1. By these writ petitions under Article 226 of the Constitution the petitioners seek the, quashing of certain assessment orders made under the I.T. Act, 1961, and the W.T. Act, 1957, as also some penaltyorders made under these two Acts and for refund of the entire amountof income-tax, wealth-tax, penalties and interest hitherto realised, fromthe petitioner as also for release of seized goods.
2. In view of the facts of these two writ petitions, as contemplated by the second proviso to Rule 2(1) of Chap. 12 of the Rules of the court, we propose to decide the petition at this very stage on merits.
3. The petitioners in the two petitions are Ram Narain and Badri Prasad respectively. Both of them were partners of a registered firm, M/s. Ram Charan Lal Ram Narain, Etawah. In April, 1969, as a result of the raid and seizure made by the authorities of the Central Excise Dept., 79 bags of silver ornaments, 8 boxes of gold ornaments and some primary gold were seized. An order under Section 132(5) of the I.T. Act, 1961, Was made and thereafter the cases of the partnership firm and the concerned persons were transferred from the file of the ITO, Etawah, to the file of the I.T. and W.T. Officer, Company Circle, B-Ward, Kanpur, respondent No. 3 by an order dated September 29, 1969. Thereafter, a settlement was made with the Central Board of Direct Taxes whereby it was agreed that the assessments would be made in the status of an HUF on the two smaller HUFs headed by Ram Charan Lal and Ram Narain Lal. Badri Prasad, the petitioner in Writ Petition No. 314 of 1981, is the son of Ram Charan Lal. The total income and wealth was to be divided equally between the two HUFs and it was to be given a spread over. The total income for assessment was agreed to be taken at Rs. 26,00,000. As for penalties it was agreed that there would be no penalty under Section 271(1)(c) of the I.T. Act and Section 18(1)(c) of the W.T. Act. Penalties for late submission Of returns under Section 271(1)(a) and Section 18(1)(a) of the two Acts respectively will be imposable but not for the period beyond April 1, 1969. Penalty under Section 273 will be restricted to the statutory minimum. Interest under Section 139(1) and Section 217 of the I.T. Act will be chargeable but that will be restricted to a period of twelve months. As for payment, it was provided that the payment of taxes and penalty amount will be made in suitable instalments in the course of two years from the date of assessment. The assessee will pay a lump sum in the beginning and to the extent of that amount the seized articles will be released. These articles will be sold or redeemed and the assessee will pay a further amount when more seized articles will be released. In this manner the assessee will arrange to pay in full the tax in the course of two years from the date of the final assessment. It was stated that the Chairman was particular that the taxes should be paid regularly as per the settlement. The books of account would be returned as soon as the returns were filed and the assessments were completed. Lastly, as for prosecution, it was stated that since the returns would be filed on the basis of the settlement, therewas no question of any prosecution. This settlement was communicated by the CRDT to the Commissioner of Income-tax, Kanpur, by a letter dated 20th September, 1972.
4. In pursuance of the settlement the two petitioners filed income-tax and wealth-tax returns in the status of an HUF. For the assessment years 1956-57 to 1969-70, the assessment to income-tax and wealth-tax were made on October 28, 1972, under Section 143(1)/148 of the I.T. Act, and Section 16(3)/17 of the W.T. Act respectively. Income-tax assessments for the assessment years 1970-71 to 1972-73 were made on November 14, 1972, under Section 143(3). The wealth-tax assessments were also made for the year under Section 16(3). For the assessment year 1973-74, the wealth-tax assessment was made on January 31, 1977, and was further rectified on September 13, 1977. Penalty orders under Section 271(1)(a) for the assessment years 1956-57 to 1968-69 and under Section 18(1)(a) for the assessment under Section 273(b) for the assessment years 1956-57 to 1969-70 were passed on November 13, 1972. It appears that the aggregate amount of tax and penalty sums came to Rs. 23,26,187 out of which the two petitioners paid Rs. 16,53,415, 40 boxes containing silver ornaments were released, the last release having been made on January 15, 1974, and after that a further sum of Rs. 6,06,909, which stands included in the aforesaid amount of Rs. 16,53,415, was paid thereafter.
5. The petitioners have now to pay the balance amount due and the Department has got 39 boxes of silver ornaments and 8 boxes of gold ornaments still with them, So far as the challenge of the petitioners to the validity of the assessments made under the two Acts is concerned, it is of no substance because the petitioners had their remedy to challenge the assessments by way of appeals but they did not do so and now after a lapse of such a considerable time they cannot be permitted to challenge those orders. The same is the position with regard to the various penalty orders. They cannot also claim refund of the amounts which they have paid hitherto in pursuance of these orders nor can they deny their liability to pay the balance amount. The controversy is that the petitioners want the release of some more boxes before making any further payment towards the balance amount and in this behalf we find that they have got a proper grievance. Annexure 2 to the writ petition is a copy of a letter from the Commissioner of Income-tax, Jaipur House, Agra, to the Collector, Central Excise, Kanpur, dated 6th December, 1980. This letter reads as under :
Sub : Gold control cases of Shri Badri Prasad of Etawah. Kindly refer to your letter C. Nov. (2) Gold-App. 184 AdJ/74/35652 dated 19th August, 1975, and this office letter F. No. ADI (INT), Kanpur, 1/S-53/Vol. V/208, dated 29th September, 1977, on the subject noted above.
2. According to the arrangement regarding payment of taxes agreed to by the Department and the assessee, 20 boxes out of 39 boxes in the custody of the Department are to be released to the assessee. As per the Board directions it is proposed to release these 20 boxes in the last week of December, 1980, after reweighment and rechecking. You are, therefore, requested to let me know, the date convenient to you so that necessary arrangements for the release be made on that date.'
6. A copy of the letter was sent to M/s. Ram Charan Lal Ram Narain, Etawah, as well for information. The difficulty arose because of the fact that before releasing these 20 boxes the Department wanted the petitioners to give an undertaking that they would make the payment of a certain amount by a certain date. The petitioners were not willing to comply with that demand and this has furnished the immediate provocation for those writ petitions.
7. After hearing counsel for the parties, we find that the demand on behalf of the Department for an undertaking is not justified because there was no such requirement in the agreement which had been arrived at between the petitioners on the one hand and the CBDT on the other. Apart from this it does not appear that any such question arose on any previous occasion when the release of the seized goods was made in favour of the petitioners. Therefore, the petitioners are entitled to obtain release of 20 boxes of silver ornaments forthwith. It is, of course, understood that from the proceeds of those boxes the petitioners will make payments towards the balance due from them.
8. The petitions are hence allowed in part and respondents Nos. 1 and 2, that is, the Commissioner of Income-tax, Kanpur, and Commissioner, Income-tax, Agra, are directed to release 20 boxes of silver ornaments in favour of the two petitioners without insisting on the petitioners to furnish any undertaking. The release is to be made within a period of two weeks from the date of this order. In the circumstances of the case, we make no order as to costs.