Facts of the Case

The petitioner, Sonali Rastogi, along with other family members, filed a batch of writ petitions seeking release of gold jewellery, bullion, cash/forex and other valuables seized during search operations conducted between 17.12.2024 and 20.12.2024 at their residential premises by the Income Tax Department. The seized assets included approximately 6.862 kilograms of gold jewellery and bullion valued at about ₹5.95 crore and cash/forex of approximately ₹40 lakh.

The petitioners contended that despite lapse of time, the Department had not finalized block assessment proceedings under Section 158BC of the Income-tax Act. It was asserted that the petitioners were regular assessees, had been filing returns and paying taxes, and that the seized assets were fully explained or explainable. Special urgency was also highlighted on account of an upcoming family marriage in March 2026, requiring release of jewellery.

Issues Involved

Whether seized jewellery, bullion and cash can be retained indefinitely by the Income Tax Department pending completion of proceedings under Section 158BC, and whether conditional release can be ordered by directing deposit of advance/self-assessment tax to safeguard revenue interests.

Petitioner’s Arguments

The petitioners argued that continued retention of seized assets was arbitrary and unjustified when proceedings under Section 158BC had not even been finalized. It was submitted that the value of seized assets far exceeded any probable tax liability and that the petitioners were willing to furnish solvent security or deposit reasonable amounts to protect the interest of the Revenue. Emphasis was placed on the personal and emotional need for release of jewellery, especially in view of an impending marriage in the family.

Respondent’s Arguments

The Revenue opposed unconditional release of the seized assets and submitted that the petitioners should first deposit an amount equivalent to the probable tax liability as advance tax or self-assessment tax for Assessment Year 2025-26, so that the interests of the Revenue remain protected in case any demand is ultimately raised.

Court Order / Findings

The Delhi High Court noted that the petitioners were regular assessees and that the seized assets were of substantial value. Taking a balanced view, the Court accepted the consensual arrangement proposed during hearing. The Court directed that the petitioners Sonali Rastogi and Manit Rastogi shall deposit ₹1.25 crore each as advance/self-assessment tax on or before 15.01.2026. Upon such deposit and production of challans before the Assessing Officer, the Department was directed to release the entire seized jewellery, bullion and cash/forex within seven days.

The Court clarified that no opinion was being expressed on the merits of the explanation of the seized assets and that both parties were free to raise their respective contentions in appropriate proceedings.

Important Clarification

The High Court clarified that release of seized assets was ordered purely as an interim measure to balance equities and protect revenue interests. The order does not amount to acceptance of the assessee’s explanation regarding the source of jewellery, bullion or cash, which remains open to examination in block assessment proceedings.

Final Outcome

The writ petition was allowed. The Income Tax Department was directed to release the seized jewellery, bullion and cash/forex upon deposit of ₹1.25 crore by the petitioner as advance/self-assessment tax within the stipulated time. All petitions and pending applications were disposed of accordingly.

 

Link to download order https://www.mytaxexpert.co.in/uploads/1769504144_SONALIRASTOGIVsASSISTANTDEPUTYCOMMISSIONEROFINCOMETAXCENTRALCIRCLE27NEWDELHIANDANR.pdf

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