Loss of jewellery seized and kept in bank custody amounts to loss by Income Tax Authorities and payment of said jewellery has to be made by the Income Tax Authorities.
In a recent judgment, Hon’ble High Court has held that the loss of jewellery seized by Income Tax Authorities and kept in bank custody would amount to loss by the Income Tax Authorities, and payment of the said jewellery has to be made by the Income Tax Authorities.
ABCAUS Case Law Citation:
4760 (2025) (09) abcaus.in HC
A search and seizure operation under section 132 of the Income Tax Act, 1961 (the Act) was carried out at the place of the Petitioner and jewellery belonging to the Petitioner was seized. However, the seized jewellery kept in bank custody by the Income Tax Authorities, was lost.
Tthe Petitioner/Assessee had filed a Writ Petition praying for an order and direction to the Income Tax Authorities to pay compensation along with interest for the loss of jewellery seized from the assessee and reportedly lost by the Department. It was also prayed to award exemplary cost and further compensation for the mental agony, harassment and financial distress caused to the petitioner due to the Department negligence, arbitrariness and malafide conduct.
The Hon’ble High Court observed that the Income Tax Authorities were delaying the entire process. The money should have been returned to the petitioner in the year of itself when the petitioner had agreed upon the settled amount.
However, the Hon’ble High Court further observed that no money had been received by the petitioner with regard to the seized jewellery, which had been lost by the Bank.
The Hon’ble High Court held that the petitioner is not concerned with whether the money was paid by the respondent Bank or by the Income Tax Authorities. As the jewellery has been seized by the Income Tax Authorities, the loss of jewellery would amount to loss by the Income Tax Authorities, and accordingly, payment of the said jewellery has to be made by the Income Tax Authorities.
As a result, the Income Tax Authorities were directed to look into the valuation done by the petitioner and upon verification of the said valuation, make payment of the said amount within a period of four weeks from date.
The Court further clarified that the petitioner should be paid the amount within the aforesaid period, otherwise the Income Tax Authorities shall be liable to pay penal interest of 12% on the valuation of the Jewellery starting from the date of seizure of the said jewellery.
The Income Tax Authorities were given the liberty to recovery the amount from the Bank in accordance with law.
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