intercede in the matter. Once again, on 16th July, 2008, a
request was made to the concerned Income Tax Officer for the release of
jewellery. In the meanwhile, the petitioner's husband had approached the
Income Tax Appellate Tribunal (ITAT)- aggrieved by the order of the AO.
The ITAT set aside the assessment order and directed the AO to conclude the
proceedings de novo.
4. On 31st December, 2009, the AO once again made an order whereby
the petitioner's husband was held liable for tax evasion in respect of
undisclosed income to the extent of `1.79 crores and the corresponding tax
effect was made, through a demand. All the while the petitioner continued to
request the income tax authorities for release of her jewellery. Finding the
respondents' approach unrelenting she has approached the court.
W.P.(C) 7620/2011 Page 2
5. It is argued by Mr. N.P. Sahni, learned counsel for the petitioner that
the retention of her jewellery is contrary to law. Learned counsel points out
that the first assessment order categorically accepted her submission that
the jewellery belonged to her and that she had right to that moveable
property. In fact it was not the income tax department which was aggrieved
by the order but rather the Petitioner's husband. This led to his approaching
the tribunal which set aside the assessment order for the block period. The
ITAT directed the AO to conduct proceedings de novo. In these proceedings
there is not of a whisper about the jewellery or the contention that it was her
property rather than that of her husband. Arguing that the continued retention
of the jewellery constituted the deprivation of her property without authority
of law, learned counsel highlighted that were there any demand on account
of the valuation of jewellery like in the earlier assessment, one could have
understood that there were some doubts with respect to the ownership of the
property. However neither the AO returned any finding on that aspect nor
did the income tax authorities urge anything in that regard. In these
circumstances the findings recorded earlier have not in effect been removed
and should be given effect. It is contended that the petitioner has been not
subjected to any assessment on the ground that she had concealed the
valuation of jewellery or that the amounts were not her property.
6. The respondents' counter affidavit - and the argument of their counsel,
Shri. Manchanda, is that even though the first assessment order had virtually
accepted the petitioner's contention that the property belonged to her,
nevertheless the fact remains that there is nothing to substantiate her claim
for ownership. It is contended next that the findings in the first assessment
cannot be relied upon because they were set aside and the AO was directed
W.P.(C) 7620/2011 Page 3
to conduct proceedings de novo. In the circumstances in the absence of a
positive finding either with respect to ownership or as to the facts that the
jewellery was not concealed as undisclosed income or property of her
husband, till the tax demands were satisfied, the jewellery could be validly
detained.
7. The facts are undisputed, as is evident from the above factual
discussion. The search of the petitioner's husband's premises and property
led to a follow-up search in Ranchi; his bank locker with the IOB too was
searched. This contained the jewellery in question. Concededly, the
jewellery is 398 gms and of gold. The assessee relies on circulars of 1985
and 1994 to say that when such small quantities are recovered, no follow-up
action is necessary and that in any case, the jewellery is her stridhan. The
respondent counters by saying that though in the first round of litigation, the
assessee's contentions were accepted, that AO's order was set aside and a
fresh de novo proceeding led to addition of a greater quantum. It is further
submitted that till tax demands are satisfied, the property can be validly
retained.
8. This court is of opinion that the respondent's recalcitrance is not mere
inaction; it is one of deliberate harassment. Unarguably, the first round of
assessment proceedings culminated in no addition of the jewellery or its
value in the hands of the petitioner's husband. The matter ought to have
rested there, because the further proceedings were at the behest of the
petitioner's husband who was aggrieved by the additions made (and not
aggrieved by the decision on issues in his favour ). The ITAT's decision to
proceed de novo, nevertheless strengthened the respondents' obduracy and
hardened their resolve not to release the jewellery. The de novo order did not
W.P.(C) 7620/2011 Page 4
result in any addition on that aspect at all; still the respondents cling to
another ingenious argument- that till the petitioners' husband's tax demands
are satisfied, they can detain the jewellery.
9. The respondents' rationale or justification is entirely insubstantial. The
petitioner says that she was married in mid 1960s and her daughters were
born in 1967- she was 70 when these proceedings were started. The
respondents do not deny this. In the circumstances, the further explanation
that the jewellery belonged to her and represented accumulation of gifts
received from family members over a period of time, and also acquired
during the subsistence of her marriage is reasonable and logical. The nature
of ownership of a woman's Stridhan is explained by the Supreme Court in its
decision Pratibha Rani vs. Suraj Kumar 1985 (2) SCC 70 in the following
terms:
"a Hindu married woman is the absolute owner of her
Streedhan property and can deal with it in any manner she likes
and, even if it is placed in the custody of her husband or her in-
laws they would be deemed to be trustees and bound to return
the same if and when demanded by her".
In Ashok Chaddha v Income Tax Officer [2012] 20 taxmann.com 387 (Delhi)
a Division Bench of this Court held as follows:
"After considering the aforesaid submissions we are of the view
that addition made is totally arbitrary and is not founded on
any cogent basis or evidence. We have to keep in mind that the
assessee was married for more than 25-30 years. The jewellery
in question is not very substantial. The learned counsel for the
appellant/assessee is correct in her submission that it is a
normal custom for woman to receive jewellery in the form of
"stree dhan" or on other occasions such as birth of a child etc.
W.P.(C) 7620/2011 Page 5
Collecting jewellery of 906.900 grams by a woman in a married
life of 25-30 years is not abnormal. Furthermore, there was no
valid and/or proper yardstick adopted by the Assessing Officer
to treat only 400 grams as "reasonable allowance" and treat
the other as "unexplained". Matter would have been different if
the quantum and value of the jewellery found was substantial.
4. We are, therefore, of the opinion that the findings of the
Tribunal are totally perverse and far from the realities of life.
In the peculiar facts of this case we answer the question in
favour of the assessee and against the revenue thereby deleting
the aforesaid addition of Rs.3,87,364/-."
10. The petitioner's explanation is justified and reasonable. Like in Ashok
Chadha (supra), her contention that the gold jewellery was acquired through
gifts made by relatives and other family members over a long period of time,
is in keeping with prevailing customs and habits. The obdurate refusal of the
respondents to release the jewellery constitutes deprivation of property
without lawful authority and is contrary to Article 300-A of the Constitution
of India. The petition has to succeed; a direction is issued to the respondents
to release the jewellery within two weeks and in that regard intimate to the
petitioner the time and place where she (or her representative) can receive it.
The respondents shall also pay costs quantified at `30,000/- to the petitioner,
within four weeks, directly. The writ petition is allowed in terms of these
directions.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
OCTOBER 21, 2016
W.P.(C) 7620/2011 Page 6
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