Delhi High Court: While hearing a writ petition concerning the continued retention of seized cash and jewellery by the Income Tax Department, Division Bench of Dinesh Mehta and Rajneesh Kumar Gupta, JJ., strongly criticised the Department for retaining the petitioner’s assets for more than 13 years without satisfactory justification. The Court directed the assessing officer concerned to remain personally present on the next date of hearing and explain the prolonged delay.
The petitioner challenged the continued retention of cash amounting to ₹32,50,000 and jewellery valued at ₹23,16,146, which had been seized by the Income Tax Department on 17 September 2010.
According to the petitioner, pursuant to the assessment order dated 28 March 2013, the assessing officer adjusted ₹22,53,850 against the outstanding tax demand for Assessment Year 2011—2012, leaving ₹9,96,150 refundable to the petitioner. Senior Counsel for the petitioner submitted that the assessing officer was now asking the petitioner to deposit the outstanding demand with interest at 12 per cent per annum from the date of the assessment order, after which the Department would refund the seized amount of ₹32,50,000 along with interest at only 6 per cent per annum. Despite there being no subsisting demand, the balance cash and the seized jewellery continued to remain in the custody of the Department.
The petitioner further submitted that in response to the Department’s communication dated 8 August 2018, he furnished the requisite indemnity bond on 20 August 2018. However, despite repeated representations thereafter, neither the cash nor the jewellery was returned.
Senior Counsel appearing for the petitioner also emphasised that while the monetary value was significant, the continued retention of the jewellery caused greater hardship because of the emotional and sentimental value attached to it for the petitioner and his family.
The Court described the matter as depicting a “shocking state of affairs”, noting that the seized assets had remained with the Department since 2010 despite the absence of any satisfactory explanation. Senior Standing Counsel appearing for the respondents could not offer any satisfactory explanation for the Department’s prolonged inaction, stating only that some rectification remained to be carried out at the Department’s end.
The Court observed that the Department’s conduct reflected high-handedness and red-tapism, particularly when the petitioner had already complied with the Department’s requirement of furnishing an indemnity bond years earlier.
The Court further remarked that while taxpayers are expected to act honestly and comply with their statutory obligations, public authorities are equally expected to discharge their own legal duties promptly and fairly. The prolonged failure to release the seized assets, despite repeated representations, was found to be wholly unsatisfactory.
Posting the matter for 4 August 2026, the Court directed the assessing officer concerned to remain personally present on the next date of hearing and explain why the necessary action for release of the seized assets had not been taken for more than 13 years.
[Shally Thapar v. Assistant Commissioner of Income Tax, W.P.(C) No. 10592 of 2026, dated 30-7-2026]
Advocates who appeared in this case :
For the Petitioner: Sachit Jolly, Senior Advocate, Arjun Syal, Rohit Kumar, Sahib Kochhar, Abhyudaya Shankar Bajpai, Sohum Dua, Advocates.
For the Respondents: Indruj Singh Rai, Senior Standing Counsel, Priya Sarkar, Junior Standing Counsel, Sanjeev Menon, Rahul Singh, Gaurav Kumar, Prateek Bhati, Advocates.