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9 / 29 05-WPL-992-19.odt

5. On the other hand, learned Counsel for the Department opposed the Petition. Placing reliance on the affidavit-in-reply dated 30/03/2019 filed by one Mr.Bipin Kumar Gupta, Tax Recovery Officer, he submitted in the Petitioner-Company, one Mr.Nirav Modi holds 99.95% equity shares. Search and seizure action was conducted, during which it was found that as many as 173 paintings and artworks were stored by the company at the premises of M/s Fine Art Warehousing and Logistics P. Ltd. Those were received from the Petitioner-Company. Statement of the Director of the Petitioner- Company Hemant Bhatt was recorded. It was suggested that he was a dummy Director and was working under the instructions of Nirav Modi and adjusted his unaccounted cash transactions. Counsel submitted that the department had taken all steps to serve notice of assessment on the Petitioner-Company. Service was in fact effected after which, in absence of any participation from the Petitioner, assessment was completed exparte. After waiting for the full period for filing Appeal, since no Appeal was filed, the department initiated recovery proceedings. Here again, 10 / 29 05-WPL-992-19.odt after service of notice to the Petitioner for recovery, properties in question were attached and thereafter put to sale through auction. He stated that auction was completed on 26/03/2019 as scheduled, during which all the paintings and artworks were sold for a total consideration of Rs.54,84,25,000/-. He submitted that proceedings under the Prevention of Money Laundering Act, 2002 (for short 'PMLA') are pending before the competent Court. Permission of the said Court was obtained before carrying out the auction. In view of the pendency of the proceedings under the PMLA, the amount fetched through sale proceeds is kept in the escrow account to be adjusted upon completion of such proceedings. He submitted that the Petitioner has prima facie evidence to suggest that of paintings and artworks belong to the Petitioner. Except for a bare statement, the Petitioner has not produced any material to suggest that any of the paintings and artworks do not belong to the Petitioner. He submitted that the entire proceedings have been given wide publicity. From time to time, the public at large had opportunity to learn about the proposed auction. Till the time auction was conducted and 11 / 29 05-WPL-992-19.odt even till date, no person has claimed ownership of the said properties. The Petitioner is therefore merely trying to delay the proceedings by taking up an invalid defence.

6. In the circumstances, the purported auction is unlawful, and liable to be cancelled forthwith.
7. You are hereby called upon to forthwith deliver the purported assessment orders culminating in alleged tax arrears of Rs.95,91,82,589/- per reply."

7. The Respondents have filed a detailed affidavit-in- reply, in which the main averments are that the Petitioner is a company in which Mr.Nirav Modi has 99.95% equity shares. The company was subjected to search action, during which it was found that paintings and artworks were stored at the premises namely M/s Fine Art Warehousing and Logistics P. Lts. B-203, Antop Hill Warehousing Complex, Wadala East, Mumbai. The statement of the Director of the said warehouse was recorded, which suggested that it was the Petitioner company, which had stored all the artworks and paintings and that, his company had never kept any other artwork and paintings of Mr.Nirav Modi and his entities other than the Petitioner. He stated that bills in this respect were raised to the Petitioner company.

17 / 29 05-WPL-992-19.odt Ltd. has billed only to M/s. Camelot Enterprises P. Ltd. for storage of artwork & paintings and also stated that his company has never kept any other artwork and paintings of Shri Nirav Modi and his entities other than M/s. Camelot Enterprises P. Ltd. Copy of the bill for charges for storing paintings dated 26.10.2017 raised by the warehouse on M/s. Camelot Enterprises P. Ltd. (Exhibit-B2). The aforementioned facts show that the Petitioner is the owner of all the paintings put up for auction on 26.03.2019."

The statement of Mr.Hemant Bhatt was also recorded, in which it was stated that he was working under the instructions of Nirav Modi for making cash purchases and cash sales of diamonds and for making unaccounted cash transactions. The statement of Hemant Bhatt was recorded under PMLA Act by Enforcement Directorate, in which he had stated that he had never attended any Board Meeting of the company and that he would sign the minutes as instructed.