Madhu Lalwani vs Commissioner Of Income Tax Delhi
2011 Latest Caselaw 190 Del

42.
* IN THE HIGH COURT OF DELHI AT NEW DELHI

+      W.P.(C) 7336/2008

       MADHU LALWANI                ..... Petitioner
                  Through Mr. Piyush Kaushik, Advocate.

                       versus

       COMMISSIONER OF INCOME TAX DELHI ..... Respondent
                   Through Mr. Sanjeev Sabharwal, Advocate.

        CORAM:
        HON'BLE THE CHIEF JUSTICE
        HON'BLE MR. JUSTICE SANJIV KHANNA

                    ORDER

%                   13.01.2011

       CM No. 372/2011

This is an application for restoration of the Writ Petition (Civil) No.

7336/2008. Mr. Sanjeev Sabharwal, learned counsel for the Revenue

Department has no objection.

In view of the aforesaid, the application stands allowed and the writ

petition is directed to be restored to file in its original number.

The application is accordingly disposed of.

W.P.(C) No. 7336/2008

As we have restored the matter, we have taken up the writ petition

for hearing.

2. Heard Mr. Piyush Kaushik, learned counsel for the petitioner and

Mr. Sanjeev Sabharwal, learned counsel for the Revenue Department.

3. On 19th August, 1993, the Income Tax Department conducted

search and seizure operation under Section 132 of the Income Tax Act,

1961 (Act for short) at the residential premises of Ms. Madhu Lalwani,

the petitioner and seized cash and jewellery aggregating to Rs.2,07,887/-.

4. On 16th December, 1993, the Assistant Commissioner of Income

Tax passed an order under Section 132(5) of the Act treating jewellery

worth Rs.1,81,614/- as prima facie unexplained and taxable in the

financial year ending 31st March, 1994. With regard to the cash of

Rs.1,11,300/-, it was held that the same was unexplained. However, this

was without prejudice that the cash could be assessed in the hands of

another person. Cash of Rs.1,11,300/- was treated as unexplained in the

hands of the petitioner on protective basis. It was accordingly directed that

the seized assets worth Rs.2,07,887/- should not be released till

assessments order was finalized. It may be noted that no third person

had/has challenged or claimed any right to the jewellery.

5. The petitioner filed return for the year ending 31st March, 1994 on

31st March, 1995, declaring a total income of Rs.2,75,340/-. After

scrutiny, the Deputy Commissioner of Income Tax passed an assessment

order under Section 143(3) of the Act assessing her total income at

Rs.4,56,950/- after making a singular addition of Rs.1,81,614/- on account

of unexplained investment in jewellery, under Section 69A of the Act.

The said addition was not on protective basis. The assessment order does

not relate to and deal with cash of Rs. 1,11,300/-. We are not concerned

with the cash of Rs. 1,11,300/-.

6. The petitioner filed an appeal and vide order dated 24th March,

1999, addition under Section 69A of the Act on account of unexplained

jewellery was reduced to Rs.56,614/-.

7. On further appeal, the Income Tax Appellate Tribunal deleted the

entire addition under Section 69A of the Act vide order dated 19th May,

2003. The said order has attained finality.

8. Petitioner accordingly approached Commissioner of Income Tax,

Delhi (Central)-III vide her application dated 22-23rd April, 2008 for

return of jewellery. She also made a prayer for refund of Rs. 91,306/-

which was deposited towards taxes vide two challans after the assessment

order making addition of Rs. 1,81,614/- was passed. The request has been

rejected and denied vide order dated 21-23rd May, 2008, which reads as

under:-

"2. Your request for release of Jewellery made in letter dated 14.01.2008 has been considered. After

hearing your Authorized Representative and considering his letters dated 22nd April 2008 filed on 23.04.2008 and 23rd April, 2008 filed on 28.04.2008 your request for release of jewellery, seized during search & seizure operation on 19.09.93 in the Prince Gutka group, is hereby rejected. The said jewellery has been held to belong to the family and not just the present assessee alone. Since the appeals in other cases are still pending for decision, the said jewellery cannot be released presently."

9. The aforesaid order does not deal with the question of refund of

Rs.91,306/-. In the counter affidavit it is submitted that no such refund is

pending in the case of the petitioner. However, when and how the amount

was adjusted is not stated. It is not denied in the counter affidavit that the

said payments were made by the challans concerned. The respondent has

not filed any computation chart to show and establish that the refund has

been adjusted. It is therefore, appropriate and necessary that the

respondent should examine the case of refund of Rs.91,306/-

deposited/paid by the petitioner and pass a speaking order. In case any

amount is refundable, the same shall be refunded and paid to the

petitioner in accordance with law.

10. Even with regard to jewellery, it is noticed that in the order under

Section 132(5) of the Act dated 16th December, 1993, the jewellery has

been treated as unexplained investment of the petitioner. In the

assessment order passed on 31st December, 1998 under section 143(3) of

the Act, addition of Rs.1,81,614/- was made on account of the jewellery.

Protective assessment was not made. The respondent has not placed on

record any order or document to show that the jewellery seized was

treated as jewellery belonging to a third person. On the other hand, the

Commissioner of Income Tax (Appeals) had reduced the addition on

account of unexplained jewellery/investment to Rs.56,614/- but the

Tribunal deleted the entire addition on the ground that the jewellery

belongs to the petitioner, though it may have been gifted to her on various

occasions. The Tribunal has relied upon the affidavit of the petitioner‟s

brother that the jewellery was given at the time of marriage by the mother

of the petitioner.

11. Learned counsel for the Revenue submitted that in case jewellery is

returned to the petitioner, family members of the petitioner may make a

claim on the said jewellery. Learned counsel for the petitioner, on the

other hand, has submitted that he is ready and willing to furnish „no

objection certificate‟ from the family members and indemnity bond to the

authorities to the satisfaction of the Income Tax authorities. In these

circumstances, the impugned order dated 21-23rd May, 2008 passed by the

Commissioner of Income Tax, Delhi (Central)-III is set aside and quashed

and the matter is remanded to the concerned Commissioner to pass a fresh

order on both return of jewellery as well as refund of Rs.91,306/-. The

petitioner or her representative will appear before the Commissioner of

Income Tax, Delhi (Central)-III on 28th February, 2011 at 3 pm.

Commissioner of Income Tax will fix a date for hearing the petitioner or

her representative and pass a speaking order on or before 31 st March,

2011. Refund, if due, will be paid within 15 days thereafter along with

interest, if payable, in accordance with the provisions of the Act. The writ

petition is accordingly disposed of. No order as to costs.

SANJIV KHANNA, J.

CHIEF JUSTICE

JANUARY 13, 2011 VKR/NA