JAG MOHAN GUPTA vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-20 & ANR.

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W.P.(C)/2727/2026HC DelhiDLHC01007471202616 April 2026Author: HON'BLE MR. JUSTICE VINOD KUMAR,HON'BLE MR. JUSTICE DINESH MEHTA3 pages
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What did the High Court hold?

The Delhi High Court directed the petitioner to appear before the Assessing Officer (AO) on April 30, 2026, at 11:00 am. The petitioner was to furnish a post-dated cheque dated July 1, 2026, for Rs. 20,35,166 from his HDFC Bank account (no. 50100028212070). Additionally, the petitioner had to provide an undertaking to the AO, stating that the entire proceeds from the released KVPs and FDRs would be deposited into the same bank account. The undertaking would also confirm that the post-dated cheque would be honored upon presentation. The AO was instructed to release all seized FDRs and KVPs as soon as the cheque and undertaking were furnished. The Court stipulated that if the petitioner faced difficulties in crediting the proceeds, he could approach the High Court for further directions. In case the cheque was dishonored, the respondents were permitted to initiate recovery proceedings, including those under Section 138 of the Negotiable Instruments Act, 1881, and contempt proceedings under the Contempt of Courts Act, 1971. The writ petition and pending applications were disposed of.

What were the facts?

The petitioner, Jag Mohan Gupta, challenged an order dated July 19, 2023, passed under Section 245D(4) of the Income Tax Act, 1961, and a demand notice dated July 21, 2023, for Assessment Year 2002-03, totaling Rs. 15,18,781. The petitioner argued that Kisan Vikas Patras (KVPs) and Fixed Deposit Receipts (FDRs) seized by the Income Tax Department exceeded this demand. He requested the return or encashment of these assets to satisfy the demand. The Court noted the reasonableness of this request, as the demand was outstanding and interest was accumulating. The respondents, represented by the Deputy Commissioner of Income Tax, were asked to provide instructions. Subsequently, the Assessing Officer calculated the total demand, including interest up to June 30, 2026, at Rs. 20,35,166. The respondents had no objection to the proposed disposal.

What were the issues?

1. Whether the seized Kisan Vikas Patras (KVPs) and Fixed Deposit Receipts (FDRs) of the petitioner should be released to satisfy the outstanding demand under Section 245D(4) read with Section 156 of the Income Tax Act, 1961, for Assessment Year 2002-03? Assessee's Contention: The petitioner argued that the value of the seized KVPs and FDRs was significantly higher than the outstanding demand of Rs. 15,18,781. He sought either the return of these assets to enable him to pay the demand or for the department to encash them. The petitioner relied on the principle of facilitating recovery while minimizing the burden on the assessee. Revenue's Contention: The respondents, through their learned Senior Standing Counsel, initially sought time to complete instructions. Subsequently, they indicated no objection to the proposed disposal of the writ petition as suggested by the Court, which involved the petitioner furnishing a post-dated cheque and an undertaking.

Which sections of the Income-tax Act were involved?

Section 245D(4),Section 156,Section 138

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~96 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2727/2026, CM APPL. 13249/2026 & CM APPL. 13250/2026 JAG MOHAN GUPTA .....Petitioner Through: Mr. Ruchesh Sinha, Adv. along with the petitioner in person. versus DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-20 & ANR. .....Respondents Through: Mr. Vipul Agarwal, SSC with Ms.Sakshi Shainwal, JSC, Mr. Gaoraang Ranjan & Ms.Harshita Kotnu, Advs. CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

O R D E R %

16.04.

2026

1.

On 07.04.2026, we had passed the following order:

“1. Learned counsel for the petitioner submitted that the total outstanding demand against the petitioner as created by order dated 19.07.2023 passed under Section 245D(4) of the Income Tax Act, 1961 (hereinafter referred to as „the Act of 1961‟) read with notice of demand dated 21.07.2023 issued under Section 156 of the Act of 1961 for Assessment Year 2002-03 is Rs.15,18,781/-, whereas Kisan Vikas Patras (KVPs) and Fixed Deposit Receipts (FDRs) which are lying seized with the Income Tax Department, are of a value much more than the demand raised by the Department.

2.

He further submitted that he has made a representation and requested the respondents either to return the same so that the petitioner can satisfy the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/04/2026 at 15:32:40

demand or asked them to encash the same, but nothing has been done so far.

3.

The request made by the petitioner-assessee appears to be reasonable. Because on the one hand, the respondents are not able to recover a valid demand and on the other hand the interest clock is incessantly clicking due to which the due amount against the petitioner is soaring.

4.

We propose to direct the respondents to hand over the FDRs and KVPs as mentioned in para No.4 of the writ petition, upon the petitioner furnishing the particulars of the bank account and a post-dated cheque equal to the up-to-date demand and an undertaking stating that he shall deposit the entire proceeds of the said FDRs and KVPs in the said bank account. In case of default, the respondents may be allowed to take any proceedings in accordance with the law including initiating proceedings under Contempt of Court Act, 1971. 5. Mr. Vipul Agrawal, learned Senior Standing Counsel to complete instructions regarding the same within two weeks.”

2.

Pursuant to the observations made by this Court, Mr. Vipul Agarwal, learned senior standing counsel for the respondent has produced a note-sheet dated 10.04.2026 whereby the Assessing Officer (hereinafter referred to as „AO‟), Income Tax, Ward-36(1) has calculated the total demand including principal amount due along with interest up to 30.06.2026 (Rs.20,35,166/-).

3.

He further submitted that the respondents have no objection if the petition is disposed of as proposed on 07.04.2026. 4. We, therefore, direct the petitioner to appear before the AO on 30.04.2026 at 11:00 am and hand over a postdated cheque (of 01.07.2026) of Rs.20,35,166/- from his account no. 50100028212070 of HDFC Bank. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/04/2026 at 15:32:40

5.

The petitioner shall also furnish an undertaking before the AO to the effect that the entire proceeds of Kisan Vikas Patras (hereinafter referred to as „KVP‟) and Fixed Deposit Receipts (hereinafter referred to as ‘FDR‟) after being released from the Department shall be deposited in the petitioner’s bank account bearing no. 50100028212070 maintained at HDFC Bank, Shalimar Bagh Branch. The undertaking shall also record that the cheque given shall be honored as and when presented for payment.

6.

It shall be required of the AO to release all the FDRs and KVPs as mentioned in the seizure memos and panchnama, as soon as an undertaking and a cheque is furnished before him.

7.

In case, the petitioner faces any difficulty in getting the amount of proceeds credited, he shall be free to move to the High Court for seeking directions.

8.

In case the cheque of Rs.20,35,166/- given by the petitioner is not honored, the respondents shall be free to take up not only the recovery proceedings but also other appropriate proceedings, including filing of complaint under Section 138 of the Negotiable Instruments Act, 1881 and petition seeking initiation of proceedings against the petitioner under the Contempt of Courts Act, 1971. 9. The writ petition is disposed of. All pending applications are also disposed of.

DINESH MEHTA, J

VINOD KUMAR, J APRIL 16, 2026/kk This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/04/2026 at 15:32:40

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