The Delhi High Court has paused proceedings on a ₹17.66 crore reassessment after it questioned the tax department’s changing stance on seized cash linked to Kapoor Industries Limited, amidst procedural inconsistencies and prior acceptance of the sum as company income.
The Delhi High Court has put on hold reassessment proceedings over ₹17.66 crore after finding it hard to accept the tax department’s latest position on money that an assessing officer had already treated as belonging to the company. In a sharp observation, the bench said the circumstances were “quite shocking” because the cash had been traced to the company’s director, declared by the company as sales, and then accepted in earlier proceedings as part of the company’s taxable position.
The dispute arose from a search on May 12, 2024, at the premises of Ashish Kapoor, a director of Kapoor Industries Limited, where officers recovered the cash from lockers linked to him and another individual, Shakun Tamang. According to the materials before the court, Kapoor later stated that the money belonged to the company and had come from its sales. The company then reflected the amount as cash sales in its return and offered to pay tax on it, while also asking that the seized sum be adjusted against its tax liability. LiveLaw reported that the company’s return had been processed under the summary assessment route, but no credit was given for the self-assessment tax claim.
The controversy deepened after the Income Tax Appellate Tribunal accepted the company’s plea and directed the assessing officer to issue a refund after setting off the company’s tax liability. Related reports also say Kapoor’s own assessment was completed on March 27, 2026, and that the same assessing officer accepted that the seized money belonged to the company. Against that background, the High Court questioned how the department could now argue that the same amount represented escaped income simply because the company’s return had been dealt with under Section 143(1) rather than a fuller scrutiny assessment.
The tax department argued that the search justified the notice and that the mere fact that the cash was said to belong to the company did not settle whether it had been properly offered to tax. Even so, the court said the case required examination and stayed proceedings arising from the notice issued under Section 148. It has given the department six weeks to respond and fixed December 15 for the next hearing. Separate reporting on a related order said the court has also been attentive to the limits on how long seized cash can remain under tax department control, after earlier directing release of the money subject to adjustment for the company’s tax dues.
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