Release of Seized Assets Permitted Upon Tax Deposit: Delhi HC

In a significant interim order, the High Court of Delhi has directed the Income Tax Department to release jewellery, bullion, and cash seized during a search operation conducted in December 2024. The court’s decision offers relief to a petitioner family, contingent upon the payment of specified tax deposits to safeguard the interests of the Revenue.

Background of the Dispute

The petitioners, including members of the Rastogi family, approached the High Court seeking the release of movable assets—specifically 6.862 kg of gold jewellery and bullion, along with approximately ₹40,00,000 in cash and foreign exchange. These items had been seized by the Income Tax Department during search proceedings conducted between December 17 and December 20, 2024.

As of the date of the petition, the department had not finalized proceedings under Section 158BC of the Income Tax Act, 1961. The petitioners argued that the articles were explained, and requested their release—citing emotional attachment and the upcoming marriage of one of the family members, Ananya Vir, scheduled for March 2026.

Arguments from the Bench

Counsel for the petitioners, Mr. Sachit Jolly, submitted that the assessees were compliant with their tax obligations and offered to provide solvent security equal to the value of the seized items. The Income Tax Department, represented by Mr. Gaurav Gupta, strongly objected, maintaining that the seized assets were derived from undisclosed income. The Department requested that the petitioners be directed to deposit an amount equivalent to their probable tax liability as advance tax or self-assessment tax for the Assessment Year 2025-26.

Acknowledging these arguments, the petitioners agreed, with a commitment to deposit ₹1.25 crore each by two family members, Sonali Rastogi and Manit Rastogi.

Key Observations

The Court, led by the bench of Hon'ble Mr. Justice Dinesh Mehta and Hon'ble Mr. Justice Vinod Kumar, took into account the age profile of the petitioners, noting the presence of both senior citizens and younger family members. The Court clarified that the order was an interim measure and did not express a final opinion on the legitimacy of the seized assets.

Key quotes from the order include: * "In view of the above and considering that some of the petitioners are either senior citizens... or children... we are persuaded to accede to the proposals so made by the learned counsel for the petitioners." * "Needless to observe that this Court has not recorded any finding or made observation in relation to the merit of the contention of the assessees that the jewellery, bullion and cash/forex are duly explained." * "The petitioners so also respondent-Department shall be free to take their respective pleas, at appropriate stage."

Court’s Decision

The Court allowed the petitions with the following directives: 1. Manit Rastogi and Sonali Rastogi are to deposit ₹1,25,00,000 each as self-assessment or advance tax on or before January 15, 2026. 2. Upon verification of these deposits, the respondent-Department must release the entire seized gold jewellery, bullion, and cash within seven days.

By adopting this balanced approach, the Delhi High Court ensured that the family’s immediate needs were respected while effectively protecting the government’s revenue interests pending the conclusion of the tax assessment proceedings. This ruling serves as a notable reminder of the court's willingness to mediate asset recovery cases in exchange for tax security during ongoing investigations.