Rajesh Gupta & Ors. Vs ACIT (Delhi High Court)
120 Days Not Automatic Release: Delhi HC Upholds Retention of Seized Jewellery Pending AO’s Satisfaction u/s 132B
The Delhi High Court, in Rajesh Gupta & Ors. vs ACIT, Central Circle-31 & Ors. (W.P.(C) No. 12433/2025, judgment dated 23.12.2025), dismissed the writ petition seeking release of gold coins and jewellery seized during a search conducted u/s 132 in October 2024. Jewellery worth about ₹3.88 crore was seized, though the Petitioners claimed that the entire jewellery was duly disclosed in their ITRs and Wealth-tax Returns and that the Revenue failed to release the same within 120 days as mandated by the second proviso to Section 132B(1)(i).
The High Court held that the 120-day period under Section 132B is directory and not mandatory, and expiry of 120 days does not result in automatic release of seized assets. The Court ruled that release under Section 132B is conditional upon the Assessing Officer being satisfied about the nature and source of acquisition of the seized assets, which is a mandatory pre-condition under the first proviso. Mere filing of an application or reliance on WTRs/valuation reports does not compel release unless such satisfaction is recorded.
The Court rejected the Petitioners’ contention that non-passing of an order within 120 days invalidates retention, holding that the only statutory consequence of delay is liability to pay interest u/s 132B(4), not automatic release. It preferred the view taken by Allahabad and Rajasthan High Courts and expressly declined to follow the Gujarat and Gauhati High Court line of judgments which treated the 120-day limit as mandatory.
On facts, the Court found that the AO had passed a reasoned order rejecting the application for release, recording dissatisfaction regarding source and reconciliation of jewellery, disputed valuation reports, pending assessments, and outstanding tax demands. The Court further held that disputed questions on valuation methodology, reconciliation of jewellery with WTR disclosures, alleged HUF partition, and anticipated tax liabilities cannot be adjudicated in writ jurisdiction.
Accordingly, the writ petition was dismissed, and the Revenue was held entitled to retain the seized jewellery pending completion of assessment proceedings, subject to statutory interest consequences, if any.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
This petition has been filed with the following prayers:
“a. quashing the impugned order dated 18.07.2025 passed by Respondent No. 1; and
b. releasing the Gold (Coins) and jewellery seized in terms of Annexures B-1, B-2, J-1, J-2, J-3 & J-4 [Annexure C to the present writ petition]; and/or”
2. This present petition is a second round of litigation before this Court. The petitioners no. 1 and 2 are husband and wife and the petitioners no. 3 and 4 are their children. The brief factual background surrounding the case is that the petitioners herein, were subjected to a search and seizure operation at their residence which was conducted by the respondent/Revenue from 09.10.2024 to 11.10.2024, based on a search warrant authorized by the respondent no.3 under Section 132 of the Income Tax Act, 1961 (the Act).
