CBDT release timelines for seized jewellery bar enhanced security demands caused by revenue delay and price escalation.

The CBDT circular governing release of seized jewellery required the competent authority to act within stipulated timelines once ownership, valuation, and adequate security were accepted. Where the assessee had furnished a bank guarantee covering the department's valuation and the delay in release was attributable to the revenue, the authorities could not demand enhanced security merely because gold prices later increased. Jewellery claimed by third parties was also releasable on filing ownership affidavits and the assessee's no-objection. The operative effect was that seized jewellery had to be released against the security already furnished, without prejudice from administrative delay.

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Issues: Whether the seized jewellery, including jewellery claimed by third parties and jewellery sought by the assessee against an already furnished bank guarantee, was liable to be released in terms of the CBDT circular governing release of seized assets, and whether the revenue could insist upon an enhanced bank guarantee because of delay in release and increase in gold prices.

Analysis: The CBDT circular issued under Section 119(2) of the Income-tax Act, 1961 prescribed a specific procedure and fixed timelines for release of seized jewellery against adequate security. Once the assessee unconditionally accepted ownership and valuation, obtained approval for release, and furnished a bank guarantee covering the valuation assessed by the department's valuer, the competent authority was required to release the jewellery within the stipulated period. The delay in release was attributable to the revenue and was explained only on vague administrative grounds. Such delay could not be used to prejudice the petitioners by demanding a higher bank guarantee on the basis of subsequent increase in gold prices. As regards the jewellery claimed by petitioner Nos. 3 and 4, the revenue had no objection to its release once ownership affidavits were furnished and the assessee expressed no objection.

Conclusion: The seized jewellery claimed by petitioner Nos. 3 and 4 was directed to be released on the filing of the requisite affidavits, and the remaining seized jewellery was directed to be released to the assessee against the bank guarantee already furnished, subject to the required ownership and no-objection affidavits.

Final Conclusion: The writ petition succeeded, and the revenue was bound to release the seized jewellery in accordance with the CBDT circular without insisting on an enhanced security amount caused by its own delay.

Ratio Decidendi: Where the department has approved release of seized jewellery and the assessee has furnished security sufficient to cover the valuation then obtained, the revenue cannot, because of its own delay, insist upon a higher bank guarantee on account of later price escalation; the circular's release timelines are binding and must be followed.

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