No separate claim can be made for seized gold once it has been taxed.
Issue
Can a person file a writ petition to claim the release of seized assets, such as gold ornaments, if those very same assets have already been considered and substantively assessed to tax in the hands of another person (in this case, their spouse)?
Facts
- During a search conducted based on a warrant issued in the name of the petitioner’s husband, a significant quantity of gold ornaments was seized.
- In the subsequent assessment proceedings against the husband, he took the specific stand that the seized gold belonged to his wife (the petitioner). However, the tax authorities rejected this contention and proceeded to make an addition for the value of the gold in the husband’s undisclosed income, and finalized the assessment.
- In parallel, a “protective assessment” was also initiated against the wife for the same gold, as a backup measure.
- The wife then filed a writ petition directly in the High Court, seeking a direction for the release of the gold ornaments to her, based on her claim of ownership.
Decision
The High Court ruled in favour of the revenue and dismissed the writ petition.
- It held that since the very same gold being claimed by the petitioner had already been substantively assessed to tax in the hands of her husband, and his specific claim that it belonged to her had been considered and rejected during those proceedings, the matter was effectively concluded at the assessment stage (subject to any statutory appeals the husband might file).
- The court concluded that the petitioner could not make a further, independent claim for the release of the same assets through a separate writ petition, as their ownership and taxability had already been adjudicated in her husband’s completed assessment.
Key Takeways
- One Asset, One Substantive Assessment: The value of a single asset cannot be substantively taxed as undisclosed income in the hands of two different people. Once the tax department makes a final assessment on one person and includes the asset’s value, the issue is decided for that assessment.
- A Writ Petition is Not an Appeal: A writ petition cannot be used as a substitute for the statutory appeal process. It also cannot be used to re-agitate a factual issue (like the ownership of an asset) that has already been decided in another person’s assessment order. The wife’s remedy, in this case, was intrinsically tied to the outcome of her husband’s appeal against his own assessment.
- The Consequence of a Rejected Claim: When the husband claimed the gold belonged to his wife and the department, after due process, rejected that claim, it became a formal finding of fact in the assessment order. The wife cannot simply ignore this finding and start a fresh legal proceeding in the High Court as if that determination was never made.
- A Protective Assessment Becomes Irrelevant: The purpose of a protective assessment is to safeguard the revenue’s interest in case the main, substantive assessment fails. Once the substantive assessment (on the husband) is successfully completed and the addition is made, the protective assessment (on the wife) loses its legal significance and cannot be used by her as a basis to claim any rights.
HIGH COURT OF KERALA
Lakshmi R. Nair
v.
Principal Commissioner of Income-tax
ZIYAD RAHMAN A.A., J.
WP(C) NO. 26741 OF 2022
AUGUST 12, 2025
V.Philip Mathews, Gibi.C.George, Amal Parthasaradhy and Smt. Abiya Mariyam Mathew, Advs. for the Petitioner. Christopher Abraham, Standing Counsel and P.R. Ajith Kumar, Adv. for the Respondent.
JUDGMENT
| 1. | The petitioner has approached this Court seeking the following reliefs:- |
| “a) | Issue a writ of mandamus or other appropriate writ or order commanding respondents to return all the gold, articles and documents seized by them including those stated in Exhibits P1 to P5 and inventory of gold dated 16.10.1996. |
| (a) | (i) Issue a writ of certiorari or other appropriate writ or order quashing Exhibits P12 communication issued by second respondent and Exhibit P13 order issued by first respondent. |
| (b) | Issue appropriate writ or order declaring that proceedings against Petitioner based on Exhibits P1 to P5 are illegal and unsustainable and that respondents are not entitled to retain any gold, articles, assets or documents of the Petitioner mentioned in those documents. |
| (c) | Issue a writ of mandamus or other appropriate writ or order commanding first respondent to consider and take appropriate action on Exhibit P10 and P11 representations within a time limit to be specified by this Honourable Court after hearing the Petitioner or her representative. |
| (d) | Pass just and proper reliefs considering the facts and circumstances of the case and the prayers at the time of hearing.” |
2. The facts that led to the filing of this writ petition are as follows:- The petitioner is the wife of Sri R. Ramachandran Nair, who was the former Chief Secretary of Kerala from 01.03.1994 to 15.06.1996. He retired from the Indian Administrative Service on 31.05.1997. A search was conducted by the officers of the Income Tax authorities in the house of the petitioner on 15.10.1996 and 16.10.1996 under Section 132 of the Income Tax Act- 1961. Along with the petitioner, the husband and her mother were also staying there. After the search, 379.6 sovereigns of Gold belonging to the Petitioner, her mother, daughter, son and son-in-law, along with cash and title deeds of properties, were seized by the Income Tax officials, as evidenced by Exts.P1 to P5.
3. Based on the said search, an assessment was made against the petitioner’s husband on 29.10.1997 by fixing an undisclosed income to the tune of Rs.1,14,94,610/-(Rupees One Crore Fourteen Lakhs Ninety Four Thousand Six Hundred and Ten only). During the assessment process, since the husband of the petitioner contended that the gold ornaments belonged to the petitioner, a protective assessment was initiated against the petitioner. The challenge against the assessment proceedings against the husband of the petitioner, was ultimately settled in Ext.P7 judgment passed by a Division Bench of this Court in R. Ramachandran Nair v. Dy. CIT 110/ 391 ITR 343 (Kerala)/ITA No.3/2004 which was pronounced on 06.01.2017. In the said judgment, the findings of the appellate authority, assessing the undisclosed income at the hands of the husband of the petitioner was confirmed. In the meantime, Ext.P6 order was passed, against the petitioner, as part of protective assessment against the petitioner in respect of the gold ornaments seized.
4. During the said proceedings, the petitioner submitted Ext.P8 representation dated 07.03.2005 before the Chief Commissioner of Income Tax, requesting the release of the gold ornaments seized. Since there was no response, repeated representations were submitted by the petitioner and Ext.P11 is the last representation submitted by the petitioner on 18.08.2021 before the Principal Chief Income Tax Commissioner, wherein, the petitioner referred to the earlier representations submitted. Ultimately the said representations were answered by the Chief Commissioner as per Ext.P12, rejecting the same, on the reason that, the articles were seized, based on the warrant issued in the name of the husband of the petitioner, and the valuables, jewelry and other articles were seized in the name of Sri. R. Ramachandran Nair, the husband of the petitioner. Therefore, it was found that, if at all any release is to be ordered, the same has to be done only to the husband of the petitioner. It was in these circumstances, the writ petition was submitted seeking the above reliefs.
5. A counter affidavit was submitted by the respondents, denying the averments contained in the writ petition and opposing the reliefs sought. A reply affidavit was also submitted by the petitioner, in response to the averments contained in the counter affidavit. An additional statement was also filed by the Standing Counsel for the respondents, as the writ petition was amended in the meantime.
6. I have Heard Sri. V.Philip Mathews, learned Counsel for the petitioner and Sri.Christopher Abraham learned Standing Counsel for the respondents.
7. The learned Counsel for the petitioner raised various contentions with regard to the sustainability of the protective assessment. According to the petitioner, there is no expressed provision in the Income Tax Act that contemplates for a protective assessment and such practice was brought to India based on the concept borrowed from England as per the decision rendered by the High Court of Culcutta in Jagannath Hanumanbux v. ITO [1957] 31 ITR 603 (Cal). According to the petitioner, the decision rendered by the Calcutta High Court, was a case in which the cause of action for the litigation, had arisen in a place that formed part of British India, and that cannot be made applicable to the area where the petitioner was residing and the cause of action for the entire proceedings that culminated in seizure has affected. This contention is raised by the learned Counsel for the petitioner mainly on the ground that, according to the petitioner, the place of the petitioner comes within the erstwhile Travancore-Cochin area, which was not included in Part B States and therefore, it was not part of the British India. Therefore, the English law, as applied by the Calcutta High Court in Jagannath Hanumanbux (supra) could not have been made applicable in the case of the petitioner. Moreover, it was also contended that, the seizure and retention of the articles, by the authorities concerned, were without any approval or order from the Chief Commissioner or Director under Section 132(8) of the Income Tax Act and therefore, the retention of the said gold by the authorities concerned are not legally sustainable.
8. However, while considering the aforesaid contention, the crucial aspect to be noticed is that, the gold which is claimed by the petitioner, is evidently assessed in the proceedings initiated against the husband of the petitioner. In the said assessment process, the husband of the petitioner took a specific contention that, all these articles belonged to his wife, but the said contentions were rejected and the assessment was completed, except certain portion of the gold. The challenge raised against such assessment orders, wherein, the gold claimed by the petitioner was assessed in the name of the husband of the petitioner, was ultimately resulted in Ext.P7 judgment rendered by a Division Bench of this Court. In the said judgment, the findings of the appellate authority, with regard to the inclusion of the said gold in the name of the husband of the petitioner were upheld. The relevant observations in this regard are at paragraph 7, 12 and 13 of Ext.P7 judgment, which read as follows:
| “7. | The first issue that was raised by the counsel for the assessee was with respect to the finding of the Tribunal regarding the gold ornaments. According to counsel, the Tribunal should have accepted the claim of the assessee that the quantity of gold belonged to the other members of his family. We have considered this contention and find from paragraphs 27 and 28 of the order that the case of the assessee was that his wife had inherited gold from her deceased father, that his wife had about 200 sovereigns of her own, his wife’s mother had about 400 sovereigns, the most of which was given to his married daughter and that his daughter had at the time of her marriage received about 67 sovereign of gold, as gift. In paragraph 28, these contentions were examined and the Tribunal rejected the plea mainly for the contradictory contentions urged. Thereafter; in paragraph 29 of its order Tribunal accepted the plea of the assessee to the extent of 1500 gram of gold, by concluding thus: |
“29. considering the family back ground of the assessee, i.e. one of the eldest brother of the assessee retired from the central Government as a Dy. Accountant General, three brothers are Advocates, one brother is an officer in State service and the other is a Bank officer and from the side of his wife, father-in-law was an eminent Economist, was a professor in the university of Kerala and Member of Second Pay Commission for central Government Employees, two brother-inlaws are Doctors, two brother-in-laws are at Mumbai, one brother-in-law is in the united States and another brother-in-law is an Electrical Engineer, doing contract work, and social status of the family, smaller gifts from individuals as mentioned above and also gifts from the side of assessee and his wife cannot be ruled out. Therefore, we are of the view that the assessing officer has not considered the case in its entirety, i,e. The gifts received other than the details given by the assessee because the assessee was asked to give the details of persons those who have gifted five or more sovereigns of gold, a reasonable estimation of 1500 grams of gold cannot be ruled out. Therefore, we allow the claim of the assessee to this extent, The difference is to be treated as assessee’s undisclosed income.”
These conclusions are purely factual and no question of law can arise from these findings.
| 8. | xxx |
| 9. | xxx |
| 10. | xxx |
| 11. | xxx |
| 13. | Though this submission would sound attractive, on a closer examination, we find that this contention is only to be rejected for the reason that the assessment completed against the assessee’s wife is only protective assessment. It is well settled that where there is a doubt as to the assessment of a person amongst two, parallel proceedings can be taken against both and alternative assessment may also be completed. Therefore, the fact that a protective assessment has been completed against the assessee’s wife does not ipso facto mean that assessment of such items of assets at the hands of the assessee is unsustainable. On the other hand, if the assessment at the hands of the assessee is sustained, the assessment of the very same assets at the hands of the assessee’s wife, would have to necessarily fail. In such circumstances, we reject the contention now raised before us by the learned Senior Counsel for the assessee.” |
9. Thus, the question regarding the entitlement and ownership of the gold claimed by the petitioner is already decided by this Court and such decision has become final.
10. Now when coming to the contentions raised by the petitioner as to the sustainability of the protective assessment made against the petitioner, it is to be noted that, in view of the fact that, the original assessment against the husband of the petitioner pertaining to the very same transactions were finalized and concluded, the significance of such protective assessment is lost. Therefore, I do not find it necessary to consider the challenge raised against such protective assessment, by entertaining the contentions of the petitioner with regard to the applicability of British law, where protective assessment is contemplated, to the area of Travancore. Such a question does not arise in this case, as the protective assessment made against the petitioner is no longer valid, in view of the assessment against the husband of the petitioner, which attained finality. Therefore, I am of the view that, as the gold claimed by the petitioner, is already assessed in the name of the husband of the petitioner, and the proceedings in respect of the same are concluded, the petitioner cannot make a further claim in respect of the same. To be precise, such a claim is beyond the legal competence of the petitioner as the petitioner has no right to make such a claim. This fact is specifically bound by the authority concerned in Ext.P12 order and therefore, I do not find any justifiable reason to interfere with the same.
11. Of course, the learned counsel for the petitioner raised a contention that the findings in Ext P7 judgment is not binding on the petitioner, and hence she is competent to raise the claim for the gold. However, the crucial aspect is that, claim raised by the petitioner is for the release of the gold seized from the house where the petitioner was residing along with her husband. In the further proceedings based on such seizure, the said gold was found to the owned by the husband of the petitioner and the assessment against the husband of the petitioner was completed by including the said gold as the undisclosed asset of the said person. The said assessment attained finality as per Ext P7, wherein, the contention that, the said gold belonged to petitioner was rejected. Therefore, as the question of ownership of the gold is finally settled and as per the said finding, it was concluded that, it is income/asset of the petitioner’s husband, it is not open to the petitioner to raise a claim for the same before the authorities. In such circumstances, I do not find any merit in the said contention.
Accordingly, this writ petition is dismissed. However, it is clarified that, this will not preclude the petitioner or the husband of the petitioner from approaching the authorities to claim the gold by paying the amounts due as per the assessment order and other proceedings in connection with the same.