Bombay High Court
Mahavir Jewellers Nx Llp vs Deputy Director Of Income Tax ... on 8 December, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2025:BHC-OS:25990-DB
60.OS.WPL.31675.2025
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 31675 OF 2025
Mahavir Jewellers NX LLP & Another .. Petitioners
Versus
Deputy Director of Income Tax
(Investigation), 2(4), Mumbai & Ors. .. Respondents
VINA Mr. P. J. Pardiwalla, Senior Advocate a/w. Mr. Dharan V. Gandhi, Ms.
ARVIND Aanchal Vyas, Advocates for the Petitioner.
KHADPE
Digitally signed by
VINA ARVIND Ms. Sushma Nagaraj (Through V.C.) a/w. Ms. Adyasha Das, Advocates
KHADPE
Date: 2025.12.23 for the Respondent Nos. 1 to 3.
12:41:30 +0530
Mr. N. C. Ranganayakulu, Advocate for the Respondent No. 5.
CORAM: B. P. COLABAWALLA &
AMIT S. JAMSANDEKAR, JJ.
DATE: December 8, 2025
P. C.
1. Rule. Respondents waive service. With the consent of the
parties, Rule made returnable forthwith and heard finally.
2. Petitioner No. 1 is a limited liability partnership engaged in the business of manufacturing and trading of gold ornaments and precious stone jewellery. Petitioner No. 2 is one of the partners of Petitioner No. 1. Page 1 of 23
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3. In the present petition, the main relief prayed for, is release of gold jewellery, being the stock-in-trade of Petitioner No.1, weighing 4698.81 grams (gross weights) and 4370.280 grams (net weight) consisting of various gold ornaments, which was seized initially by the Railway Police (i.e. Respondent No. 4 and his team) on 10.12.2024, and thereafter, requisitioned by Respondent No. 1 vide panchnama dated 18.12.2024 (hereinafter referred to as the 'seized jewellery').
4. At the outset, it is pertinent to mention that this is the second round of litigation. Initially, the Petitioners herein, had filed a writ petition before this Court being WP (L) No. 8071 of 2025. The same was disposed of vide order dated 17.06.2025 whereby this Court directed that the application of the Petitioners for release of jewellery be disposed of by Respondent No. 5 within 6 weeks from the date of the said order.
5. Pursuant thereto, Respondent No. 5 has passed an order dated 29.07.2025, whereby he has rejected the application of the Petitioners for release of the seized jewellery for the reasons stated therein. The said order has been interalia, challenged in the present petition.
6. The facts as brought out in the Writ Petition are as under: Page 2 of 23
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60.OS.WPL.31675.2025 a. It is the Petitioners' case that as a matter of regular practice, the partners of Petitioner No. 1 carry their stock-in-trade from their office to various places to show the goods to prospective customers.
Since the goods are valuable, the same are carried by the partners of the Petitioner No. 1 along with their employees. b. On 10.12.2024, Petitioner No. 2 along with his associate Shri Fulchand Motilal Lohar, left the office of Petitioner No.1 at or about 9.10 pm with the seized jewellery in a bag with an intent to display the same to the retailers in Bhandup on the next day. It also contained 9 sales bills issued by Petitioner No. 1 in favour of some customers for the jewellery sold earlier.
c. Petitioner No. 2 and the said associate boarded a slow train coming from Chhatrapati Shivaji Maharaj Terminus ('CSMT') at or about 9:30 pm to go to Bhandup and surrounding areas. When the train reached Sandhurst Road Station, around 8 persons, being Respondent No. 4 and his team, boarded the train and without any cause apprehended Petitioner No. 2 and his associate. Page 3 of 23
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60.OS.WPL.31675.2025 d. Petitioner No. 2 and his associate were made to disembark at Sandhurst Road Station and were taken to a Police Chowki at the CSMT Railway station.
e. Petitioner No. 2 was asked about the contents of the bag that was in his possession. He replied that the bag contains jewellery which was the stock of Petitioner No. 1. The police personnel sought documents to establish the source of jewellery, to which the Petitioner No. 2 replied that he was carrying the jewellery to his residence in order to show, the next day, the same to potential customers who had their business establishments in the Bhandup, Mulund and Vikhroli area. Petitioner No. 2 requested the police personnel to call his family and his partners. On being handed over the mobile phone, Petitioner No. 2 contacted his wife and Mr. Sandeep Shah, another partner of Petitioner No. 1. Shri. Sandeep Shah reached the police station at or around 11:30 p.m. along with the vouchers in respect of the jewellery carried by the Petitioner No. 2. Inspite of the vouchers being produced with promptitude, the said jewellery was detained by the police personnel without assigning any reasons in support of their action. It is the Petitioners' case that the proceedings continued till 6:00 pm on 11.12.2024 and that a panchnama was drawn, the contents of which Page 4 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 were not shown to Petitioner No. 2, though, the signature of Petitioner No. 2 and other persons were taken.
f. It appears that in the meantime, Respondent No. 4 had informed Respondent No.1 about the interception of the gold jewellery from Petitioner No. 2. Between 11.12.2024 to 18.12.2024, Respondent No. 1 had issued summons to Petitioner No. 2 and the statements of Petitioner No. 2 were recorded by Respondent No. 1. g. On 13.12.2024, Respondent No. 1 issued summons to Petitioner No. 2 requiring the Petitioner to be present on 14.12.2024 at Camp office - Room No. 102, Scindia House to give evidence and / or to produce books of accounts and other documents. On 14.12.2024, Petitioner No. 2 along with Mr. Sandeep Shah appeared before Respondent No. 1. It is the Petitioners' case that they had provided a copy of all the vouchers and invoices and explained the issue in detail. It was submitted that the seized jewellery was the stock-in- trade of Petitioner No.1 and that it was duly disclosed in the books of accounts. It was also impressed upon Respondent No.1 that the same constituted about 60% of the total stock-in-trade of Petitioner No. 1 and seizure of such stock-in-trade for about 3 days has Page 5 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 severely hampered the business of Petitioner No. 1. Accordingly, request was made for releasing the seized jewellery. h. It is the Petitioners' case that on 18.12.2024, a call was received by Petitioner No. 2 from the office of the Income Tax Department at around 3:30 pm to be present at the RPF office. Petitioner No. 2 reached the RPF office at about 4:20 pm. On reaching the RPF office, Petitioner No. 2 was served with a summons dated 18.12.2024 issued under Section 131(1A) of the IT Act by Respondent No.1, requiring the presence of Petitioner No. 2 in the office of the RPF. Apparently, a warrant was issued under Section 132A of the IT Act by Respondent No. 2 to Respondent No. 4 for requisitioning of the seized jewellery. On the said date, the gold jewellery was valued by one Shri. Jayant Praful Kumar Bhansali and the same was thereafter handed over to the Income Tax Department. A panchanama recording the seizure was executed on the same day by Respondent No. 1.
i. It is the Petitioners' case that Petitioner No.1 and Petitioner No.2 approached the Income Tax Department multiple times for permitting them to submit the necessary details, to explain the source of jewellery, and for its release, and also for providing a copy Page 6 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 of statements recorded. However, Respondent No.1 refused to accept any submission unless further summons were issued. j. On 02.01.2025, a summons under Section 131(1A) of the IT Act was issued by Respondent No.1 to Petitioner No.2 to appear before her, on the same day at 3:00 pm. Petitioner No.2 was asked to produce all necessary documents in respect of the seized gold ornaments. k. In response, Petitioner No. 1 filed a detailed reply on 02.01.2025, narrating the entire facts and sequence of events. Along with the said letter, Petitioner No. 1 submitted various documents, including purchase bills of Petitioner No. 1 from 01.04.2024 to 10.12.2024 along with the purchase register, sale bills of Petitioner No. 1 from 01.04.2024 to 10.12.2024 along with the sales register, voucher for karigar issue and receipt, stock records as on 10.12.2024 and GST records viz. GSTR 9 and 9C for the year ended 31.03.2024 and GSTR 1 and 3B from April 24 to November 24. Petitioner No. 1 also made a request that as the goods seized are its stock-in-trade, as per the proviso to Section 132(1)(iii) and the third proviso to Section 132(1) of the IT Act, bullion, jewellery or any other valuable article or thing being stock-in-trade found in the course of search could not be seized. Thus, it was requested that as the seized Page 7 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 ornaments represented the stock-in-trade of Petitioner No. 1, and the same was duly supported by documentary evidence filed, a request was made to release the seized jewellery so as to carry on the business and to support the family of the partners of Petitioner No. 1. It was also submitted that the Petitioners were willing to submit any further documents, if required.
l. Despite the above request, and despite providing all documentary evidence in support of the case, Respondent No. 1 did not release the seized jewellery. Instead another a summons was issued by Respondent No. 1 dated 27.01.2025 to Petitioner No. 2 to appear before her on 03.02.2025 at 11:30 am for recording of his statement under Section 131. Accordingly, on 04.02.2025, another statement of Petitioner No. 2 was recorded.
m. Petitioner No. 2, inspite of not being furnished a copy of the statements recorded, and without knowing the contents thereof, affirmed an affidavit on 15.02.2025. In the said affidavit, Petitioner No.2 categorically stated on oath, after bringing out all the facts, that the seized jewellery was the stock-in-trade of Petitioner No. 1 though seized in his name.
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60.OS.WPL.31675.2025 n. Petitioner No. 2 was provided with copies of the statements recorded, vide an email dated 03.03.2025.
o. Since, Respondent No. 1 did not release the seized jewellery, therefore, the Petitioners had filed a writ petition, which was disposed of vide an order dated 17.06.2025 as already noted earlier.
7. Subsequent to the order of this Court dated 17.06.2025, a notice was issued by Respondent No. 5 to Petitioner No. 2 dated 20.06.2025. In the said notice, after referring to the order of this Court, Petitioner No. 2 was asked to provide a copy of the application filed, with detailed justification for release of jewellery and supporting documentary evidence. A hearing was also fixed on 27.06.2025.
8. The details as sought for were provided by Petitioner No. 2 vide its letter dated 27.06.2025. In the said reply, Petitioner No. 2 set out the complete facts, and thereafter, furnished a detailed justification as to how the seized jewellery represented the recorded, and disclosed stock of Petitioner No. 1. A copy of the stock register, purchase registers, copy of purchase invoices, sales invoices, sales register, GST returns were provided. The approval issue and receipt vouchers were also provided. The Petitioner's representative also appeared before Respondent No. 5 on the said date. Page 9 of 23
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9. Subsequent to the hearing, Petitioner No. 2 filed another letter on 08.07.2025. The same was to address the issue raised regarding the item wise list of jewellery seized. It was submitted that in the business of gold jewellery, the industry practice was to record the jewellery items in the stock records on an aggregate basis on the basis of gross gold weight and not on the basis of items. Since, the gold was purchased as bullion and then converted to jewellery and sometimes jewellery does not meet the market demands and the same is reconverted into bullion or some other design, the aforesaid market practice had evolved. Moreover, when the customer buys jewellery he pays according to the market value of the gold. Therefore, each item of jewellery is recorded on gross weight basis and not on an item wise basis. It was submitted that such was the uniform industry practice. It was also submitted that there is no need to maintain an item wise jewellery record because there is no loss to a jeweller if instead of two rings one chain is sold having equivalent weight. As to the issue of one-to-one mapping, it was submitted that there is no such requirement under the Income-tax Act or under any other law that the inventory record should be maintained in a particular format. It was submitted that, since, the value of weight as recorded in the stock register of Petitioner No. 1 reconciles with the jewellery as seized by the RPF, it was clear that the said stock was the accounted stock Page 10 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 of Petitioner No. 1. It was therefore, requested that the seized jewellery should be released.
10. Vide a letter dated 17th July 2025 filed on 18th July 2025, another detailed submission was made coupled with a request for release of the jewellery.
11. On 29.07.2025, Respondent No. 5 passed the impugned order, rejecting the request for release of seized jewellery. The primary reason to reject the request of the Petitioners is the alleged lacuna in the stock register produced, inasmuch as the same only reflects the gross weight, and which according to him, lacks essential descriptive particulars of the goods in stock such as number of pieces, type of items, etc. It is also stated that there is no evidence whether specific items seized by the RPF corresponds to the stock mentioned in the register. As a result, it is stated that the basic requirement of linking physical jewellery with the stock reflected in the books of Petitioner No. 1 is not fulfilled. Further, all the documentary evidence filed, viz., the purchase and sales register, karigar vouchers, GST returns, audit reports, etc. of Petitioner No. 1 are held to not conclusively establish the ownership of the specific jewellery seized. On the above basis, the request of the Petitioners to Page 11 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 release the seized jewellery stood denied. It is this order which is the subject of challenge in the present petition on several grounds.
12. In this factual backdrop, Mr. Pardiwalla, the learned Senior Counsel appearing for the Petitioners, submitted that the seized jewellery belongs to Petitioner No. 1. Ample documentary evidence is produced before the Respondents to demonstrate the same. He submitted that Petitioner No. 1 is engaged in the business of manufacture of gold ornaments and their sale on a wholesale basis. Petitioner No. 1 purchases gold bullion and gives the same on job work to karigars for making of gold ornaments which are then sold to various jewellers in the central suburbs of Mumbai. The Petitioners have produced the audited accounts for the preceding year, i.e. for the year ending 31.03.2024. In the Balance Sheet for the year ending 31.03.2024, closing stock as on 31.03.2024 is appearing at a figure of Rs. 4,12,06,280/-. He submitted that the Petitioners have produced voluminous record for the financial year 2024-25, i.e. for the year in which the event of seizure has taken place, which demonstrates that the seized jewellery not only belongs to Petitioner No. 1 but also to demonstrate that such seized jewellery is the stock in trade of Petitioner No. 1 and that the same is duly recorded and disclosed in the books of Petitioner No. 1. To this effect, he submitted that, the Petitioners have produced purchase invoices, purchase register, Karigar Page 12 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 receipts/ vouchers, stock register, sales invoices, sales registers and GST returns from 01.04.2024 till the date of seizure before the Respondents. None of the documents have been disputed by the Respondents. He drew our attention to the entry in the stock register and specifically to page 258 of the Petition, wherein there is an entry on 10.12.2024 in the name of Petitioner No. 2 for taking the seized jewellery of 4370.280 grams (net weight). He submitted that this very jewellery of the exact same weight was seized on the same day. This, he submitted, demonstrates that the seized jewellery belonged to Petitioner No. 1. He also brought to our notice similar entries against the name of Petitioner No. 2 and another partner which reflects that they have taken the goods out on an approval basis on day one coupled with a return of a similar quantity a couple of days later, at page 242 of the paperbook as illustrative of this practice. He further placed reliance upon the provisions of Section 132A of the IT Act which deals with requisition of books of accounts and assets. He argued that sub-section (3) of Section 132A refers to and provides for application of the provisions related to search procedure as enacted in Section 132. Then, he referred to the provisions of Section 132(1) of the IT Act, which empowers the tax department to carry out a search if, inter alia, there is any reason to believe that a person is in possession of any bullion, jewellery or other valuable article etc. which represents income or property which is not fully disclosed or would not be Page 13 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 disclosed. He invited our attention to the proviso to clause (iii) of Section 132(1) which specifically debars the Department from seizing any stock-in- trade and that in respect of stock-in-trade, only an inventory or note can be made. Relying upon the above provisions, he submitted that first of all, what can be seized in the course of a search is only an undisclosed asset and that in any event stock in trade cannot be seized. Accordingly, he submitted that since, in the present case, the seized jewellery belongs to Petitioner No. 1 and is duly disclosed in its books and that in any event the same is its stock in trade, therefore, the same cannot be seized and the same ought to be released. He submitted that the findings of Respondent No. 5 that the stock register lacks essential descriptive particulars like number of pieces etc., and that the Petitioners have not been able to satisfactorily establish that the seized jewellery was the very jewellery which was given to Petitioner No. 2 by Petitioner No. 1, cannot be countenanced. He submitted that first of all, the jewellery seized is of the exact same weight as that recorded in the books of Petitioner No. 1. Further, he submitted that the documentary evidence produced by Petitioner No. 1 was never disputed. He submitted that all along, right from day one, and even in the statements of Petitioner No. 2, which were recorded on oath, it was always the Petitioners' case that the seized jewellery is the stock-in-trade of Petitioner No. 1. He submitted that there is no requirement to maintain item wise stock and that in the wholesale Page 14 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 jewellery business, which the Petitioner No. 1 is engaged in, the stock and other records are always maintained in terms of weight, i.e., grams. This is because the jewellers are not interested in the type of ornament sold but they are more concerned with the quantity sold. It was also contended that on the date of seizure, about 9 invoices issued by Petitioner No. 1 were also found in the same bag in which the seized jewellery was found. He also drew our attention to the invoices and karigar receipts to show that all the vouchers, sales invoices also give only the net weight without specifying the nature of ornaments. He, thus, submitted that the seized jewellery belongs to Petitioner No. 1 and is disclosed in the books, and is the stock-in-trade and, therefore, should be released forthwith.
13. Per contra, Ms. Nagaraj, the learned counsel appearing for Respondent No. 1 to Respondent No. 3, relied upon the instruction of the Board bearing number F. No. 299/06/2023- Dir(Inv-III) dated 16.10.2023, which provided for the steps for release of seized assets. She relied upon paragraph 5 to submit that the Petitioners can get the goods released by providing a bank guarantee of the market value of the assets. She then relied upon a judgment of this Court in case of M. N. Navale (Bigger HUF) vs. Somnath M. Wajale, Deputy Commissioner of Income-tax, Central Circle - 2(2), Pune reported in (2017) 57 taxmann.com 5 (Bombay), and the order Page 15 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 dated 04.09.2019, in case of Echjay Industries Pvt. Ltd. and Ors vs. Mr. Rajendra and Ors in Notice of Motion No. 481 of 2016 wherein, under similar circumstances, this Court had directed release of jewellery on furnishing of a bank guarantee. She submitted that to safeguard the interest of Revenue, similar conditions may be imposed in the present case.
14. Mr. Ranganayakulu, learned Counsel for Respondent No. 5, referring to the affidavit in reply filed by Respondent No. 5, submitted that the order of Respondent No. 5 is a reasoned order and need not be interfered with. He submitted that the Petitioners have failed to explain to the satisfaction of the Officer that the seized jewellery belonged to Petitioner No.
1. He submitted that the stock register did not record an item wise inventory and that it merely brought out the stock in terms of weight. Based on such register, he submitted, one cannot be satisfied that the seized jewellery belonged to Petitioner No. 1. Thus, in such a case, he submitted, this Court ought not interfere with the impugned order.
15. In his rejoinder, Mr. Pardiwalla, the learned Senior Counsel for the Petitioners, submitted that the question of furnishing a bank guarantee would come into play only if either the goods were validly seized or if such goods are undisclosed. Since, in the present case, the seized goods are Page 16 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 already disclosed in the books of Petitioner No. 1 and that the same constitutes its stock-in-trade, which cannot be seized, he submitted that the requirement to furnish any security would not arise. He referred to the first proviso to Section 132B(1)(i) of the IT Act to submit that if the nature and source of acquisition of the asset is explained, then, such assets have to be released subject to the recovery of any existing liability without any requirement of any security. He also referred to paragraph 3 of the instruction of the Board dated 16.10.2023 (supra), to submit that even the instruction provides for release of assets whose nature and source is explained without any requirement of furnishing a bank guarantee. Thus, in such scenario, he submitted, that paragraph 5 of the Instruction dated 16.10.2023 (supra) cannot be invoked. In fact, he placed on record a press release issued by the Income-tax Department dated 12.11.2020, which gave details of search proceedings in case of a leading wholesale bullion and gold jeweller, and it was stated that around 814 kg of excess stock valued at Rs. 400 crore was not seized because the Income-tax Act restrains seizure of business stock. He, thus, submitted that there cannot be any insistence of any security, particularly when the documents produced by the Petitioners have not been disputed at all.
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16. We have heard the parties and perused the papers. From the facts set out earlier, we are, prima facie, satisfied that the seized jewellery belongs to Petitioner No. 1 and that it constitutes its stock-in-trade. We say so because, first of all, the Petitioners have produced voluminous records before the authorities below including the purchase invoices to show purchase of bullion, purchase register which records all such invoices, karigar receipts/ vouchers to demonstrate making of gold ornaments from the bullion purchased, stock register of bullion which shows movement of bullion, sales invoices to show sale of ornaments and the stock register of finished goods, which records movement of finished goods. These records/ documents are from 01.04.2024 till the date of seizure. None of the above records have been disputed. There is not a whisper in the impugned order that such records are false or concocted. In fact, in the course of hearing as well, to our specific query as to any dispute regarding the correctness of the record, none of the Counsels for the Respondents have disputed the same. Therefore, there is no reason to disbelieve the voluminous records produced by the Petitioners. Secondly, and more importantly, the very same quantity of gold i.e., 4370.280 grams (net weight) which is recorded in the stock register of Petitioner No. 1 on 10.12.2024 to have been handed over to Petitioner No. 2, stand seized from Petitioner No. 2. This in our opinion is a clinching circumstance and cannot be regarded as a coincidence. Further, Page 18 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 from the stock register of finish goods, we find that there are entries at regular intervals of partners taking goods and then bringing back such goods which demonstrates that this appears to be a regular practice. Thirdly, even at the time of seizure, along with the seized jewellery, invoices of Petitioner No. 1 were found. Moreover, right from day one, and even in the statements of Petitioner No. 2, it was his consistent stand that the seized jewellery belonged to Petitioner No. 1 and was the stock-in-trade of Petitioner No. 1. All the above facts and events, at least, prima facie, demonstrates that the seized jewellery belonged to Petitioner No. 1 and are the same goods as reflected in the entry on 10.12.2024 as recorded in the stock register of Petitioner No. 1 to have been given to Petitioner No. 2 and the same constitutes the stock-in-trade of Petitioner No. 1.
17. Coming to the aspect of Petitioner No. 1 not maintaining item- wise stock details, we find that this can hardly be considered to be a ground to deny relief to the Petitioners, considering the voluminous documents and records produced by them before the authorities. Nothing has been brought to our notice that Petitioner No. 1 was required to maintain item wise stock. No provision of either the Income-tax Act or any other law in force which mandates such maintenance is pointed out. In fact, the explanation tendered by the Petitioners that the goods are normally recorded in terms of weight Page 19 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 i.e., in grams, appears to be not without substance as they have shown from the contemporaneous record that even the karigar receipts/vouchers and the sales invoices of Petitioner No. 1 only mention ornaments and the weight thereof without specifying the type of ornament. Such practice has been followed by Petitioner No. 1 consistently and such method has not been found fault with in the past and the returns filed by Petitioner No. 1 were accepted. It also stands to logic, that, at least in the wholesale business, the stock is reflected in weight, i.e., grams and not item wise, as any stock which is not marketable can be reconverted into other items. Even otherwise, even if stock is maintained item wise, still such stock would have to be maintained in terms of weight only. Therefore, we do not find this ground to be a valid ground to reject the application of the Petitioners.
18. In light of the above discussion, we are not inclined to accept the contention of Ms. Nagaraj that the goods may be released subject to Petitioners securing the Department with a bank guarantee. If the goods cannot be seized at all, but are still seized, then, it does not stand to logic that such goods can be released only on furnishing of some security. It is not disputed by the Department that stock-in-trade cannot be seized in terms of the proviso to Section 132(1)(iii) of the Act and that the Department is consistently making its position, in this regard, clear, as can be seen from the Page 20 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 Press Release dated 12.11.2020 (supra). Therefore, if goods are wrongly seized, then, such goods cannot be retained by the Department, and it cannot insist on providing security for release of the goods. Moreover, we are prima facie satisfied that the Petitioners have discharged the onus to prove the nature and source of the seized assets and therefore, such seized jewellery has to be released without insisting on any security from the Petitioners in terms of the first proviso to Section 132B(1)(i) of the Act and paragraph 3 of the Board Instruction dated 16.10.2023 (supra).
19. The reliance by Ms. Nagaraj on the two decisions of this court is misplaced. The judgment in case of M. N. Navale (supra) is clearly distinguishable from the facts of the present case, inasmuch as first of all, it does not deal with a case of seizure of stock-in-trade and secondly, from paragraph 2 of the said order, it is clear that in the said case, the Petitioner's themselves wanted the seized goods to be released on providing of an unconditional bank guarantee for the value of jewellery. Therefore, the said judgment will not assist the Revenue. The second judgment is in case of Echjay (supra). Again, in the said matter, the Petitioners were prepared to give a bank guarantee for the release of gold jewellery that belonged to the family members of the directors and the Court was not dealing with a case of Page 21 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 seizure of stock-in-trade. Thus, even this decision would not assist the Revenue.
20. It is pertinent to mention that very recently, this very Bench had decided a similar issue in the case of H. K. Jewels (P) Ltd. vs. Assistant Director of Income Tax Investigation reported in [2025] 180 taxmann.com
664. The facts are more or less similar as in that case as well, jewellery was found from an employee of the Petitioner. The only difference is that, in that case, the jewellery was seized by the Tax Department pursuant to an action under Section 132 of the Act, whereas in the present case, the jewellery was seized by the Railway Police and thereafter, requisitioned by the Tax Department in accordance with Section 132A of the Act. In the decision in case of H. K. Jewels (supra), we held in paragraph 16, that since, the Petitioner therein had provided ample evidence to show that the jewellery seized was the stock-in-trade, therefore, the same cannot be seized. Moreover, in paragraph 18, we had secured the interest of Revenue by stating that "We must clarify that this order should not be understood to mean that we have given a clean-chit to the Petitioners, and the Income Tax Authorities, if they are of the opinion that the aforesaid gold ought to be brought to tax, they are free to do so in accordance with law."
21. We intend to adopt the same reasoning as in the above referred case. Accordingly, we hereby quash and set aside the order dated 29.07.2025 Page 22 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::
60.OS.WPL.31675.2025 passed by Respondent No. 5 rejecting the application of Petitioner No. 2 to release the seized jewellery. We also direct Respondent No. 5 to release forthwith to Petitioner No. 1 the seized jewellery of 4698.81 (gross weight) and 4370.280 grams (net weight) as seized vide the panchnama dated 18.12.2024 within a period of two weeks from the date of uploading of this order on the website of the High Court.
22. We also clarify that the view taken in this order is a prima facie view and that this order would not come in the way of Income Tax Authorities, when they make any assessment of the Petitioners. If they are of the opinion that the value of the aforesaid gold ornaments ought to be brought to tax, they are free to do so in accordance with law.
23. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof, with no orders as to cost.
24. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [ AMIT S. JAMSANDEKAR , J.] [B. P. COLABAWALLA, J.] Page 23 of 23 December 8, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 23/12/2025 ::: Downloaded on - 26/12/2025 20:58:59 :::