Income Tax Department's Seizure of Jewellery Leads to Court Battle

In a significant development, the income tax department raided the residence of Mr. Jain, discovering several pieces of gold jewellery valued at over Rs 90 lakh. The jewellery was seized as Mr. Jain was unable to provide a satisfactory explanation for its ownership. In an unexpected turn, the jewellery, which had been placed in the safe custody of a nationalized bank, was subsequently reported stolen.

As the income tax case concerning the jewellery seizure progressed, the theft occurred within the bank's premises. Aggrieved by this loss, Mr. Jain filed a case against the Union Bank of India, the income tax department, and the branch manager at the Allahabad High Court, seeking compensation for his significant loss. He demanded Rs 94 lakh (Rs 94,64,844) in damages, with 9% interest per annum from July 30, 2025, until the amount is paid.

Verdict by Allahabad High Court

The Allahabad High Court addressed the matter in its judgment order (WRIT TAX No. - 4160 of 2025) dated September 25, 2025. The court acknowledged that the income tax authorities had caused undue delays in the process. It stated that the money should have been returned to Mr. Jain in 2023, following an agreed settlement of Rs 41 lakh (Rs 41,52,146). Despite this, Mr. Jain had not received any compensation regarding the lost jewellery, which was under the custody of the bank.

The court emphasized that Mr. Jain should not have to bear the burden of determining who should pay—the bank or the income tax authorities. Since the jewellery was seized by the income tax department, the loss of the jewellery would be treated as a loss incurred by the department. Hence, the payment for the jewellery should be made by the income tax authorities.

Court's Directives

In light of these circumstances, the Allahabad High Court directed the income tax authorities to assess the valuation provided by Mr. Jain on July 30, 2025. Following the verification of this valuation, the court mandated that the payment be made within four weeks from the date of the order.

The judgment stipulated, "We make it clear that the petitioner (Jain) 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 from the date of seizure. The income tax authorities may recover the amount from the respondent bank in accordance with the law.” With these directives, the writ petition was disposed of, marking a significant step in the ongoing legal battle over the seized jewellery.