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A Karnataka High Court bench headed by Chief Justice Ritu Raj Awasthi today warned the Deputy Director of Income Tax (investigation) to comply with the order of the court in 24 hours or face contempt charges.

A single judge of the court had, in September 2021, passed a consent order directing the income tax authorities to release gold jewellery seized from a partnership firm called S.S. Jewellery upon receipt of a bank guarantee equivalent to the value of the jewellery. However, the firm moved a contempt petition before the Division Bench stating that the authorities have failed to comply with the order of the court. Court was also told that the bank guarantee has duly been furnished but the jewellery has not been returned yet.

The division bench, on the last date of hearing, had made a note of the fact that the counsel for the authority has contended that an order for release of the jewellery has been made in March 2022. However they could not physically hand over the possession of the jewellery as the firm had sent a letter for withdrawing the bank guarantee.

The counsel for the firm, however, had informed the court that they are not going to withdraw the bank guarantee. Considering this, the court had recorded that there was no hindrance now to hand over the seized jewellery back and directed the authorities to comply with the order of the single judge.

When the matter came up for hearing today, the counsel for the petitioner informed the court that the jewellery has not been handed over yet despite the bank guarantee. The counsel for the authorities informed the court that the question of ownership of the jewellery has been kept open by the court as a result of which they have not handed over the jewellery.

The counsel for the authorities further submitted that the jewellery has not been handed over in order to protect the interest of the revenue. 

A visibly upset CJ Ritu Raj Awasthi remarked, “While you are looking at the interest of the revenue, I am interested in implementing the court orders.” The CJ further said that not taking the income tax officer into task would amount to compromising the dignity of the court.

Court thus proceeded to pass an order framing charges for contempt of court. However, the counsel for the officer interjected the court and informed that they will hand over the seized jewellery back to the firm today.

However, Court recorded that despite being given many opportunities, the deputy director of income tax has not returned the seized jewellery. It was recorded that the counsel for the authority has submitted that the question of ownership of jewellery has been kept open so it has not been returned.

It was observed by the court that they do not appreciate the stand of the respondent. Furthermore, in case there was any difficulty in delivering the possession, they could have got the order modified or clarified, this was not done, Court said.

Court in its order stated, “At this stage we can’t permit the respondent to not comply writ court order. We are therefore satisfied that we have to proceed in contempt.”

Court, while taking note of the undertaking that the jewellery will be returned granted 24 hours time to the IRS officer to make full and complete compliance and ordered that contempt charges will be framed if the undertaking is not followed.

The case will now come up for hearing on the last week of June.

Case title: SS Jewellery Vs Dr. Vijay Kumar MD, IRS