Delhi HC Rules: Seized Gold Is Not Automatically Returnable After 120 Days

The petitioners, Rajesh Gupta and his family members, were subjected to a search and seizure operation by the Income Tax Department in October 2024. During the search, the revenue seized gold coins and jewellery weighing approximately 2,519 grams, with an estimated value of over Rs. 3.88 crore. The petitioners claimed that the seized assets were fully disclosed in their past Income Tax and Wealth Tax returns.

An application for release of the jewellery was filed under Section 132B of the Income Tax Act, 1961,  that the explained assets were required to be released within 120 days from the date of search. The High Court directed the Department to decide the application. Thereafter, the Assessing Officer rejected the request for release, citing discrepancies in valuation and inadequacy of explanations regarding the source of certain items. Aggrieved, the petitioners filed the present writ petition challenging the refusal to release the seized jewellery.

Question of Law: Whether the 120-day period prescribed under the second proviso to Section 132B(1)(i) of the Income Tax Act is mandatory, and whether expiry of this period entitles an assessee to automatic release of seized jewellery irrespective of the Assessing Officer’s satisfaction regarding its nature and source.

HC’s Decision: The High Court dismissed the writ petition, holding that the 120-day period stipulated under Section 132B(1)(i) is directory and not mandatory. The Court observed that the statute itself provides a consequence for delay in the form of interest payable under Section 132B(4), and therefore, non-compliance with the timeline does not result in automatic release of seized assets.

The Court further held that the release of seized jewellery is conditional upon the Assessing Officer being satisfied about the nature and source of acquisition. Here the AO had recorded valid reasons for rejection. Since judicial review under Article 226 is confined to examining the legality of the decision-making process and not reappreciating factual determinations, the Court found no grounds to interfere with the AO’s decision. Thus, the jewellery was held liable to be retained till completion of assessment proceedings.

To Read Full Judgment, Download PDF Given Below