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W.P. No.6810 of 2024 & Others

IN THE HIGH COURT OF MADHYA PRADESH

AT INDORE

BEFORE

HON'BLE SHRI JUSTICE VIVEK RUSIA

&

HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI

WRIT PETITION No. 6810 of 2024

ARIHANT JEWELLERS

Versus

PRINCIPAL COMMISSIONER OF INCOME TAX I AND OTHERS

WITH

WRIT PETITION No. 6850 of 2024

MR. AMIT SHARMA

Versus

PRINCIPAL COMMISSIONER OF INCOME TAX 1 AND OTHERS

WRIT PETITION No. 15169 of 2024

SEQUEL LOGISTICS PRIVATE LIMITED THROUGH ITS

AUTHORIZED PERSON/ SIGNATORY JITENDRA PATIDAR

Versus

PRINCIPAL COMMISSIONER OF INCOME TAX I AND OTHERS

Appearance:

Shri Ajay Bagadia, learned Senior Counsel assisted by Shri Amit Pal,

learned counsel for the petitioner in W.P. No.6810 of 2024.

Shri P. M. Choudhary, learned Senior Counsel assisted by Shri Amit Pal,

learned counsel for the petitioner in W.P. No.6850 of 2024.

Shri Jai Kansara, learned counsel for the petitioner in W.P. No.15169 of

2024.

Shri Harsh Parashar along with Ms. Yashika Bondwal, learned counsel for

the respondent / Income Tax Department.

Shri Bhuwan Gautam, learned Government Advocate for the respondents /

State.

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W.P. No.6810 of 2024 & Others

Shri Jai Kansara, learned counsel for the respondent / Sequel Logistics.

Reserved on: 15

th

July, 2025

Delivered on: 18

th

August, 2025

O R D E R

Per : Justice Vivek Rusia

The present three writ petitions are filed under Article 226 of the

Constitution of India raise interconnected questions of facts and law

arising out of the seizure of jewelry in 37 consignments on 23.10.2023

by the Static Surveillance Team, (SST) Ratlam by the District Election

Officer during the enforcement period of Model Code of Conduct during

the Madhya Pradesh State Assembly Elections and thereafter

proceedings initiated under the Income Tax Act, 1961 (in short 'the IT

Act') and the consequential action taken by the respondent authorities.

02.Since the factual matrix and legal questions involved are

substantially common and interlinked across all the writ petitions, with

the joint request of the parties, they are analogously heard and are being

disposed of together by this common judgment.

03.Admittedly, the petitioners have sought common relief in these

three writ petitions and there is no conflict of interest between them.

There are no allegations and counter-allegations against each other.

They all agree on a series of actions taken by the respondents.

FACTS OF THE CASE IN BRIEF

04.On 23.10.2023, during the enforcement of the Model Code of

Conduct in connection with the Legislative Assembly Elections in

Madhya Pradesh, a Bolero Vehicle bearing registration No.MP 09 ZR

5319 (hereinafter called as 'Vehicle') operated by Sequel Logistics

Private Limited was intercepted by the Static Surveillance Team (SST),

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Ratlam. At the time of interception, Mr. Amit Sharma, an employee

acting in his official capacity as Custodian Officer at the Indore office of

Sequel Logistics, was present in the Vehicle along with the driver.

4.1.The SST was operating under the directions of the Election

Commission of India in accordance read with the Standard Operating

Procedure for seizure and release of cash and valuable items issued by

the Central Board of Direct Taxes (CBDT) vide Regulation No.

464/Seizure/GE-Las/2021/EPPS dated 19.08.2021 read with Instruction

No. 76/Instructions/EEPS/2015 dated 29.05.2015.

4.2.Upon interception, the SST seized 37 sealed and tamper-proof

jewellery consignments valued at over Rs.6.00 crore, as per

accompanying documents. These consignments belong to various clients

of Sequel Logistics booked for transportation to the different locations.

The petitioner M/s Arihant Jewellers, one of them, booked the

consignment, which allegedly contained approximately 1785.120 grams

of gold jewellery valued at Rs.1,06,36,500/-.

4.3.Following the seizure, summons dated 25.10.2023 under

Section 131 of the IT Act were issued to Mr. Amit Sharma in his

personal capacity by the Income Tax Department and he was asked to

appear before them on the same day itself. Subsequently, on his arrival,

his statement was recorded wherein he disclosed that he was not the

owner of any of the consignments and was acting purely in his official

capacity as a custodian employee of Sequel Logistics and that the goods

belonged to different clients of Sequel Logistics, but the same was not

accepted or believed.

4.4.The District Grievance Committee for Ratlam, constituted by

the District Election Officer under the instruction of the Election

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W.P. No.6810 of 2024 & Others

Commission of India, comprising the Chief Electoral Officer, the Nodal

Officer of Expenditure Monitoring and the District Treasury Officer on

26

th

October, 2023, issued a communication to the Income Tax

Department acknowledging its request for requisition of seized

consignments. Pursuant to this a warrant of authorization under Section

132A(1) of the Income Tax Act was issued on 27.10.2023 by the

Principal Director of Income Tax (Investigation), Bhopal authorizing the

Deputy Director of Income Tax (Investigation) to requisition the seized

consignments and accordingly consignments and supporting documents

were handed over on 28.10.2023 by Shri Durgesh Sirolia, SST

Magistrate, Ratlam.

4.5.Subsequently, on 29.12.2023, a notice was issued by the

Principal Commissioner of Income Tax–1, Indore, to Mr. Amit Sharma,

informing him that his assessment case has been transferred to the

jurisdiction of the Deputy Commissioner of Income Tax (Central)–2,

Indore under Section 127 of the Income Tax Act. Meanwhile, M/s

Arihant Jewellers submitted a formal representation dated 10.01.2024 to

the Additional and Deputy Commissioners of Income Tax (Central),

Indore, asserting legal ownership of the seized goods and requesting

immediate release of the goods. Sequel Logistics also submitted similar

representations on behalf of its clients whose consignments were seized.

4.6.On 12.01.2024, Mr. Amit Sharma also submitted a letter to the

Deputy Commissioner of Income Tax (Central) - 2, Indore reiterating

that he had no proprietary interest in the seized consignments and that

the goods belonged to different entities who had availed of the services

of Sequel Logistics and also requested for the certified copy of his

statement recorded on 25

th

October, 2023. Thereafter, three notices

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under Section 148 of the Act were issued on 16.01.2024 to Mr. Amit

Sharma for the assessment years 2020–21, 2021–22 and 2022–23 by the

Assistant Commissioner of Income Tax (Central Circle) - 2, Indore.

4.7.By Communication dated 29.01.2024, M/s Arihant Jewellers

was informed that the consignments had been requisitioned under

Section 132A and that jurisdiction had been transferred to the Central

Circle. The Communication also stated that assessment proceedings

against Mr. Amit Sharma have been ongoing and that any release of the

goods would be subject to further examination. On the same date, Mr.

Amit Sharma also addressed a letter to Deputy Commissioner of Income

Tax (Central) - 2, reiterating that he had no proprietary interest in the

consignments and sought the supply of the seizure memo, panchnama

and related documents.

4.8.Meanwhile, All India Gem & Jewellery Domestic Council,

Mumbai received a Communication on 31.01.2024 from the Officer on

Special Duty (OSD), Election Cell, CBDT, clarifying that seizure of

jewellery or bullion is not needed if the goods are accompanied with

valid documentation, including tax invoices, stock statements,

authorization letters and ID cards.

4.9.However, disregarding the above, the Income Tax Department

issued a communication dated 08.02.2024 to M/s Arihant Jewellers and

other consignors/consignees stating that Mr. Amit Sharma had been held

to be the owner of the goods during requisition proceedings and that

only his case had been centralized. A CBDT instruction dated

16.02.2023 was also cited to state that the respondent authorities did not

have jurisdiction over claims of the consignors or consignees. Similar

responses were also given to the subsequent representations filed by

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Sequel Logistics and other consignors/consignees.

4.10.Despite repeated communications dated 13.02.2024 and

05.03.2024 by M/s Arihant Jewellers and on 04.03.2024 by Sequel

Logistics addressed to the Income Tax Authorities and the District

Committee, Ratlam, asserting ownership by the respective traders and

violation of applicable SOPs, no action was taken by the respondent

authorities.

4.11.According to the petitioners, during the 2024 General Elections,

a similar incident occurred on 25 April 2024 when another vehicle of

Sequel Logistics was intercepted by the Static Surveillance Team,

Deendayalnagar, Ratlam and on this occasion, nine consignments were

seized despite being accompanied by complete documentation.

However, in this case, after the representative of Sequel Logistics

appeared before the District Election Officer with all requisite records

upon verification of documents, the District Election Monitoring

Committee passed an order on 29.04.2024 directing the release of

consignments, finding that the seizure had been unjustified.

4.12.Being aggrieved by the action and inaction of the

respondent/authorities, the petitioners have now approached this court

under Article 226 of the Constitution, challenging the legality of seizure,

requisition and consequential assessment proceedings. The petitioners

contend that the impugned actions are arbitrary, contrary to the

prescribed procedural safeguards provided in the Income Tax Act and

relevant CBDT instructions and further prayed for appropriate reliefs in

each of their cases including a declaration that the seizure and

requisition were bad in law as done without authority of law and

contrary to the statutory safeguards as provided by law.

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05.After filing the reply by respective respondents, the petitioners

have filed a detailed rejoinder, written submissions and a compilation of

case laws in support of their case.

SUBMISSION OF PETITIONER / ARIHANT JEWELLERS

06.Shri Ajay Bagadiya, learned Senior Counsel appearing on behalf

of this petitioner, advanced detailed submissions assailing the legality of

the seizure and continued retention of the petitioner's jewellery

consignment. That the entire action commencing from the interception

by the SST to the requisitioning of the goods under Section 132A of the

Income Tax Act, 1961, is without jurisdiction and contrary to the

binding Standard Operating Procedure (SOP) framed by the ECI.

6.1.At the outset, learned Senior Counsel submitted that the

Petitioner is a registered and established entity engaged in the lawful

business of manufacturing and trading of jewellery. The petitioner in the

ordinary course of business had procured 2050 grams of gold from M/s

Creative Gold and had in accordance with standard industry practice

instructed the seller to deliver the said gold directly to M/s Subhas

Mondal a craftsman in Mumbai to manufacture jewellery who had to

upon completion of the work dispatch the finished jewellery in a

consignment to the petitioner at Ratlam through Sequel Logistics Pvt.

Ltd, with whom the petitioner had entered into a logistics agreement

dated 15.12.2020 for the transportation of high-value goods.

6.2.Learned Senior Counsel submitted that the consignment

belonging to the petitioner was one of 37 consignments which was

seized by the SST, Ratlam despite having necessary documents

including tax invoice dated 21.10.2023 issued by M/s Subhas Mondal

and further submitted that the above transactions were duly recorded in

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W.P. No.6810 of 2024 & Others

the regular books of account of the petitioner which are available on

record.

6.3.Learned Senior Counsel submitted that when the said vehicle

was intercepted by the SST, Ratlam Mr. Amit Sharma showed all proper

documents for each consignment however the SST without giving any

valid reason seized all the goods and later handed over them to the

Income Tax Department which they were not authorized under the SOP

to take custody in such a manner.

6.4.Learned Senior Counsel submitted that the SOP issued by the

Election Commission particularly Circular No. 464/Seizure/GE-

Las/2021/EPPS dated 19.08.2021 read with Instruction No.

76/Instructions/EEPS/2015 dated 29.05.2015 clearly states that the SST

is empowered to seize cash or valuables only upon a clear finding that

such items are being used or intended to be used for electoral purposes

or are linked to a candidate, political party or electoral inducement and

that in the present case since there was absence of any such linkage the

SST had no authority to carry out seizure.

6.5.Learned Senior Counsel submitted that Clause 8 of the SOP

specifically provided that in cases where valuables are accompanied

with proper documentation and there is no electoral linkage, the SST

shall not seize the cash but may pass on the information to the Income

Tax Department for necessary action. That in the present case, there was

no political linkage found, and as proper documentation was available

establishing the nature, origin and destination of the goods, the SST had

no ground to seize them and subsequently transfer them to the Income

tax department.

6.6.Learned Senior Counsel submitted that Clause 9 of the SOP

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further mandates that in the event of suspicion of an offence it is binding

upon the SST to get an FIR or a complaint registered in the police

station or court having jurisdiction within 24 hours however in the

present case no such FIR or complaint was registered against the

petitioner nor any finding was recorded by the SST or the District Level

Committee establishing any irregularity or criminality done by the

petitioner thereby making the entire seizure illegal.

6.7.So far as the actions of Income Tax Department are concerned,

learned Senior Counsel argued that the requisition made under Section

132A of the IT Act against Amit Sharma in respect of property of the

petitioner is void ab initio and liable to be quashed as the provision

empowered the authorized officer to requisition articles only where he

has "reason to believe" that such articles represent income not disclosed

or likely to be suppressed for the purposes of assessment. That in the

present case, no such belief can be said to have validly arisen as the

department had before it the tax invoice, docket, declaration and the

statement of Mr. Sharma which all clearly indicated that the

consignment was lawful stock-in-trade of the petitioner which was being

transported as per the normal course of commercial transit involved in

such businesses.

6.8.Learned Senior Counsel submitted that the requisition was

effected without any notice or opportunity of hearing to the petitioner

thereby violating the principles of natural justice and further submitted

that the department had wrongly presumed the custodian of the

consignment to be the owner whereas the actual ownership rested with

the petitioner which was evident from the documentary record as well as

the statement recorded by the Department itself.

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6.9.Learned Senior Counsel Shri Bagadia further submitted that the

subsequent transfer of the case under Section 127 of the Income Tax Act

to another jurisdiction without giving an opportunity of hearing to the

petitioner and without recording reason in writing for such transfer

shows the malafide intention of the IT department and further submitted

that the centralization of the case of Amit Sharma has been done merely

to avoid scrutiny before this court and to distance the officer who had

requisitioned the goods from further accountability.

6.10.Learned Senior Counsel submitted that the continued retention

of the consignment by the Income Tax Department is in clear violation

of the mandate of Section 132B of the Act as the provision lays down a

strict timeline of 120 days from the date of requisition within which the

Assessing Officer is required to complete the assessment or determine

liability and appropriate the seized assets accordingly and in absence of

such determination, the assets are liable to be released forthwith. That in

the present case, the requisition was made long back and no

determination has still been made long after the expiry of the stipulated

period, thus the continued retention is totally arbitrary and unlawful.

6.11.Learned Senior Counsel submitted that despite repeated

representations made supported with all relevant documents, no

adjudication has been made on merits and further pointed out that the

applications submitted during the pendency of the writ proceedings were

also rejected without addressing the core issue of ownership or validity

of requisition on the ground that the matter had been centralized and

thus the authority has no jurisdiction/power to deal with the case.

6.12.In support of his submissions, learned Senior Counsel has

supplied copies of the several judgments of Apex Court and of different

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W.P. No.6810 of 2024 & Others

High Court delivered in the cases of State of Punjab v/s Davinder Pal

Singh Bhullar reported in (2011) 14 SCC 770, Badrinath v/s

Government of Tamil Nadu reported in (2000) 8 SCC 395, CIT v/s

Vindhya Metal Corporation reported in (1997) 5 SCC 321, Indian

Traders v/s State of Bihar reported in (2019) 417 ITR 95 (Patna),

Khem Chand Mukim v/s Pr. DIT (Investigation) reported in (2020)

423 ITR 129 (Del.), Biaora Constructions (P.) Ltd. V/s Director of

Income Tax (Investigation) reported in (2006) 281 ITR 247 (MP),

Pushpa Ranjan Sahoo v. Assistant Director of Income Tax reported in

2012 SCC OnLine Ori 428, Harshvardhan Chhajed v/s DGIT

(Investigation) reported in (2021) 438 ITR 68 (Raj.), Ashish Jayantilal

Sanghavi v/s ITO reported in (2022) 444 ITR 457 (Bom.), Mitaben R.

Shah v/s Deputy CIT reported in (2011) 331 ITR 424 (Guj.), M/s

Bhagwati Jewellers v/ Directorate of Enforcement in SB Civil Writ

Petition No. 10226/2021 (Raj.) and Nadim Dilipbhai Panjvani v/s

Income Tax Officer Ward-3 in Special Civil Application No. 13374 of

2015 (Guj.).

6.13.Shri Ajay Bagadia, learned Senior Counsel, in conclusion,

submitted that the seizure was without authority under the SOP, the

requisition under Section 132A was illegal for want of valid satisfaction

and notice and that the continued retention beyond 120 days is contrary

to Section 132B and accordingly prayed that the impugned requisition

and all consequential proceedings be quashed and a direction be issued

to the respondents to forthwith release the petitioner's consignment.

SUBMISSIONS OF PETITIONER / AMIT SHARMA

07.Shri P. M. Choudhary, learned Senior Counsel appearing for the

petitioner – Mr. Amit Sharma submitted that the entire action taken

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W.P. No.6810 of 2024 & Others

against the petitioner under the Income Tax Act, 1961, is without

jurisdiction, suffers from non-application of mind and is based on a

fundamental misunderstanding of the petitioner's role in the entire

episode. That the petitioner is merely an employee of M/s Sequel

Logistics Pvt. Ltd., a fact admitted by the respondents themselves, and

he was in lawful possession of the consignments solely in his capacity

as a custodian for transportation purposes for its employer.

7.1.Learned Senior Counsel submitted upon being intercepted by

SST, Ratlam the petitioner immediately produced all relevant documents

relating to the consignments and on finding no political link or illegality,

the SST released the petitioner on 24.10.2023 but despite there being no

illegality did not return the consignments to the petitioner and instead

handed them over to the income tax department which was without

authority and contrary to the SOP guidelines as it restricts such transfer

unless there is a link to an electoral candidate or suspicion of an offence

none of which were found or recorded in this case. The basic

intelligence and application of mind are expected from the government

officials.

7.2.Learned Senior Counsel submitted that the Income Tax

Department summoned the petitioner, and his statements were recorded

wherein he disclosed his identity as an employee of Sequel Logistics

and explained that he was only transporting the goods in his capacity as

the custodian of the company. During the statement, specific questions

regarding each document were asked. The answers to questions 5, 6, 9,

11, 12, 15, 16, 19, 22 and 26 in the statement are particularly relevant

for the consideration of ITO, who failed to understand them.

7.3.Learned Senior Counsel submitted that despite disclosure of all

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facts by the petitioner, a warrant of authorisation/ requisition under

Section 132A (1) (c) was illegally issued by the department on the belief

that the goods in question are part of the undisclosed income of the

petitioner. This requisition by the income tax authority is totally

unsustainable in law, as there is no basis whatsoever to form such a

belief, especially in light of the statement of the petitioner and the

accompanying documents.

7.4.Learned Senior Counsel submitted that the continued belief by

IT that the petitioner is the owner is wholly misconceived, which will

lead them nowhere. The expectations from an employee to establish the

ownership of consignments who is merely discharging his assigned

duties is totally misplaced, as he had only limited knowledge regarding

the contents of the consignment and his responsibility was limited to

only that which is of a bailee. The absence of e-way bills does not vitiate

the transportation in this case, as the movement of jewellery is exempt

under Rule 138(14)(a) of the CGST Rules, 2017.

7.5.Learned Senior Counsel submitted that the department had

obtained a No Objection Certificate (NOC) from the Local Grievance

Committee on 26.10.2023, that is, even before any formal order under

Section 132A was issued, which shows that the department had acted

first and tried to justify it later, which is not permissible in law. Learned

senior counsel objected to the presumption taken by the department

under Section 132(4A) and submitted that such presumptions arise in

case of lawful seizure and also do not apply to a person acting as a

carrier without any ownership interest.

7.6.Lastly, learned Senior Counsel submitted that multiple notices

under Section 148 of IT Act have been issued to the petitioner in his

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capacity without prior opportunity of hearing and without initiating any

action against the actual owners despite communications from them and

the employer further his case was also subsequently centralized under

Section 127 of the IT Act without granting any opportunity of hearing.

7.7.In support of the aforesaid contentions, learned Senior Counsel

supplied photocopy of several judgments of Apex Court and of different

High Court in the cases of CIT v/s Vindhya Metal Corporation reported

in (1997) 224 ITR 614 (SC), Vindhya Metal Corporation v/s CIT

reported in (1985) 156 ITR 233 (All), DGIT (Inv.) v/s Spacewood

Furnishers Pvt. Ltd. reported in (2015) 374 ITR 595 (SC), Ajit Jain v/s

Union of India reported in (2000) 242 ITR 302 (Del) affirmed in

(2003) 260 ITR 80 (SC), D.N. Singh v/s CIT reported in (2023) 454

ITR 595 (SC), ITO v/s Lakhmani Mewal Das reported in (1976) 103

ITR 437 (SC), Ganga Saran & Sons P. Ltd. v/s ITO reported in (1981)

130 ITR 1 (SC), ITO v/s Seth Brothers reported in (1969) 74 ITR 836

(SC), Biora Construction (P) Ltd. v/s DIT (Inv.) reported in (2006) 281

ITR 247 (MP), Tejram Omprakash (HUF) v/s DIT (Inv.) reported in

(2013) 262 CTR 82 (MP), MECTEC v/s DIT (Inv.) reported in (2021)

433 ITR 203 (Telangana HC), Khemchand Mukim v/s PDIT (Inv.)

reported in (2020) 423 ITR 129 (Del), Prakash Jaichand Shah v/s DIT

(Inv.) reported in (2013) 350 ITR 336 (Guj), Samta Construction Co.

v/s DDIT (Inv.) reported in (2000) 244 ITR 845 (MP), Smt. Rewati

Singh (Late) v/s ACIT reported in (2017) 397 ITR 512 (All), H.L. Sibal

v/s CIT reported in (1975) 101 ITR 112W (P&H), Garg Trading Co.

v/s Sales Tax Officer reported in (1983) 16 VKN 10, and Tejram

Omprakash (HUF) v/s Director of Income Tax (Investigation) & Ors

reported in (2013) 262 CTR 82 (MP).

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7.8.Learned Senior Counsel lastly submitted that the IT authorities

are still erroneously proceeding with the case of the petitioner, treating

him as the owner of the jewellery and prayed that the entire proceedings

initiated against him in his personal capacity be quashed and that

appropriate direction be issued for the release of the consignments to

their rightful owners.

SUBMISSIONS OF PETITIONER / SEQUEL LOGISTICS

PRIVATE LIMITED

08.Shri Jay Kansara, learned counsel for the petitioner Sequel

Logistics submitted that it is a where a specialized logistics company

engaged in the secure transportation of high-value consignments such as

bullion, diamonds, and jewellery and operating on a business-to-

business model the company provides door-to-door secured logistics

solutions to authorized traders, manufacturers, and retailers across the

country including reputed business and government institutions such as

the Reserve Bank of India and several nationalized banks.

8.1.Learned counsel submitted that the petitioner functions under

formal logistics agreements with its clients wherein sealed consignments

are transported strictly as per instructions, accompanied by requisite

documents including tax invoices, transport dockets, authorisation

letters and client declarations specifying the nature and value of the

goods being transported. Under these agreements, the company is not

permitted to open or inspect the sealed packages, and its role is confined

to transporting them without any claim of ownership over the contents.

8.2.Learned counsel submitted that the consignments in question

belonged to bona fide jewellery traders like Arihant before this court and

manufacturers across the country and were supported by complete

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documentation, including tax invoices, entries in books of accounts,

transport dockets and agreements with the petitioner.

8.3.Learned counsel submitted that the employee of the company,

Mr. Amit Sharma, had furnished all such documents before the

respondent authorities and has also placed them on record through the

present proceedings. Additionally, income tax returns of the consignors

and consignees for the years 2020–21, 2021–22 and 2022–23 have also

been submitted to support their case.

8.4.Learned counsel submitted that multiple communications were

sent to the department by the petitioner on behalf of all consignees

claiming ownership of the goods and requesting their release. However,

the authorities have not taken any steps under Section 132B of the Act,

and since the 120-day statutory period for retention has long lapsed, the

continued possession is unlawful.

8.5.Learned counsel submitted that the arbitrary action by

respondents had not only caused financial damage but had also affected

their reputation as well as credibility, causing a lasting impact on the

petitioner company and prayed that the seizure, requisition and retention

be declared illegal and that directions be issued for their release to the

rightful owners.

SUBMISSIONS OF RESPONDENT / STATE AUTHORITIES

09.Shri Bhuwan Gautam, learned Government Advocate appearing

on behalf of the answering respondents No. 4 to 6, 8 and 9 submitted

that the seizure of the consignments containing jewelleries in question

was carried out strictly in discharge of statutory duties assigned to the

Static Surveillance Team (SST) as part of election related enforcement

mechanisms mandated by the Election Commission of India.

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9.1.Learned Government Advocate submitted that following the

announcement of the Madhya Pradesh Assembly Elections on

21.10.2023 and the consequent enforcement of the Model Code of

Conduct the District Election Officer, Ratlam had constituted various

surveillance teams including the concerned SST through a revised order

dated 05.10.2023 authorizing designated officers to conduct checks to

prevent the movement of unaccounted cash, jewellery and other

valuables capable of influencing the electoral process.

9.2.That on 23.10.2023, while discharging routine surveillance duty

near the Shalakhedi check-post, the SST intercepted a private vehicle

bearing registration no. MP-09-ZR-5319, which was found to be

carrying 37-38 sealed boxes containing what appeared to be gold and

silver ornaments. At the time of interception, neither the driver nor Mr.

Amit Sharma, who was present, was able to produce any invoice, bill,

consignment note or other document establishing the lawful ownership

or source of the goods. In the absence of supporting documentation, the

SST proceeded to seize the goods in accordance with the SOP dated

07.08.2023 and a seizure memo was duly prepared on the spot. And

subsequently, a Panchanama was drawn on 24.10.2023 when certain

documents were produced about a part of the consignment.

9.3.Learned Government Advocate submitted that as per the

applicable SOPs, any seizure of cash or valuables exceeding Rs.10.00

lakhs during election enforcement operations must be reported to and

transferred to the Income Tax Department or the appropriate authority

within seven days of polling. In the present case, given the high value of

the goods and the absence of complete documentation, the matter was

referred to the District Grievance Committee for further verification.

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9.4.Learned Government Advocate submitted that the committee

had, after examining the documents subsequently submitted, found

invoices supporting only part of the seized articles, specifically silver

weighing approximately 112.11 kg, which were accordingly released

vide order passed by the Committee. However, the remainder of the

articles for which no proper documentation of claim of ownership was

furnished were formally handed over to the Income Tax Department in

accordance with the prescribed protocol.

9.5.Learned Government advocate submitted that since appropriate

proceedings have already been initiated by the Income Tax Department,

it is open to the petitioners and other concerned parties to approach the

said authority for redressal, including the release of goods. The role of

the SST and the District Grievance Committee was confined to

administrative compliance with directions issued by the Election

Commission, and the action taken was neither arbitrary nor mala fide.

That no allegations of personal bias or improper conduct have been

levelled by the petitioners against the officials concerned.

9.6.Learned Government Advocate finally submitted that the writ

petitions are not maintainable in law as the petitioners have an

alternative and efficacious statutory remedy under the Income Tax Act,

as writ jurisdiction under Article 226 cannot be invoked without

exhausting the remedy available and prayed that the petitions be

dismissed.

COMMON SUBMISSIONS OF INCOME TAX DEPARTMENT

10.Shri Harsh Parashar, learned counsel appearing on behalf of

respondent Nos 1, 2 and 3 / IT department, submitted that all three writ

petitions are misconceived, filed with substantial delay and without

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W.P. No.6810 of 2024 & Others

exhausting the adequate and efficacious statutory remedies available

under the Income Tax Act, 1961. That the seizure of assets on

23.10.2023 by the Static Surveillance Team (SST), subsequent

requisition under Section 132A of the IT Act and reassessment

proceedings under Section 148 of the IT Act were all validly undertaken

in accordance with statutory mandate and after satisfaction of requisite

legal thresholds.

10.1.Learned counsel submitted that the requisition of assets was

carried out lawfully under Section 132A of the IT Act, 1961, pursuant to

credible information received by the department from a concerned state

government official during electoral surveillance and that the

department had not acted suo motu but had intervened only after

receiving information. The decision of requisition was based on credible

and cogent material supported by a "reason to believe" as required under

the statute.

10.2.Learned counsel submitted that an independent enquiry was

conducted by summoning the person found in possession under Section

131(1A) the IT Act, 1961 whose statement revealed significant

inconsistencies and since the documents provided by Amit Sharma were

vague, incomplete and failed to explain the source or valuation of the

high-value consignments the statutory presumption under Section

132(4A) was drawn against him. That even if a seizure is held to be

illegal, the evidentiary value of the seized material remains intact, and

the department is entitled to proceed with assessment or reassessment

based on such material.

10.3.Learned counsel submitted that Section 132B of the IT Act,

1961, provides a complete and specific mechanism for any person

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W.P. No.6810 of 2024 & Others

claiming ownership of the seized assets to seek release thereof, subject

to satisfying the competent Assessing Officer regarding the nature and

source of acquisition. Despite being advised, none of the petitioners

made any valid or complete application under Section 132B of the IT

Act, 1961, within the statutory period of 30 days from the end of the

month in which the assets were seized. All three petitioners have

consciously avoided invoking the statutory remedy under Section 132B

of the IT Act, 1961, presumably to evade scrutiny of their financial

affairs and the requirement to explain the source and ownership of the

gold and silver items.

10.4.Learned Counsel finally concluded the submissions that the

satisfaction note prepared for the purpose of requisition is protected

from disclosure under the proviso to Section 132A of the IT Act, 1961

and cannot be the subject of judicial scrutiny. Those questions relating to

ownership, source of acquisition and justification for the transport of

high-value jewellery require inquiry into facts and evidence which

cannot be undertaken by this Court in writ jurisdiction.

SPECIFIC SUBMISSION OF MR. PARASHAR FOR EACH CASE

11.With respect to the case of M/s Arihant Jewellers in W.P. No.

6810 of 2024, learned counsel submitted that the petition has been filed

by Arihant Jewellers without first making a proper application for the

release of the seized assets under the prescribed procedure of Section

132B of the IT Act, 1961. A vague representation in January 2024

seeking release of the gold without explaining the source of the assets or

the delay in filing the same cannot be treated as a valid application

under Section 132B of the Act, as it did not meet the statutory

requirements.

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11.1.Learned counsel submitted that the Department has rejected the

representation as no assessment or proceedings were pending against the

petitioner before the concerned officer. These orders have not been

challenged in the present writ petition and therefore stand unopposed.

Under the scheme of the IT Act, 1961, only the jurisdictional Assessing

Officer of the person claiming ownership of the seized assets can accept

and decide such applications under Section 132B of the IT Act, 1961,

after verifying existing tax liabilities and other relevant details. Learned

counsel submitted that since the officer who handled the requisition in

this case is not the Assessing Officer of M/s Arihant Jewellers, he had no

authority to adjudicate its claim.

11.2.Mr. Harsh learned counsel emphasised that the seizure records

show three packets bearing the name "Arihant", yet the petitioner has

sought release of only one and has not provided an explanation

regarding the other two packets, raising serious doubt about the claim of

ownership by the petitioner. The petitioner has not challenged the

rejection of its earlier representations; instead, it is seeking to invalidate

the entire seizure, hoping that all proceedings that followed will fall.

The petitioner cannot bypass the statutory process merely by raising a

challenge to the seizure and prayed that the petition be dismissed.

11.3.With respect to the case of Mr. Amit Sharma in W.P. No.6850 of

2024, Mr. Harsh learned counsel submitted that he is the primary person

from whom the gold and silver Jewelleries were seized and pursuant to a

requisition under Section 132A his case was centralized and

reassessment proceedings are underway however the petitioner has not

been cooperative in the assessment proceedings and despite multiple

notices under Section 142(1) and Section 133(6) the IT Act, 1961 has

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W.P. No.6810 of 2024 & Others

failed to provide adequate information.

11.4.Learned counsel submitted that once a notice under Section 148

the IT Act, 1961 has been issued and proceedings under the IT Act, 1961

are ongoing the proper remedy for the assessee is to participate in those

proceedings, file objections and avail the appellate remedies as may

arise from the final assessment order rather than invoke the

extraordinary jurisdiction of this court. It is submitted that the petitioner

has not explained the delay in filing the writ petition and has also not

challenged the centralization order or jurisdiction of the Assessing

Officer, and thus the petition is premature and misconceived, and the

petitioner must be relegated back to the statutory authority to avail the

remedy of appeal.

11.5.With respect to the case of Sequel Logistics in W.P. No. 15169

of 2024, Mr. Parashar learned counsel submitted that that their entire

claim rests on a vague assertion that Mr. Amit Sharma has been their

employee and the consignment was being carried on behalf of

consignors/consignees however no credible documentation was

furnished to support this claim either during the course of requisition

proceedings or thereafter.

11.6.Learned Counsel appearing for the IT department submitted that

no application for release was filed by Sequel Logistics either within the

prescribed time or even after the advisory letter was issued to them by

the Department, and that the petition suffers from delay. The petitioner

lacks locus to seek release of the seized assets or to challenge the

requisition proceedings, particularly when it has not taken steps to

demonstrate either ownership or source.

11.7.Learned counsel placed reliance upon several judgments of

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W.P. No.6810 of 2024 & Others

Apex Court and other High Courts in the cases of Pooran Mal v/s

Director of Inspection reported in (1974) 93 ITR 505 (SC), Kusum

Lata v/s CIT reported in (1990) 51 Taxman 300 (SC), GKN Drive

Shafts (India) Limited v/s Income Tax Officer reported in (2002) 125

Taxman 963 (SC),Commissioner of Income Tax v/s Chhabil Das

reported in (2014) 1 SCC 603, Seema Gupta v/s Income Tax Officer

reported in [2023] 153 taxmann.com 583, BMN Steel Emporium,

Chennai v/s Deputy Commissioner of Income Tax reported in [2023]

155 taxmann.com 623 (Madras), Leo Charitable Trust v/s

PCIT(Investigation) reported in [2023] 152 Taxmann.com 441

(Madras), DGIT v/s Spacewood Furnishers Pvt. Ltd. reported in

(2015) 2 SCC 179, M/s N.K. Jewellers & Another v/s CIT reported in

(2018) 12 SCC 627 and Deepak Kumar Agarwal v. Assessing Officer &

Others reported in (2024) SCC OnLine ALL 2878.

11.8.In view of the foregoing submissions, learned counsel sum

upped that the petitions are premature, barred by availability of a

statutory remedy, involving disputed facts not fit for writ adjudication,

seeking to bypass the process of verification and assessment envisaged

under the Income Tax Act, 1961, and thus prayed that all three writ

petitions be dismissed.

APPREICIATION & CONCLUSION

12.Sequel Logistics Private Limited filed W.P. No.15169 of 2024

seeking reliefs to the extent of issuance of writ in the nature of

mandamus/order holding that the action of Static Surveillance Team,

Ratlam, of seizure/detaining of consignments on 23.10.2023 for the

lawful possession of its representatives was arbitrary, illegal and without

any basis. The petitioner is also seeking a declaration that requisition of

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W.P. No.6810 of 2024 & Others

goods and seizure of consignments by the authorities under the

provisions of the Income Tax Act is arbitrary, illegal and bad in law.

13.W.P. No.6850 of 2024 has been filed by an employee of Sequel

Logistics seeking relief of quashment of proceedings initiated by the

Income Tax Department and also quashment of notice issued under

Sections 132A & 148 of the Income Tax Act for the Assessment Year –

2020 – 21, 2021 – 22 & 2022 – 23.

14.M/s Arihant Jewellers has filed W.P. No.6810 of 2024 seeking

writ in the nature of mandamus or order, holding that the action of SST

for seizure of goods and assignment of the petitioner is illegal, arbitrary

and bad in law. The petitioner is further seeking direction to release the

consignment relating to them from the custody of the Income Tax

Department.

15.For adjudication of these writ petitions, the following issues

have emerged for consideration: -

Issue No.1.Whether the action of the SST is justified in detaining /

seizing the consignments and handing over to the Income Tax

Department ?

Issue No.2.Whether the action of the Income Tax Department is

justified in initiating the proceedings under Section 148 against Mr.

Amit Sharma upon a prima facie believe that the consignment

belongs to him ?

Issue No.3.Whether Arihant Jewellers is entitled to get back the

jewellries belonging to them ?

ANSWER TO ISSUE NO.1

16.Facts of the case are not in dispute to the extent that Sequel

Logistics is a company registered under the provisions of the Companies

Act and engaged in the business pertaining to logistics, logistics

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W.P. No.6810 of 2024 & Others

solutions for precious goods and securities such as diamonds, jewellery

items, bullion, cash, etc. The petitioner is also the registered partner of

all the bullion banks nominated by the Reserve Bank of India, having

operations in around 130 countries and 500 cities in India, with 100

branches and 3500 employees. The petitioner pays the tax of around 70

to 80 crores; however, the same is not relevant in this matter.

17.The Sequel Logistics is not disputing about its relationship of

employee – employer with Mr. Amit Sharma. Under the agreement of

consignor/consignee, 37 consignments were being carried by Mr. Amit

Sharma to deliver to different consigners from Indore to Ralam on

23.10.2023 in a Bolero Vehicle.

18.The aforesaid Vehicle was intercepted by the SST at or around

4:30 pm on 23.10.2023. According to Mr. Amit Sharma, he provided all

the necessary documents for each and every consignment, such as the

docket, consignor/consignee's tax invoice, delivery challan, relevant

certificates, etc. The details as reproduced in the memo of writ petition

are reproduced as under:-

Sr. No.Docket

Number

Consignees Consignors

1 16357 South India Jewellers Nidhi Jewellers

2 18866 Dhiraj Jewellers Mokes Gold

3 43766 Anmol Ratnam Madhab G. Maji

4 11961 Midas Diamonds Private LimitedMidas Diamonds Private Limited

5 43226Kataria Dhulchand Pannalal Jewellers

Private Limited

Gkd Jewels Pvt. Ltd.

6 41363 Arihant Jewellers Swarn Shilp Chains & Jewellers

Pvt. Ltd.

7 10060Kgk Creations (Inida) Private LimitedKgk Creations (India) Pvt. Ltd.

8 43766 Anmol Ratnam Qizil Jewels Private Limited

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W.P. No.6810 of 2024 & Others

9 10718 Emerald Jewel Industry India Ltd.Emerald Jewel Industry India Ltd.

10 41363 Arihant Jewellers M/s Subhas Mondal

11 41726 Golden Carat Private LimitedGolden Carat Private Limited

12 10481 Mani Jewel Mani Jewel

13 18886 Dhiraj Jewellers Hemratna Jewellers

14 10056 Mehta Gold Private Limited Mehta Gold Private Limited

15 10603 J.P. Exports J.P. Exports

16 41741 Priyesh Kailash Chandra Sharma Anokhi Bangles

17 11187 Kp Sanghvi Jewels Pvt. Ltd.Kp Sanghvi Jewels Pvt. Ltd.

18 41741 Priyesh Kailash Chandra SharmaBiswajit Jyotindera Nath Bera

19 10895 Creative Jewel Creative Jewel

20 10189 R.S. Diamonds Pvt. Ltd R.S. Diamonds Pvt. Ltd

21 41214 Siddhi Jewels Siddhi Jewels

22 14963 Matra Smruti Jewels Matra Smruti Jewels

23 40318 M.U. Jewellers Ltd. Sajjanlal Gajendra Kumar

24 41190 Aujasa Samta Jewel Llp

25 10769 Hemratna Jewellers Hemratna Jewellers – Mumbai

26 41196 Jain Chain Ahmedabada Llp Jain Chain Ahmedabada Llp

27 12380Mark Bullion Commodities Private

Limited

Mark Bullion Commodities

Private Limited

28 11983Shri Vardhman Ornaments Pvt. Ltd.Shri Vardhman Ornaments Pvt.

Ltd.

29 44233 Ratnalife Creation Llp Ratnalife Creation Llp

30 41190 Aujasa Unitouch Creation

31 44572Arpit Kumar Lalit Kumar Chordiya BS Jewellers

32 40318 M.U. Jewellers Pvt. Ltd. Shri Samarth Jewellers

33 41348 Jmd Jewellers Shrishti Gold Pvt. Ltd.

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W.P. No.6810 of 2024 & Others

34 14549 Unique Valley Unique Valley

35 44260 Leo Silver Art Pvt. Ltd. Leo Silver Art Pvt. Ltd.

36 41190 Aujasa Suraj Suresh Chavan

37 14285 Vie ' 90 Jewellery Vie ' 90 Jewellery

19.The documents related to the above 37 consignments revealed

that the value of the entire jewellery in the consignment is Rs.

6,11,51,573/- (Rupees Six Crore Eleven Lakh Fifty One Thousand Five

Hundred and Seventy Three Only). The SST prepared a Panchnama of

seizure of 37 tamper-proof jewellery consignments as per accompanying

documents, one of which M/s Arihant Jewellers claiming return of

approximately 1785.120 grams of jewellery amounting to Rs.

1,06,36,500/-.

20.As per the reply filed by the District Election Officer, Ratlam,

since the Model Code of Conduct had been made applicable w.e.f.

21.10.2023, vide order dated 05.10.2023, the Static Surveillance Team

(SST) was constituted by the Collector and District Election Officer,

Ratlam, under the directions of the Election Commission of India. The

relevant SST who was deputed in Legislative Assembly 219, Ratlam

(Rural), Police Station – Bilpank from period 6:00 am to 2:00 pm,

headed by Shri Ranjeet Singh Bhawar and Assistant Survey Officer,

Ratlam. In order to check the possibility of influencing the voters by the

candidates or their representatives under Section 123 of the

Representation of the People Act, 1951, the Vehicle in question was

intercepted. The SST drew a Panchanama on 23.10.2023. All the 37-38

boxes were opened, and the jewellery weighing 11919.512 grams was

found. The copy of Panchnama has been filed along with the return.

21.The Election Commission of India issued Standard Operating

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W.P. No.6810 of 2024 & Others

Procedure (SOP) for seizure and release of cash and other items vide

Circular dated 07.08.2023 for the State of Chhattisgarh, Madhya

Pradesh, Mizoram, Rajasthan & Telangana. As per this SOP, a

Committee shall be formed comprising three officers of District i.e.

Chief Executive Officer, Jila Panchayat, Nodal Officer of Expenditure &

Monitoring District Election Officer, District Treasury Officer called as

the District Grievance Committee (DGC) to examine each case of

seizure made by Police or SST or FS where no FIR/complaint has been

filed against the seizure or where the seizure is not linked with any

candidate or political party or any election campaign. The DGC shall

immediately pass an order for the release of such cash to such person

from whom the cash was seized. It further provides that if the release of

cash is more than Rs. 10,00,000/-, the Nodal Officer of Income Tax shall

be kept informed before the release is affected. It further provides that in

no case the matter relating to seizure/cash / valuable shall be kept

pending in Malkhana or Treasury for more than seven days after the date

of poll, unless any FIR or complaint has been filed. The contents of the

Circular /SOP are reproduced below:-

''I am directed to refer to the Commission's letter

no.76/Instructions/EEPS/2015/Vol.II, dated 29

th

May, 2015,

forwarding therewith Standard Operating Procedure for seizure

and release of cash and other items, and to draw your attention

to the instructions laid in 'Para 16-Release of Cash' and to

request your to ensure compliance of the instructions in letter

and spirit during election process.

2.There are instances of keeping cash and valuables in

Treasury/Malkhana without any FIR/Complaint. The

Commission is concerned about the grievances of public and

hence, it is reiterated that as per instruction lai din 'Para 16-

Release of Cash', in order to avoid inconvenience to the public

and genuine person and also for redressal of their grievances, if

any, a Committee shall be formed comprising three officers of

the District, namely, (i) CEO, Zila Parishad/CDO-PD, DRDA,

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W.P. No.6810 of 2024 & Others

(ii) Nodal Officer of Expenditure Monitoring in the District

Election Office (Convenor) and (iii) District Treasury Officer.

Name of such committee will be 'District Grievance

Committee', who shall suo-moto examine each case of seizure

made by the Police or SST or FS and where the Committee

finds that no FIR/Complaint has been filed against the seizure

or where the seizure is not linked with any candidate or

political party or any election campaign etc., as per SOP dated

29

th

May, 2015, it shall take immediate step to order release of

such cash etc. to such persons from whom the cash was seized

after passing speaking order to that effect. If the release of cash

is more than Rs.10 (Ten) Lac, the nodal office of Income Tax

shall be kept informed before the release is effected.

3.It is to be ensured that functioning of 'District Grievance

Committee' should be given wide publicity, including telephone

number of the Convenor of the Committee. The procedure of

appeal against seizure should be mentioned in the seizure

document and it should also be informed to such persons at the

time of seizure of cash. It is also to be ensured that during

election process the 'District Grievance Committee' headed by

CEO, Zila Parishad/CDO/PD, DRDA will meet once in 24

hours at a predeclared place and time. All the information

pertaining to release of cash shall be maintained by the Nodal

Officer of Expenditure Monitoring in a register, serially date

wise with the details regarding amount of Cash

intercepted/seized and date of release to the person(s)

concerned.

4.In no case, the matter relating to seized cash/valuables shall

be kept pending in Malkhana of Treasury for more than 7

(seven) days after the date of poll, unless any FIR/Complaint is

filed. However, 'District Grievance Committee' should not delay

in taking decision and keep pending any case unnecessarily

upto 7

th

day of date of poll. It shall be the responsibility of the

Returning Officer to bring all such cases before 'District

Grievance Committee' and to release the cash/valuables as per

order of the Committee.

5.Your are requested to bring it ti notice of all DEOs, ROs,

election authorities concerned including Observers, all Nodal

Officers of various enforcement agencies involved in Election

Expenditure Monitoring for necessary compliance.''

[Emphasis Supplied]

22.The main grievance of the petitioners, Sequel Logistic and Amit

Sharma, is that this Circular has been grossly violated by the District

Grievance Committee. The contention of counsel appearing for the State

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W.P. No.6810 of 2024 & Others

as well as Income Tax Department is that since the jewelleries worth

more than Rs. 10,00,000/- were seized, the Income Tax Officer was

called, and the jewelleries were handed over. But it is not in dispute that

to date, no FIR has been registered in this matter.

23.In an identical manner, the District Grievance Committee vide

order dated 30.10.2023 during the relevant period had released the

jewellery weighing 121 kg. According to the reply filed by the District

Election Officer, at the time of seizure, there was no appearance of

documents or bills presented by a person in whose custody the material

was there, therefore, the matter was brought to the knowledge of District

Grievance Committee and when the documents were presented before

the District Grievance Committee regarding bills of 112.11 kg silver, the

same was released.

24.It is further submitted that as per the letter dated 09.10.2023, it

was made clear by the Collector, Ratlam, that any material found

without a proper document shall be seized and handed over to the

concerned Department. The District Election Officer has not filed any

document in the reply to show that the DGC took any decision for not

releasing these consignments either to Mr. Amit Sharma or Sequel

Logistics, and passed an order for handing over the same to the Income

Tax Department.

25.As per the SOP, there has to be satisfaction by the SST or the

DGC that the seized cash, articles or goods are being transported or in

possession of a person concerned belonging to any candidate of the

election and brought for influencing the voters. There is absolutely no

such satisfaction recorded either by SST or by the District Grievance

Committee. As discussed above, no FIR was registered against Mr. Amit

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W.P. No.6810 of 2024 & Others

Sharma, Sequel Logistics or any other candidates. Therefore, as per this

SOP, these consignments ought to have been released to Mr. Amit

Sharma, from whom it was seized, instead of being handed over to the

Income Tax Department. As the SOP only provides information that is

liable to be given to the Income Tax Department in respect of the release

of cash more than ₹10,00,000

26.The Income Tax Department filed a reply admitting certain

important facts in paragraph 5.2 and the same is reproduced below:-

''5.2.With respect of paragraph no.5.4 & 5.6 of the

Petition, the contents therein are correct and affirmed. It is not

the case that supporting documents explaining the source and

details of the consignment in question were not carried by the

petitioner. Further, it is correctly stated that the consignments or

even Respondent No.5 has no linkage whatsoever to any

candidate / his or her agent / a party worker, etc, nor was the

Vehicle carrying any unaccounted cash, election posters,

election materials, drugs, arms, etc." It is pertinent to mention

that it is not even the case of SST or any of the Respondent

authorities that the Vehicle was carrying any such items

connected with the election of any candidates. It is submitted

that, as mentioned in these paragraphs, till date, no basis or

reason to seize the consignments or for transferring the

consignments to the Respondent authorities has been provided.

It is submitted that multiple representations have been made by

Respondent No.5 as well. However, no explanations or

documents have been provided to Respondent No.5 as well.''

27.The Income Tax Department has also admitted that Mr. Amit

Sharma is indeed an employee of SLPL appointed to the post of

Custodian Officer at Indore Office, which is evident from the

communication dated 12.01.2024 and the statement recorded on

25.10.2023. Therefore, the SST and District Grievance Committee did

not consider the important facts that the Vehicle was not carrying any

unaccounted cash, election posters, election materials, drugs, arms, etc.,

except these consignments, which could create suspicion leading to

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W.P. No.6810 of 2024 & Others

seizure and handing over to the IT department. It is also not the case

with the SST that the Vehicle does not belong to Sequel Logistics, which

is a logistics company. The valuation of the consignment or jewellery,

which is more than Rs.6,00,00,000/- became the basis of seizure and

information to the IT department.

28.As per the list of dates in chronological events submitted by the

parties, especially the Income Tax Department, on 23.10.2023, SST,

Ratlam City 220, seized the gold and silver jewellery from the

possession of Mr. Amit Sharma. On 24.10.2023, this information was

shared with the Income Tax Officer – I, Ratlam, who subsequently

shared the information with the Deputy Director, Investigation Wing – I,

Indore, relating to each of 38 packets containing gold and silver

ornaments. On 25.10.2023, Income Tax Officer – I issued a summons

under Section 131(1)(d) of the IT Act to Mr. Amit Sharma for

examination about the nature and source of gold and silver ornaments.

On 27.10.2023, a warrant of authorisation was issued under Section

132A(1) of the IT Act by the Principal Director of Income Tax

Investigation, Bhopal. It is also a case of the Income Tax Department

that during the proceedings under Section 132A, Mr. Amit Sharma

claimed that the seized consignments belong to Sequel Logistics.

Finally, on 28.10.2023, the gold and silver ornaments worth Rs.5.87

crore were taken from the SST by the Income Tax Department. From

23.10.2023 to 28.10.2023, these consignments worth Rs 5.87 crore were

in the custody of SST, Ratlam, which is also in violation of the SOP

dated 07.08.2023 because, as per Clause 4, in no case, the matter

relating to seized cash/valuables shall be kept pending in Malkhana or

Treasury for more than seven days. There is no such document to show

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W.P. No.6810 of 2024 & Others

that these valuable consignments were sent to the Malkhana or Treasury.

There is a contradiction in the number of consignments and the value of

the jewellery in the documents of the SST and Income Tax Department.

Therefore, the action of the SST and District Grievance Committee is

wholly illegal in keeping the valuable consignments with them for seven

days and not recording the satisfaction and thereafter, handing over to

the Income Tax Department.

29.In view of the above detailed discussion, issue No.1 is hereby

answered against the respondents and in favour of the petitioners.

ANSWER TO ISSUE NO.2

30.As per the return filed by the Income Tax Department, the gold

and silver ornaments were seized by the SST, Ratlam City 220, on

23.10.2023 from the possession of Mr. Amit Sharma in a total of 38

packets. This information was shared with Income Tax Officer – I on

24.10.2023, who further shared it with the Deputy Director of Income

Tax (Investigation) – I, Indore. On receipt of such information, a

Commission under Section 131(1)(d) of the Income Tax Act was issued

on 24.10.2023 to the Income Tax Officer, Ratlam, to conduct an enquiry

from Mr. Amit Sharma with further direction to carry out the

investigation and submit the enquiry report. The Income Tax Officer – I

conducted an enquiry and submitted a detailed report on 25.10.2023,

which contains the statement of Mr. Amit Sharma on oath disclosing the

nature and source of purchase of gold jewellery weighing 12121.51

grams, inclusive of packing documents. The statement of Mr. Amit

Sharma was recorded on oath under Section 131(1) of the Income Tax

Act. Mr Sharma also disclosed that he is working as a Custodian of

SLPL. He works to deliver the gold and silver ornaments from

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W.P. No.6810 of 2024 & Others

consignors and various clients like Chennai, Mumbai, Surat, etc., to

different consignees located in nearby Indore City and Ratlam. Upon

demand, Mr. Amit Sharma produced the documents relating to gold and

jewellery seized by SST, like the docket, delivery challan, labour

receipts, etc. He was confronted with each tax invoice bill, delivery

challan, labour bill, docket, bilti provided by SLPL relating to each 38

packets.

31.After examining the report submitted by the Income Tax Officer

– I, Ratlam, the Deputy Director of Income Tax (Investigation) – I,

Indore has reached to the conclusion that item of gold and silver carried

by Mr. Amit Sharma in all 38 packets remained as unexplained with

angle of purchase, ownership and stock moment as Mr. Amit Sharma

could not furnish necessary documentary evidence and failed to give the

necessary reply. The Principal Director of Income Tax recorded its

satisfaction that the gold and silver ornaments weighing 12121.51 gram,

either wholly or partly, income and property or assets has not been

disclosed for the purpose of Income Tax Act and the same is liable to

requisitioned from SST Magistrate, Ratlam 220, Station Road, Police

Station – Ratlam within the meaning of Section 132A(1)(c) of the

Income Tax Act and accordingly, the further proceedings have been

initiated from 28.10.2023 by issuing notice under Section 132A of the

Income Tax Act. The case of Mr. Amit Sharma was centralized vide

order dated 29.12.2023 from Income Tax Officer – 5 (1), Indore, to

Deputy Commissioner of Income Tax (Central – 2) Indore by Principal

Commissioner of Income Tax, Indore – 1.

32.According to the respondents / Department, in the present case,

the seizure was not done by the Income Tax Authorities; it was done by

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SST, Ratlam. Hence, it is not a case under Section 132 of the IT Act, but

falls squarely under Section 132A. Thereafter, a notice was issued under

Section 148 of the IT Act in the case of Mr. Amit Sharma for the

Assessment Years 2020–21, 2021–22, and 2022–23, and as of today, the

proceedings are pending.

33.Mr. Amit Sharma approached this Court by way of W.P.

No.6850 of 2024, questioning the income tax proceeding against him

solely on the ground that these assets do not belong to him. Sequel

Logistics Private Limited has also filed W.P. No.15169 of 2024 before

this Court, although no action has been taken against it either under the

Income Tax Act or under the IPC. The company has come to this Court

as a responsible consignor to protect the consignments of its clients and

goodwill. Moreso, the company also filed a case before this Court to

protect its employee, Mr. Amit Sharma, from these proceedings. This is

a bona fide act on the part of Sequel Logistics by approaching this

Court; otherwise, they have no reason to file a petition by spending so

much money. We don't know whether individual goldsmiths and

jewellers have approached Sequel Logistics to claim their goods.

Therefore, Sequel Logistics is before this Court only to protect its

employee and reputation in the market, which shows that these goods

were handed over to Sequel Logistics under the consignee–consignor

agreement for delivery, not related to any election purpose.

34.So far as the action of the Income Tax Department is concerned,

much stress has been given by Shri Parashar, learned counsel, that there

is a satisfaction note by the authority to believe that these consignments

are undisclosed income and property of Mr. Amit Sharma. The basis of

this satisfaction is that these ornaments were recovered from the

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possession of Mr. Amit Sharma, and he has failed to furnish a valid

explanation and the necessary documents. As discussed above, there is

no dispute about the employer-employee relationship between Sequel

Logistics and Mr. Amit Sharma and the seizure of 37-38 consignments

by the SST, during the election period, from the Vehicle of Sequel

Logistics, in which Mr. Amit Sharma was travelling. There is no

satisfaction note by SST or by the District Grievance Committee about

the relationship between these articles and the election. The SST or

District Grievance Committee was only required to inform the Income

Tax Department about the release of these articles. Therefore, handing

over of these articles to the Income Tax Department is, per se, illegal.

35.According to the Income Tax Department, these cases fall under

Section 132A of the Income Tax Act. Under Section 132A(1)(c), where

the Income Tax Officer in consequence of information in his possession

has reason to believe that any assets represent either wholly or partly

income or property which has not been disclosed for the purpose of

Income Tax Act by any person in whose possession and control such

assets have been taken into custody by officers under any other law for

the time in force. The Authority is required to record the reasons to

believe that such assets belong to a person from whose possession they

were taken into custody; however, such reasons to believe shall not be

disclosed to any person, authority or tribunal, as held by the Apex Court

in the cases of Spacewood Furnishers Pvt. Ltd. & M/s N.K. Jewellers

(supra). We are of the considered opinion that when it is a case of Mr.

Amit Sharma, he is an employee of Sequel Logistics and transporting

these 37-38 jewellery boxes from the consignor of Indore to the

consignees of Ratlam, then he is not supposed to disclose, either wholly

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W.P. No.6810 of 2024 & Others

or partly, his income or property. The documents which were in his

possession relating to transportation, viz, bills and invoices, etc, were

produced. Much emphasis has been given with respect to the non-

production of the e-way bill by Amit Sharma. The absence of e-way

bills does not vitiate the transportation in this case, as the movement of

jewellery and the same is exempt under Rule 138(14)(a) of the CGST

Rules, 2017. The Income Tax Authority ought to have called these 38

consignees/jewellers to explain their income relating to these assets.

Interview of the world, we are of the considered opinion that there is

absolutely no basis for proceeding against Amit Sharma under section

148 of the Income Tax Act. Hence, all the proceedings initiated under

section 148 of the IT Act against Amit Sharma are hereby quashed.

However, the IT Department shall be at liberty to initiate the

proceedings against 37 jewellers or consigners based on the information

collected so far, especially the statement of Amit Sharma. The Issue

No.2 is answered in favour of the petitioner, Shri Amit Sharma.

ANSWER TO ISSUE NO. 3

36.M/s Arihant Jewellers filed an application for the release of

jewellery weighing 1785.12 grams valued at Rs. 1.06 crore, claiming

ownership of such assets. The said application was not considered

because it was liable to be filed before the concerned Assessing Officer,

and accordingly, some advice was given to him vide letter dated

08.02.2024. In support of the aforesaid stand, Shri Parashar, learned

counsel for the Income Tax Department, has produced a copy of

Circular dated 16.10.2023 and submits that it must be read along with

Section 132B of the Income Tax Act. It is also submitted that such a

request must be made within thirty days from the date of seizure under

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the scheme of the Act; therefore, the application has rightly not been

entertained.

37.When the case of Mr. Amit Sharma was centralized, then all the

applications submitted by others relating to the case of Amit Sharma

ought to have been entertained by the same Assessing Officer, i.e.

Deputy Commissioner of Income Tax, Central – 2, Indore, in order to

avoid any conflict of orders. The Deputy Commissioner of Income Tax,

Central – 2 while dealing with the seizure of these consignments on a

believe that these consignments belong to Mr. Amit Sharma and he has

denied the ownership, then whosoever claiming the ownership is liable

to intervene in the same proceedings before the Centralized Officer for

entertaining any application for release or deciding the claim of the

ownership. The CIT of the Income Tax Department has enough power to

centralise any proceeding of any assessee under Section 127 of the

Income Tax Act.

38.The application, which was filed by M/s Arihant Jewellers,

ought to have been entertained by the Assessing Officer under

authorisation under Section 127 of the Income Tax Act for the release of

the goods. The Arihant Jewellers was ready to give the bank a guarantee

for the release of the jewellery.

39.Shri Bhuwan Gautam, learned Government Advocate has placed

reliance upon a judgment delivered by the Apex Court in the case of

Pooran Mal v/s Director of Inspection reported in (1974) 93 ITR 505

(SC), in which the Apex Court has held that whether even though, where

search and seizure were in contravention of provision of Section 132,

material seized would liable to be sued against the person from whose

custody it was seized. It is permissible under Section 132, but, as per the

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W.P. No.6810 of 2024 & Others

Income Tax Authority, the present cases fall under Section 132A and not

Section 132 of the Income Tax Act. Second proviso to Section 132B

says that the asset or any portion thereof as referred in the first proviso

shall be released within a period of one hundred and twenty days from

the date on which the last of the authorizations of search under Section

132 or for requisition under Section 132A, as the case may be, was

executed. As per the first proviso where the person concerned makes an

application to the Assessing Officer within thirty days from the end of

the month in which the asset was seized, for release of asset, therefore,

the words 'Assessing Officer' means the same Assessing Officer who is

dealing with the seized asset, not the Assessing Officer of the person

concerned. The Assessing Officer of person concerned may not have

any material or record pertaining to the seizure, therefore, they would

not be in a position to pass an effective order and if such Assessing

Officer passes an order for release and the Assessing Officer, who is

dealing with the asset under Section 132 or 132A of the Income Tax Act

is of the opinion that such asset belongs to the person from whose

possession it has been recovered and not liable to be released till

conclusion of the proceedings under Section 148, then there would be a

conflicting verdict. As per the first proviso to sub-section (i) of Section

132B(1), the person concerned has to make an application to the

Assessing Officer who is dealing with the asset and in whose possession

the assets are. Therefore, the application filed by the Arihant Jewellers

was liable to be considered by the Assessing Officer, i.e. Deputy

Commissioner of Income Tax, Central – 2. Apart from Arihant

Jewellers, whoever is the consignee claiming ownership and release,

may submit an application before the same Assessing Officer.

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40.So far as Arihant Jewellers has filed W.P. No.6810 of 2024 after

recording the statement of Mr. Amit Sharma in which he denied the

ownership then Assessing Officer than ITO ought to have sent this

information to all those persons/jewellers, whose names were disclosed

by Mr. Amit Sharma, with the valid documents in order to verify the

actual ownership, they only they can submit an application for release

within thirty days. The other consignees may not have the knowledge

about the centralization of the case of Amit Sharma. The limitation will

start from the date of knowledge, and this provision nowhere says that if

this application is not filed within thirty days, the same shall not be

considered later on. The proceedings are liable to be concluded within

120 days; otherwise, the Income Tax Authorities are liable to pay the

interest under sub-section (4) of Section 132B of the Income Tax Act on

the amount of money seized, if not released.

41.So far as the centralization is concerned, there is a provision and

Circular dated 12.03.2018 for centralization of the cases relating to the

search/survey proceedings which have been entered in the ITBA

System. The present case has not been entered into an ITBA System;

therefore, the application by Arihant Jewellers has not been properly

dealt with and considered. Had this been a case referred to ITBA, the

application would have been considered by the Deputy Commissioner of

Income Tax, Central – 2, dealing with the case of search and seizure.

Therefore, the approach of the Income Tax Authority in the present

cases cannot be appreciated and since the last two years, the valuable

jewellery has been lying with the Income Tax Department; the

proceedings under Section 148 have not been concluded till date. Issue

No. 3 is answered in favour of Arihant Jewellers.

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42.In view of the detailed discussion above, these Writ Petitions are

allowed with a direction to the Deputy Commissioner of Income Tax,

Central – 2. (Centralized) to release the jewellery consignments. The

SST of the Election Commission of India, the District Election Officer,

and the Director General of Income Tax have not conducted the

proceedings in accordance with SOP / Circulars issued by the Election

Commission of India, which has led to the seizure of these

consignments and caused losses to the owners as well as consignors.

The cost of Rs.50,000/- is awarded in favour of all the writ petitioners

payable by the respondents severally and jointly.

Let a copy of this order be kept in the connected writ petitions

also.

(VIVEK RUSIA)

J U D G E

(BINOD KUMAR DWIVEDI)

J U D G E

Ravi