Order : 1. This writ petition has been filed by Mr. Kamal Mohan Gupta and Mr. Chander Prakash Soni praying for issue of writ of mandamus directing respondents to complete the proceedings if any pending in the matter of petitioners with immediate effect, upon their successfully demonstrating the source of seized assets and to release the stock in trade being the gold studded jewellery belonging to the petitioners and also grant interest in terms of Section 132B(4)(a) of the Income Tax Act, 1961, with further direction to the respondents to grant interest to the petitioners under Section 244A of the Income Tax Act, 1961 and compensate them towards the costs for the entire proceedings from the date of seizure. 2. Mr. Gunjan Pathak, learned counsel for petitioners, submitted that petitioner no.1 is a common agent of gold jewellery, who upon approval of samples, takes orders of the clients for various studded and non-studded jewellery items. He, being working agent, regularly takes goods, such as, studded jewellery or non-studded jewellery, along with other items from various jewellers and travels to various locations for marketing of the goods upon which he procures orders from parties located at various parts of the country, if the goods are approved by them. Petitioner no.1 only receives a fixed commission for the orders procured by him. Further the petitioner no.1 is a registered broker with the Jewellers Association, Jaipur. Petitioner no.2 is a jewller and the proprietor of M/s Gold Theme Jewels, Jaipur. He regularly sends samples to the petitioner no.1 for order procurement. 3. Mr. Gunjan Pathak, learned counsel for the petitioner, contended that under the same modus operandi, the petitioner no.2 handed over the goods to petitioner no.1 against approval memo no.404 (1400 Gms) dated 03.10.2013, approval memo no.405 (650 Gms) dated 14.10.2013 and approval memo no.406 (1051.50 Gms) dated 25.10.2013, as samples to be marketed to the various jewellers in Kolkata city. Petitioner no.1, carrying the samples of petitioner no.2, was travelling from Jaipur to Kolkata through Air Route on 30.10.2013. He, after all security clearances i.e. after routine scanning, checking of his hand baggage by the airport authorities etc., was granted boarding pass to the aircraft. The airport authorities at the Jaipur airport terminal questioned him about the goods and were duly made aware of the goods being carried under approval memo. He, after all security clearances i.e. after routine scanning, checking of his hand baggage by the airport authorities etc., was granted boarding pass to the aircraft. The airport authorities at the Jaipur airport terminal questioned him about the goods and were duly made aware of the goods being carried under approval memo. They also duly informed the Income Tax Department Wing located at the airport of the same and no action whatsoever was taken by the authorities and the petitioner no.1 was permitted to board the flight to Kolkata. However, when the petitioner no.1 arrived at Kolkata airport, the ADIT, Investigation Wing, Kolkata, i.e. the respondent no.1, under pre-information from the Income Tax Authorities at Jaipur, searched the petitioner no.1 by taking him from the Airport, Kolkata to their office located at Chowrangee Square around 10:20 AM on 30.10.2013, whereupon he was also issued a notice for giving statements under the provisions of Section 131 of the Income Tax Act, 1961. The respondent no.1 concluded the search proceedings at around 2:30 AM on 31.10.2013 and also drew a 'panchnama' dated 30.10.2013, whereby the goods weighing 2,141 grams were seized by the authorities. Further, in the light of the proceedings, a search operation was carried out at the office of the petitioner no.2 at around 4:00 PM on 30.10.2013. The statements at both the locations were corroborating and the petitioner no.2 had accepted the material being given to petitioner no.1 on approval basis. Subsequently, however, petitioner no.2, vide letter dated 07.11.2013, requested the respondent no.2 to return the gold studded jewellery being stock in trade, which was also reflected in the accounts and stock register. It was also brought to their notice that the gold studded jewellery was covered under third proviso to Section 132(1) of the Income Tax Act, 1961, which specifically provides for non-seizure of stock in trade. 4. Learned counsel also referred to Circular No.8 of 2003 dated 18.09.2003 issued by the Central Board of Direct Taxes (CBDT), which also supported his argument. It is contended that when no answer was received from the respondent no.2, the petitioner no.2 again addressed a request letter dated 18.11.2013 to the respondent no.1 duly establishing the case and requesting for release of the goods being stock in trade. It is contended that when no answer was received from the respondent no.2, the petitioner no.2 again addressed a request letter dated 18.11.2013 to the respondent no.1 duly establishing the case and requesting for release of the goods being stock in trade. After a passage of almost four months, the respondent no.3, vide order dated 19.03.2014, in exercise of his powers under Section 127 of the Income Tax Act, 1961, transferred the jurisdiction of the case of petitioner no.1 along with linking it to M/s Gold Theme Jewels, Jaipur, whose proprietor is petitioner no.2, as well as his group concerns from ITO Ward 7(3), Jaipur to DCIT, Circle-7, Jaipur. When no response was received from the respondents for as long as nine months, the petitioner no.1, vide notice for demand of justice dated 02.07.2014 duly addressed to the respondents no.1 to 3, demanded release of the stock in trade held by them during the search conducted on 30.10.2013. The respondent no.1, vide letter dated 14.07.2014, replied to the notice dated 02.07.2014 stating that the Appraisal Report along with the enclosures have already been sent to the jurisdictional officer of the petitioner no.1 and further correspondence should be made with the ITO Ward 7(3), Jaipur. 5. Mr. Gunjan Pathak, learned counsel for petitioner, further argued that in view of Section 132 of the Income Tax Act, 1961, the jewellery items held by the petitioner no.1 on behalf of petitioner no.2 were stock in trade and the same ought not to have been seized in view of proviso to Section 132(c)(B)(iii) and respondent should have made a note of inventory of such stock in trade in business. It is argued that provisions of Section 132B of the Income Tax Act, 1961 categorically mentions the time limit within which the seized material and assets is to be released by the Income Tax Department. Reference in this connection is made to proviso to Section 132B(1)(i) of the Income Tax Act, 1961, according to which such assets or any portion thereof, as referred to in first proviso, shall be released within a period of 120 days from the date on which such authorization for search under Section 132 or for acquisition under Section 132A of the Income Tax Act, 1961, as the case may be, was executed. It is argued that the goods under seizure are of such nature that they would deteriorate from day to day, due to the care not being taken by the department as the climatic conditions in Kolkata included a lot of moisture, which adversely affect the nature of the jewellery. 6. Mr. Gunjan Pathak, learned counsel for petitioners, in support his arguments, has relied on judgment of the Supreme Court in Director General of Income Tax Vs. Diamond Star Exports Ltd. - (2007) 293 ITR 438 (SC), judgment of Gujarat High Court in LKS Bullion Import & Export (P) Ltd. Vs. Director General of Income Tax – (2013) 88 DTR (Guj) 95, judgment of Orissa High Court in Sri Puspa Ranjan Sahoo Vs. Assistant Director of Income Tax – (2012) 75 DTR (Ori) 341, and in Mitaben R. Shah Vs. Deputy Commissioner of Income Tax and Another – (2010) 42 DTR 124. 7. Ms. Mahi Yadav, brief holder of Mr. Sameer Jain, learned counsel for respondents, opposed the writ petition contending that the petitioners have not approached this court with clean hands inasmuch as the petitioners have not come with correct and complete facts of the case. They have not brought on record the statements recorded under Section 131 and 132(4) of the Income Tax Act, 1961 on various dates in the investigation, which has a material bearing on the case. The petitioners have also not brought on record the fact that investigation proceedings were carried out by the department as per the provisions of the Central Excise Act. The action under Section 132 of the Income Tax Act, 1961 was carried out on 30.10.2013, which falls under Financial Year 2013-14 and the relevant Assessment Year is 2014-15. The petitioners filed their return for the assessment year 2014-15 on 20.10.2014 only. The time limit for issue of notice under Section 143(2) of the Income Tax Act, 1961 was up to 30.09.2015 and the period of completion of assessment was up to 31.03.2016. Learned Assessing Officer carried out the investigation with full swing and had ample material on record, which was relevant to justify seizure of goods and carrying out assessment proceedings in respect of income tax proceedings vis-a-vis petitioners. 8. Learned Assessing Officer carried out the investigation with full swing and had ample material on record, which was relevant to justify seizure of goods and carrying out assessment proceedings in respect of income tax proceedings vis-a-vis petitioners. 8. It is argued that present proceedings are premature as it is only when the assessing officer, who is dealing with the case, after completion of investigation and going through the facts of the case, documents, return of income, would start the assessment proceedings as per the principles of natural justice before the said assessment proceedings and thus the action on the part of the respondents is fully justified, legal and correct. The petitioners cannot allege the respondents for any illegality or unjust attitude for their own conduct, evasion of tax especially when the statements tendered voluntarily are not disclosed before this court. Since the present writ petition involves disputed questions of fact, which are to be determined by the assessing officer as per the scheme of the Income Tax Act, 1961, according to the principles of natural justice and as per the prescribed procedure, the writ petition ought not to be entertained. The charge for carrying out assessment has been transferred to DCIT Circle-7, Jaipur, who has not been arrayed as party to the petition. Further the DCIT Circle-7, Jaipur, has issued notice under Section 151A of the Income Tax Act, 1961 for carrying out assessment as per the principles of natural justice. It is therefore prayed that the writ petition be dismissed. 9. I have given my anxious consideration to rival submissions and perused the material on record. 10. Before adverting to the facts of the case, it is deemed appropriate to briefly survey the cited case law on the subject. 11. The Supreme Court in Director General of Income Tax Vs. Diamondstar Exports Ltd., supra, was dealing with a case where seizure was challenged by the respondent before the High Court by filing writ petition. The High Court was of the view that search and seizure were invalid and illegal and accordingly quashed all consequential actions. The Income Tax Department was directed to forthwith return the jewellery and ornaments seized from the assessee and also to pay interest at the rate of 8% per annum on the value of jewellery and ornaments from the date of seizure till payment. The Income Tax Department was directed to forthwith return the jewellery and ornaments seized from the assessee and also to pay interest at the rate of 8% per annum on the value of jewellery and ornaments from the date of seizure till payment. Facts of that case, as evident from the decision of the Bombay High Court in Dimondstar Exports Ltd. & Ors. Vs. Director General of Income Tax & Ors. - (2005) 194 CTR (Bom) 132, which was under challenge before the Supreme Court, indicate that in that case too, the assessee was engaged in the business of manufacture, purchase and sale of gold, diamonds, ornaments and jewellery. One of its employee proceeded to leave Mumbai for Lucknow by flight for the purpose of exhibition to be held there. He was carrying with him gold, diamonds, jewellery and ornaments. He was intercepted at the airport at Mumbai when he was about to board the flight to Lucknow by the officers of the IT Investigation Department, Mumbai. He also produced various documents in his possession to explain the possession of valuables. He was allowed to proceed to Lucknow after giving declaration. The investigation wing of the Income Tax Department sent a fax message to the officers of the investigation wing of the Income Tax Department at Lucknow. On the basis of the fax message received from their counter part in Mumbai on arrival at Lucknow airport, they served a search warrant on the petitioner, who was interrogated by them. They then seized the gold, diamond and other jewellery items. The Income Tax Department issued authorization under Section 132 of the Income Tax Act, 1961. The authorization issued by the Income Tax Department under Section 132 of the Income Tax Act, 1961 and follow up action of search and seizure were challenged by the assessee on the ground that there was no information on record, on the basis whereof the department could form belief that the said gold, diamonds, jewellery, etc. recovered from the employee of the assessee at Lucknow, represented, wholly or partly, the income, which had not been or would not have been disclosed for the purpose of the Income Tax Act, 1961, a condition precedent for exercise of powers under Section 132(1) of the Income Tax Act, 1961. recovered from the employee of the assessee at Lucknow, represented, wholly or partly, the income, which had not been or would not have been disclosed for the purpose of the Income Tax Act, 1961, a condition precedent for exercise of powers under Section 132(1) of the Income Tax Act, 1961. The High Court held that mere intimation that a person is in possession of certain jewellery or ornaments cannot be construed to be sufficient for the purpose of action under Section 132 of the Income Tax Act, 1961. The High Court further held that search and seizure was illegal and directed to return the said valuables with interest at the rate of 8% per annum on the value of jewellery. The Supreme Court in appeal held that revenue was liable to compensate the respondents at least by way of costs and therefore it upheld the decision of the High Court with direction to the department to pay a sum of Rs.75000/- to the assessee on account of costs. 12. In LKS Bullion Import and Export (P) Ltd., supra, the petitioner challenged the validity of search and seizure operations initiated by the respondent Income Tax Department. The petitioner also prayed for quashing of the order in which their request for release of gold ornaments, being stock in trade, that were being carried for showing samples to customers, was rejected. The court, having regard to the above search and seizure, held that mere possession of money, bullion, jewellery or such valuable article or thing, per se would not be sufficient to enable the competent officer to form a belief that the same had not been or would not be disclosed for the purpose of the Act. What is required is some concrete material to enable a reasonable person to form such a belief. The High Court therefore declared the search and seizure to be illegal because there was no sufficient material to prove the requirement under Section 132 of the Income Tax Act, 1961. With regard to the seizure of stock in trade, the High Court held that even in case of valid search and seizure the stock in trade could not have been seized in terms of proviso to Section 132 of the Income Tax Act, 1961. 13. With regard to the seizure of stock in trade, the High Court held that even in case of valid search and seizure the stock in trade could not have been seized in terms of proviso to Section 132 of the Income Tax Act, 1961. 13. In Mitaben R. Shah, supra, the High Court of Gujarat was dealing with the case where the petitioner made application within permissible time limit for release of the gold ornaments explaining the nature of source of acquisition thereof. They were not released even after expiry of time limit of 120 days prescribed by Section of the Income Tax Act, 1961. The High Court held the action of the respondent authorities to be illegal because the application was rejected during the pendency of the writ petition, though the time sought to file reply affidavit, but it was utilized for the purpose of passing the order so as to make the earlier petition infructuous. The note said to have been prepared by the Assistant Director where the petitioner’s claim for release of gold ornaments and jewellery was rejected, was never communicated to the petitioner. The impugned order passed after expiry of the prescribed period of 120 days, was held to be contrary to mandate of proviso to Section 132B(1)(i) of the Income Tax Act, 1961. Once the said period is over, respondents have no authority to retain the jewellery, held the High Court. 14. In Sri Puspa Ranjan Sahoo, supra, the Orissa High Court, on a writ petition, directed the authorities to release the stock in trade and return the same to the party in view of the specific provision contained in proviso to Section 132(1)(iii) and third proviso to Section 132(1)(v) of the Income Tax Act, 1961. The Income Tax Department was therefore directed to return the jewellery seized by the authorized officer, after making a note. 15. The Income Tax Department was therefore directed to return the jewellery seized by the authorized officer, after making a note. 15. Section 132(1)(c)(iii) of the Income Tax Act, 1961, provides that where the competent authority in consequence of information in his possession, has reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article of thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property, which has not been or would not be disclosed for the purpose of this Act, the officer so authorized shall “seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search.” Proviso thereto carves an exception and stipulates that “bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business.” Even if he is of the view that many bullion, jewellery or valuable article or thing, which is in form of stock-in-trade of the business, represent undisclosed property or income. 16. Mere information that a person is in possession of certain jewellery or ornaments, therefore, cannot be construed to be sufficient for the purpose of action under Section 132A of the Income Tax Act, 1961. Warrant of authorization under Section 132(1)(c) could be issued only on recording satisfaction that in consequence of information in its possession, the government authority, has reason to believe that person in possession of money, bullion, jewellery or other valuable article or thing, has not been or would not be disclosed, which represented wholly or partly, income or property, which has not been or would not be disclosed for the purpose of that. Such subjective satisfaction must be formed on the basis of material on record. Possession of such article also would thus not be sufficient to enable the competent authority to form a belief that same had not been or would not be disclosed for the purpose of Act. Such subjective satisfaction must be formed on the basis of material on record. Possession of such article also would thus not be sufficient to enable the competent authority to form a belief that same had not been or would not be disclosed for the purpose of Act. Moreover, in the present case, the respondents failed to show that they had passed the order within the stipulated time of 120 days envisaged by second proviso to Section 132B(1)(i) of the Income Tax Act, 1961, and yet they have not returned the seized jewellery articles of the petitioner no.1 on application made by petitioner no.2 under Section 132B of the Income Tax Act, 1961. 17. In view of the above discussion, present writ petition is allowed in part and the respondents are directed to release the stock in trade, being the gold jewellery belonging to the petitioners forthwith, after making a note of inventory of such stock in trade in business, pending finalization of proceedings and are further directed to complete the proceedings, if any, pending against the petitioners with immediate effect, upon the petitioners demonstrating the source of seized assets or otherwise pass order in accordance with law.