Facts of the Case

The petitioner, Dhirendra Vir Rastogi, was one of the family members forming part of a batch of writ petitions filed before the Delhi High Court seeking release of movable assets seized during a search conducted by the Income Tax Department between 17.12.2024 and 20.12.2024 under Section 132 of the Income-tax Act, 1961. The seized assets comprised gold jewellery, bullion, cash/forex and other valuable articles.

The petitioners contended that despite the lapse of time after the search, the Income Tax Department had not finalized proceedings under Section 158BC of the Act. It was asserted that the petitioners were regular assessees, filing returns and paying taxes, and that the seized assets were duly explained or explainable. As per the Department’s own valuation, the seized jewellery and bullion were valued at approximately ₹5.95 crore, apart from cash/forex amounting to about ₹40 lakh.

Issues Involved

Whether continued retention of seized jewellery, bullion and cash was justified in the absence of completion of proceedings under Section 158BC, whether provisional release could be directed subject to safeguards to protect the interest of the Revenue, and whether deposit of advance/self-assessment tax could be imposed as a condition for such release.

Petitioner’s Arguments

The petitioner adopted the submissions advanced on behalf of the family members, contending that prolonged retention of seized assets without finalization of proceedings under Section 158BC was arbitrary and caused undue hardship. It was submitted that the petitioners were willing to comply with reasonable conditions, including deposit of advance or self-assessment tax, to safeguard the interest of the Revenue pending completion of assessment proceedings.

Respondent’s Arguments

The Revenue opposed unconditional release of the seized assets and submitted that to protect the interest of the Department, the petitioners should be directed to deposit an amount equivalent to the probable tax liability as advance or self-assessment tax for Assessment Year 2025-26, so that any future demand could be secured.

Court Order / Findings

The Delhi High Court observed that the petitioners were regular assessees and that proceedings under Section 158BC had not yet been finalized. Taking note of the personal circumstances of the petitioners, including the fact that some were senior citizens or young family members, the Court held that continued retention of the seized jewellery, bullion and cash was not warranted if adequate safeguards were provided.

Balancing equities and protecting the interest of the Revenue, the Court accepted the proposal that specified petitioners would deposit advance/self-assessment tax. The Court clarified that it was not expressing any opinion on the merits of the explanations offered in respect of the seized assets.

Important Clarification

The High Court clarified that the direction for release of seized jewellery, bullion and cash was issued purely on equitable considerations and subject to deposit of advance/self-assessment tax, without recording any finding on whether the seized assets constituted undisclosed income. All rights and contentions of both parties were expressly kept open.

Final Outcome

The writ petition filed by Dhirendra Vir Rastogi, along with connected matters, was allowed. The Court directed that upon deposit of ₹1.25 crore each as advance/self-assessment tax by the specified petitioners on or before 15.01.2026, the Income Tax Department shall release the entire seized jewellery, bullion and cash/forex (approximately 6.862 kg of gold jewellery and bullion and ₹40 lakh in cash/forex) within seven days. All petitions were disposed of accordingly, with liberty to the parties to raise their respective pleas in subsequent proceedings.

 

Link to download order https://www.mytaxexpert.co.in/uploads/1769503929_DHIRENDRAVIRRASTOGIVsASSISTANTDEPUTYCOMMISSIONEROFINCOMETAXCENTRALCIRCLE27NEWDELHIANDANR.pdf

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