Delhi High Court Condemns Income Tax Department's 13-Year Retention of Seized Cash and Jewellery in Shally Thapar Case
Overview of the Case
The Delhi High Court has come down heavily on the Income Tax Department for its inexcusable failure to return seized assets to an assessee even after more than a decade had elapsed. The case, Shally Thapar Vs ACIT (Delhi High Court), bearing W.P.(C) 10592/2026, was decided on 30th July 2026 in relation to Assessment Year 2011-12. The facts of this matter reveal a deeply troubling picture of institutional inertia, procedural apathy, and what the Court itself described as "high-handedness and red-tapism" on the part of the Revenue authorities.
Background and Factual Matrix
The Search and Seizure in 2010
During a search operation conducted on 17th September 2010, the Income Tax Department seized the following assets belonging to the petitioner:
- Cash amounting to ₹32,50,000/-
- Jewellery valued at ₹23,16,146/-
These assets were taken into custody by the Department under the powers vested in it for search and seizure proceedings. What followed over the next thirteen years, however, is a story of administrative negligence and bureaucratic inaction that the Delhi High Court found wholly unacceptable.
Assessment and Partial Adjustment
Pursuant to the search, an assessment was carried out for Assessment Year 2011-12. The Assessing Officer, through an assessment order dated 28th March 2013, adjusted a sum of ₹22,53,850/- from the seized cash against the assessed tax demand for that year. After this adjustment, a balance of ₹9,96,150/- remained refundable to the assessee from the seized cash alone — in addition to the entirety of the seized jewellery worth ₹23,16,146/-, which was never adjusted against any demand.
Indemnity Bond Furnished Promptly
The Department issued a communication to the assessee on 8th August 2018, requiring the furnishing of an indemnity bond as a precondition for the release of the seized assets. The assessee complied with remarkable promptness, submitting the requisite indemnity bond on 20th August 2018. Despite full compliance on the assessee's part, the Department neither returned the balance cash nor the seized jewellery, nor did it communicate any reason for the continued retention of these assets. All subsequent representations and written communications by the assessee went completely unacknowledged and unaddressed by the Department.
Arguments Before the Court
Petitioner's Contentions
Senior counsel appearing for the petitioner placed the following key contentions before the Bench: