Shalabh Agarwal And Another vs Additional Director General And Another

HIGH COURT OF JUDICATURE AT ALLAHABAD
WRIT TAX No. - 2070 of 2026
A.F.R.
Shalabh Agarwal And Another
.....Petitioner(s)
Versus
Additional Director General And Another
.....Respondent(s)
Counsel for Petitioner(s) : Shaikh Mohd Mujib Ur Rahman
Counsel for Respondent(s) : A.S.G.I., Anant Kumar Tiwari,
Dhananjay Awasthi, Krishna Agarawal
Court No. - 39
HON'BLE SAUMITRA DAYAL SINGH, J.
HON'BLE INDRAJEET SHUKLA, J.
1. Heard Sri Vineet Kumar Singh, Advocate holding brief of Shaikh
Mohd Mujib Ur Rahman, learned counsel for the petitioners, Sri Krishna
Agarawal and Sri Anant Kumar Tiwari, learned counsel for the
respondents.
2. Present petition has been filed for the following relief:
"I. Issue a writ, order or direction in the nature of Mandamus
commanding the respondents to forthwith release the seized cash
amounting to Rs.25,20,000/-, seized vide Seizure memo dated 20.08.2025,
to the petitioner, marked as Annexure No.1 to this writ petition."
3. From the first date itself, the petitioners have been relying on the fact
that cash Rs.25,20,000/- had been seized from them, by the customs
authorities, on 20.08.2025. Six months passed on 19.02.2026. Yet, neither
any show cause notice was issued to the petitioner in terms of the
provisions contained in The Customs Act, 1962 (hereinafter referred to as
'the Act'), nor any time extension order came to be passed and
communicated to them before the end date. The writ petition itself was
presented on 07.04.2026. On 10.04.2026 we passed the below quoted
order:
"1. Petitioners claim the release of the cash seized more than six months
ago.

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2
2. Shri Krishna Agarwal, learned counsel for the revenue authorities prays
for and is granted ten days time to obtain clear written instructions as to
why the seized cash has not been released and if statutory proceeding has
been drawn within limitation.
3. Put up as fresh on 24.04.2026 showing the name of Shri Krishna
Agarwal and Shri Anant Kumar Tiwari both as counsel for the
respondent".
4. On the next date, Sri Krishna Agarwal, learned counsel for the DRI
relied upon a document dated 18.02.2026 described to be the order passed
under Section 110(2) of the Act. Its copy was taken on record and learned
counsel for the petitioners granted time to complete the instructions. For
ready reference the said communication reads as below:

"A case was registered for seizure of 1497.3 gram of Gold on 13.08.2025.
SCN on this case was issued on 12.02.2026, which was within the
mandated timeline. In the follow up investigation, searches were
conducted in Bareilly at the premises of M/s. Sanklap Golds Pvt. Ltd. and
M/s KB Gold & Bullions, Bareilly on 20 August, 2025 and 3-4 September
2025. The search details are as under;
1. During the search proceedings at the premises of M/s Sanklap Golds
Pvt. Ltd. and M/s KB Gold & Bullions, Bareilly on 20 August, 2025
resulted in recovery of 25.2 lakhs cash from Chandra Kamal Bansal and
his son Shri Salabh Bansal came inside the premises during search
proceedings. The said cash was seized for further investigation under the
provisions of Customs Act, 1962.
2. During the search proceedings at the premises of M/s. Sanklap Golds
Pvt. Ltd. and M/s. KB Gold & Bullions, Bareilly on Sept, 2025 resulted
recovery of 8 suspected to be Fake Indian Currency Notes (FICN) notes,
each in denomination of Rs. 500/-, having total face value of Rs. 4,000/-,
as they appeared to be counterfeit. For examination of the notes, an
application has been submitted before CJM Customs Court requesting
approval to send it to Currency Note Press in Nasik on 08 September 2025
with continuous follow up being conducted with SPP at regular intervals
w.r.t. status of approval but court permission is still pending.
It is submitted that this case will require more time for proper
investigation regarding the cash recovered and suspected to be FICN and
issuance of SCN w.r.t. confiscation of cash and suspected to be FICN and
consequent penalty due to following reasons:

Enquiry against the cash amounting Rs.25.20 Lakhs is still not completed
and complete submission against the said seized cash is still pending from
party end.

Approval to allow Forensic/testing the. "High quality of FICN notes rest

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3
with the Court.
Request/Prayer has been made to the court through SPP on 08.09.2025
and continuous follow up is being made for expediting the approval.

The testing by lab and communication of its result will further take time.
Investigation will then be conducted based on test results.
The time limitation for filing SCN wrt seizure of FICN under Section 124
of the Customs Act, 1965, is 6 months from the date of seizure under
Section 110(2) which is getting over on 2 March 2026.
In this context, may be granted for
extension by further 6 months
investigation and issuance of SCN under Section 124 based on
reasons/cause mentioned above, may be granted, please.
Sign. Illegible Sign. Illegible
18/02/26 18/2/2026
Sign. Illegible Sign. Illegible
18/02/26 18/02/2026
Sign Illegible
18/02/2026"
5. In such circumstances, upon the case being taken up on 08.05.2026, the
following further order was passed:
"1. Today, first objection was raised that there is no order extending the
limitation.
2. On that objection being raised by learned counsel for the petitioner, we
had required Shri Krishna Agarwal to obtain further instructions. On
further oral instructions, Shri Krishna Agarwal states that the single page
order-sheet dated 18.02.2026 is the order passed by the ADG granting
approval to extension for limitation.
3. In such circumstances, learned counsel for the petitioner prays for and
is granted a weeks' time to file an appropriate application/affidavit.
4. Put up as fresh on 22.05.2026, by way of last opportunity."
6. In the meantime, the petitioners have formally brought on record the
document relied by customs authorities by means of Supplementary
Affidavit filed on 20.05.2026.
7. Upon the case being taken up today, first objection has been raised by
learned counsel for the DRI that the single sheet order dated 18.02.2026
was passed well within time. However, on further query, it has been
admitted that the said writing was never communicated to the petitioner

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4
before the end date i.e. six months from the detention. Also no show
cause notice has been issued, till date with respect to the cash detained Rs.
25,20,000/-.
8. However, for the first time today, further objection has been raised that
in the meantime, the customs authorities received a requisition dated
19.05.2026 issued by the Principal Director, Income Tax, Lucknow. On
the receipt of the same by the customs authorities, on 20.05.2026, the cash
Rs.25,20,000/- has been made over to the Income Tax Authorities. For
ready reference the record of proceedings under Section 248(1) of the
Income Tax Act, 2025 produced by learned counsel for the DRI, reads as
below:

" ANNEXURE-51
SS (F)-21

Record of Proceedings Under Section 248(1) of the

Income Tax Act, 2025
1. The authorized officer Shri/Smt./Kum Adarsh Kumar, DDIT(Inv.),
Bareilly and Durgesh Mishra, ITO(OSD)(AIU)(Inv.), Lucknow showed to
Shri/ Smt./ Kum Navneet Kumar the requisition under section 248(1) of the
1.T. Act, 2025, dated 19.05.2026 duly signed and sealed by Pr. Director of
Income Tax/Commissioner of Income Tax, Lucknow issued in the case of
Shallabh Agarwal, PAN: BHJPA7535D requiring the latter, being the
authority who had taken into custody certain books of account/documents
who jewellery/other assets in the said case, to deliver the same to the
former, the officer authorised to take over the said books of
account/documents/valuables u/s 248(1) of the Income Tax Act, 2025.

2. The said Shri/Smt/Kum Navneet Kumar after reading the said
requisition U/s 248(1) of the I.T. Act, 2025 put his/her signature on it in
token of having perused the same. The requisition proceedings then
commenced:

3. The following books of accounts/documents/cash/jewellery/ other assets
were delivered to the by the said Shri/Smt./Kum Navneet Kumar to the
authorized officer Shri/Smt./Kum Durgesh Mishra, ITO(OSD) (AIU)
(Inv.), Lucknow.
Documents as per Annexure

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Jewellery as per Annexure
Cash as per Annexure 25,20,000/-
Other assets as per Annexure

4. The proceeding commenced at..13.20 A.M./P.M. on 20.05.2026 and
were concluded at............. A.M./P.M. on 20.05.2026.

Delivering Officer Receiving Officer
Signature sign. illegible Signature sign. illegible
Date 20/05/2026 Date 20/5/2026
Designation IO Designation I.T.O C(OSD) (AIU)
(INV)
Seal: Seal:
(Navneet Kumar) (Durgesh Mishra)
(Income Tax Officer (Inv.) (AIU) (OSD)
Intelligence Officer
Directorate of Revenue Intelligence Lucknow
Zonal Unit, Lucknow
Recd.
Sign. illegible
20/05/2026 "
9. Thus, though the customs authorities admit that no extension of time
had been communicated to the petitioners before the expiry of six months
from 20.08.2025, they now cite inability to return the cash to the
petitioners for the reason of requisition made by the Income Tax
authorities.
10. Having heard counsel for the parties and having perused the
record, the stand taken by the customs authorities is an eye wash. Section
110 (2) of the Customs Act, 1962 reads as below:
"(2)Where any goods are seized under sub-section (1) and no notice in
respect thereof is given under clause (a) of section 124 within six months
of the seizure of the goods, the goods shall be returned to the person from
whose possession they were seized:

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[Provided that the Principal Commissioner of Customs or Commissioner
of Customs may, for reasons to be recorded in writing, extend such period
to a further period not exceeding six months and inform the person from
whom such goods were seized before the expiry of the period so specified:
Provided further that where any order for provisional release of the seized
goods has been passed under section 110A, the specified period of six
months shall not apply.]"
11. In the first place, we are not satisfied that the note sheet dated
18.02.2026 contains the prior approval of the Principal Commissioner of
Customs or Commissioner of Customs, to grant extension of time by six
months. Though the order sheet notes that proposal made to the
Additional Director General, only his signature is appended thereunder
without any remark or note to evidence that at the time of such signature
being placed by the said authority, he had applied his mind or recorded
reasons or approved the proposal in entirety- to allow for extension of
time, by six months. Mainly, the existence of the signature on the order
sheet is nothing more than a rubber stamp, affixed without application of
mind.
12. In
Chhugamal Rajpal vs S.P. Chaliha and Others, (1971) 1 SCC
453 , in the context of the prior approval required to be granted by the
Commissioner in exercise of statutory power under Section 151 of the
Income Tax Act, 1961 (to the reasons to believe recorded by the
Assessing Officer to issue reassessment notice, under that Act), the
Supreme Court made the following pertinent observation:
"5. In his report the Income Tax Officer does not set out any reason for coming to the
conclusion that this is a fit case to issue notice under Section 148. The material that he had
before him for issuing notice under Section 148 is not mentioned in the report. In his report
he vaguely refers to certain communications received by him from the CIT, Bihar and
Orissa. He does not mention the facts contained in those communications. All that he says is
that from those communications “it appears that these persons (alleged creditors) are name
lenders and the transactions are bogus”. He has not even come to a prima facie conclusion
that the transactions towhich he referred are not genuine transactions. He appears to have
had only a vague feeling that they may be bogus transactions. Such a conclusion does not
fulfil the requirements of Section 151(2). What that provision requires is that he must give
reasons for issuing a notice under Section 148. In other words he must have some prima
facie grounds before him for taking action under Section 148. further his report mentions:

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“Hence proper investigation regarding these loans is necessary”. In other words his
conclusion is that there is a case for investigating as to the truth of the alleged transactions.
That is not the same thing as saying that there are reasons to issue notice under Section
148. Before issuing a notice under Section 148, the Income Tax Officer must have either
reasons to believe that by reason of the omission or failure on the part of the assessee to
make a return under Section 139 for any assessment year to the Income Tax Officer or to
disclose fully and truly all material facts necessary for his assessment for that year, income
chargeable to tax has escaped assessment for that year or alternatively notwithstanding that
there has been no omission or failure as mentioned above on the part of the assessee, the
Income Tax Officer has in consequence of information in his possession reason to believe
that income chargeable to tax has escaped assessment for any assessment year. Unless the
requirements of clause (a) or (b) of Section 147 are satisfied, the Income Tax Officer has no
jurisdiction to issue a notice under Section 148. From the report submitted by the Income
Tax Officer to the Commissioner, it is clear that he could not have had reasons to believe
that by reason of the assessee's omission to disclose fully and truly all material facts
necessary for his assessment for the accounting year in question, income chargeable to tax
has escaped assessment for that year; nor could it be said that he as a consequence of
information in his possession, had reasons to believe that the income chargeable to tax has
escaped assessment for that year. We are not satisfied that the Income Tax Officer had any
material before him which could satisfy the requirements of either clause (a) or (b) of
Section 147. Therefore he could not have issued a notice under Section 148. Further the
report submitted by him under Section 151(2) does not mention any reason for coming to
the conclusion that it is a fit case for the issue of a notice under Section 148. We are also of
the opinion that the Commissioner has mechanically accorded permission. He did not
himself record that he was satisfied that this was a fit case for the issue of a notice under
Section 148. To Question 8 in the report which reads “whether the Commissioner is
satisfied that it is a fit case for the issue of notice under Section 148”, he just noted the
word “yes” and affixed his signatures thereunder. We are of the opinion that if only he had
read the report carefully, he could never have come to the conclusion on the material before
him that this is a fit case to issue notice under Section 148. The important safeguards
provided in Sections 147 and 151 were lightly treated by the Income Tax Officer as well as
by the Commissioner. Both of them appear to have taken the duty imposed on them under
those provisions as of little importance. They have substituted the form for the substance."
(emphasis supplied)
13. That principle was followed and applied in Union of India vs Rai
Singh Dev Singh Bist, (1973) 3 SCC 581 and Sahara India (Firm) (1)
vs CIT, (2008) 14 SCC 151 . In both decisions, it was held that the
approval order may not be passed mechanically and it must reflect that
before reaching the required satisfaction, the higher authority had applied
its mind and thus examined the fitness of the case for the purpose of grant
of approval.

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14. To the extent mandatorily no cash seized may be retained beyond a
period of six months and further to the extent the Act prescribes that the
extension of time may be granted for "reasons to be recorded in writing",
the note sheet is a mute document. As to what may amount to "reasons to
believe", the issue is no longer res integra.
15. Considering the law laid down by the Supreme Court, in the context
of the Income Tax Act, a coordinate bench to which one of us (S.D.
Singh, J.) was part, in Mudra Exports vs Deputy Commissioner of
, it was observed as below:
Income Tax, 2024:AHC:59707-DB
"16. As to what amounts to "reason to believe", the law has remained settled over long
decades. In S Ganga Saran and Sons (P) Ltd. Vs. ITO (1981) 3 SCC 143, in the context of
the then existing Section 147(a) of the Act, yet, in the context of initiation of reassessment
proceedings upon recording of "reasons to believe", it was established in law that those
words were stronger than "is satisfied"; the "belief" must be based on "reason" that are
"relevant and material". For ready reference, it was held as below:-
"6. It is well settled as a result of several decisions of this Court that two distinct conditions must be
satisfied before the Income Tax Officer can assume jurisdiction to issue notice under Section 147(a). First,
he must have reason to believe that the income of the assessee has escaped assessment and secondly, he
must have reason to believe that such escapement is by reason of the omission or failure on the part of the
assessee to disclose fully and truly all material facts necessary for his assessment. If either of these
conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The
important words under Section 147(a) are "has reason to believe" and these words are stronger than the
words "is satisfied". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It
must be reasonable or in other words it must be based on reasons which are relevant and material. The
court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed
with the Income Tax Officer in coming to the belief, but the court can certainly examine whether the
reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the
belief before he can issue notice under Section 147(a). If there is no rational and intelligible nexus between
the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could
reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not
have reason to believe that any part of the income of the assessee had escaped assessment and such
escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly
all material facts and the notice issued by him would be liable to be struck down as invalid."
17. Then, a co-ordinate bench decision of this Court in Indra Prastha Chemicals Ltd. Vs.
CIT (2004) 271 ITR 113, applied that law and held as below:-
"11. The expression "reason to believe" in section 147 does not mean purely subjective satisfaction on the
part of the Assessing Officer. The belief must be held in good faith; it cannot be merely a pretence. It is
open to the court to examine whether the reasons for the belief have a rational connection or a relevant
bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To
this limited extent, the action of the Assessing Officer in starting proceedings under section 147 is open to
challenge in a court of law as held in S. Narayanappa v. CIT, [1967] 63 ITR 219 (SC); Kantamani Venkata
Narayana and Sons v. First Additional ITO, [1967] 63 ITR 638 (SC); Madhya Pradesh Industries Ltd. v.

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9
ITO, [1970] 77 ITR 268 (SC); Sowdagar Ahmed Khan v. ITO, [1968] 70 ITR 79 (SC); ITO v. Lakhmani
Mewal Das, [1976] 103 ITR 437 (SC); ITO v. Nawab Mir Barkat Ali Khan Bahadur, [1974] 97 ITR 239
(SC); CST v. Bhagwan Industries (P.) Ltd.,[1973] 31 STC 293 (SC) and State of Punjab v. Balbir Singh,
(1994) 3 SCC 299.
12. The formation of the required opinion and belief by the Assessing Officer is a condition precedent.
Without such formation, he will not have jurisdiction to initiate proceedings under section 147. The
fulfilment of this condition is not a mere formality but it is mandatory. The failure to fulfil that condition
would vitiate the entire proceedings as held by the apex court in the case of Johri Lal (HUF) v. CIT, [1973]
88 ITR 439 (SC) and Sheo Nath Singh v. AAC of IT, [1971] 82 ITR 147 (SC). The reasons for the formation
of the belief must have rational connection with or relevant bearing on the formation of belief. Rational
connection postulates that there must be a direct nexus or live link between the material coming to the
notice of the Assessing Officer and the formation of his belief that there has been escapement of income of
the assessee from assessment in the particular year. It is not any and every material, howsoever vague and
indefinite or distant, remote and far fetched, which would warrant the formation of the belief relating to
escapement of income of the assessee from assessment, as held by the hon'ble Supreme Court in the case of
ITO v. Lakhmani Mewal Das, [1976] 103 ITR 437. If there is no rational and intelligible nexus between the
reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could
reasonably entertain the belief, the conclusion would be inescapable that the Assessing Officer could not
have reason to believe. In such a case, the notice issued by him would be liable to be struck down as invalid
as held in the case of Ganga Saran and Sons P. Ltd. v. ITO, [1981] 130 ITR 1 (SC).
13. Thus, it is well settled that the "reason to believe" under section 147 must be held in good faith and
should have a rational connection and relevant bearing on the formation of the belief and should not be
extraneous or irrelevant. Further, this court in proceedings under article 226 of the Constitution of India
can scrutinize the reasons recorded by the Assessing Officer for Initiating the proceedings under section
147/148 of the Act. The sufficiency of the material cannot be gone into but relevancy certainly be gone
into."
16. Therefore, we have no hesitation to reach the conclusion that there did
not exist any prior approval by the competent authority to extend the
period of limitation, to issue the show cause notice and thereby to further
enable retention of cash Rs.25,20,000/- beyond the period of six months.
17. Second, even more vitally, on the statement made by Sri Krishna
Agarwal, it is certainly not in dispute that the note sheet referred to above
(described as the order by the DRI), was never issued to or served upon
the petitioners, before expiry of six months. Thus, neither of the
conditions prescribed under Section 110 of the Act was fulfilled.
18. Consequently, it has to be concluded that the petitioners had earned a
right to be returned the entire cash Rs.25,20,000/- on expiry of six
months. Till that date no requisition had been received by the DRI
Authorities from the Income Tax Authorities, to hand over the cash to
them.

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19. Therefore, the retention of the money from 20.02.2026 to 20.05.2026
is wholly illegal and outside the procedure prescribed by the law. The
cash ought to have been returned on the mandatory statutory condition not
fulfilled, without any application by the petitioners. To retain it beyond
the period of six months was without jurisdiction.
20. In that circumstance, the petitioners approached this Court for a
mandamus upon the DRI authorities, on 07.04.2026. The petition was
entertained against advance notice to the respondents. They have been
represented on each of the three earlier dates. They were fully aware of
the lack of jurisdiction to retain the cash beyond 19.02.2026, if not for
absence of prior approval, certainly for reason of the order not
communicated to the petitioners, before expiry of the mandatory six
months period.
21. Still, without informing the Court, acting unilaterally, the DRI
authorities have, without surviving jurisdiction, dealt with the valuable
property of the petitioners, that was in their custody, in trust, held on
behalf of the petitioners and not in any other capacity, after expiry of
statutory period of six months. Yet, they made over that property, of the
petitioners (though held in trust) to the income tax authorities, without
informing the Court. Why and in what circumstance such facts were
hidden from the Court or not disclosed to the Court, is not for us to go
into, at this stage. Those may engage the scope of a disciplinary inquiry
that may be initiated against the erring officials by the DRI authorities,
themselves.
22. What is relevant to the Court is that the fact of non-communication of
the order sheet dated 18.02.2026, to the petitioners, was well known to the
DRI authorities, from before. Also, they were required to issue
instructions to their counsel, in these proceedings. The order dated
20.04.2026 and 08.05.2026 leave no doubt that the issue was in the
knowledge of the DRI authorities and they were cognizant of the fact that
the Writ Court had not only entertained the petition but release of the cash
was under active consideration by the Court.
23. Also, it is stated by learned counsel for the DRI that the
communication dated 07.05.2026 received by Deputy Director clearly
informed him that the office note/order dated 18.02.2026 had not been

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received and therefore the DRI authorities had, informed the Income Tax
authorities to requisition the money. However, on a pointed query, it is
further stated that no requisition had been received by the DRI authorities
till then, or till before 19/20.05.2026.
24. On the last date, Sri Krishna Agarwal had confirmed that other than
the note sheet, there was no other document to justify the retention of cash
beyond 19.02.2026 and it was also known that the communication dated
18.02.2026 had not been communicated to the petitioners. In that
circumstance, only for the purposes of completion of record, we had
required learned counsel for the petitioners to bring on record the said
document, before the proceedings may be concluded. Thus, the matter
was posted for today.
25. In that light of the proceedings and conduct of the DRI authorities, it
is absolutely shocking and therefore, unacceptable that just two days prior
to the date fixed in these proceedings, without taking leave of the Court,
in a wholly hurried manner, the requisition that may have been received
by the customs authorities (from the income tax authorities), was
executed, practically the same day, if not within the same hour. Thus,
requisition first issued by the Income Tax authorities on 19.05.2026 at
Lucknow, has been given effect to at 13:20 pm on 20.05.2026, at Bareilly.
26. In view of above we are forced to reach a conclusion that DRI
authorities have deliberately attempted to defeat the ends of justice and
specifically the present petition. Their conduct appears to be directed not
to participate in the proceedings, but to over reach and defeat the
proceedings, by acting in a manner wholly impermissible in law and
beyond their jurisdiction.
27. In view of above undisputed facts, specifically in face of the
admission that the order sheet/order dated 18.02.2026 was never
communicated to the petitioners within time, and further in view of
satisfaction that the said order sheet does not fulfill the requirements of
approval order, required to be recorded in terms of the first proviso under
Section 110 of the Act, we conclude that the petitioners were entitled to
refund of that amount Rs.25,20,000/-. However, that right of relief earned
by the petitioners has been positively and unfairly obstructed by the DRI
authorities, as recorded above.

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28. Thus, we dispose of the writ petition with the observation that though
the petitioners may now be entitled to return of the money from the
Income Tax authorities, in accordance with law, for the reasons noted
above, that proceedings have been thrust on the petitioners solely for
reason of illegal actions performed by respondents. To that extent
petitioners are found entitled to cost which is assessed Rs.10 lacs-for over
reaching these proceedings and the judicial process and for deliberately
defeating the ends of justice, for reasons not known to the Court.
29. Upto the last para, this order had been orally pronounced on
22.05.2026. Later, against oral mention made by Sri Krishna Agarwal on
behalf of the ASGI, he was permitted to file appropriate application with
respect to his prayer made to reduce the cost.
30. Civil Misc. Application No. 5 of 2026 came to be filed on behalf of
respondent No. 1. It is supported by the affidavit of Sri Neeraj Kumar,
Joint Director, DRI, Lucknow.
31. Today, Sri S.P. Singh, learned A.S.G.I. assisted by Sri Krishna
Agarawal has referred to the contents of the affidavit of the Joint Director.
He has also relied on the Office Order-01/2026 dated 24.05.2026 issued
by the Additional Director General, DRI, Lucknow Zone, Lucknow. In
paragraph 11, 12, 13 and 14 of the affidavit filed by Sri Neeraj Kumar, it
has been stated as below:
"11. That it is humbly submitted that the actions undertaken by the officers
were not with the deliberate intent to defeat the petition but undertaken
under the belief of bonafide discharge of official duty. That there was
never any intention, deliberate or otherwise, to disregard the dignity,
authority, or directions of this Hon'ble Court. The circumstances leading
to the present situation arose due to bona-fide understanding.
12. That it is most respectfully submitted before this Hon'ble Court that
due diligence and due caution shall be exercised by this office in future in
all the sub-judice matters.
13. That it is most respectfully submitted that the officer who had put up
the proposal for extension of the period of issuance of Show Cause Notice
under section 110(2) of the Customs Act 1962 had put up the reasons for

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seeking extension on the file and the competent authority, in agreement
with those reasons, had put his dated signature on the Note Sheet.
However, in further such extensions to be granted in such matters,
independent reason will be recorded by the competent authority and the
order of extension shall also be communicated to the concerned party in
terms of Section 110(2) of the Customs Act, 1962.
14. That the present affidavit may kindly be taken on record in the interest
of justice, this Hon'ble Court may graciously be pleased to accept the
present unconditional apology, take a lenient view in the matter and pass
such further order(s) as deemed fit and proper in the interest of justice."
32. Office Order-01/2026 dated 24.05.2026 relied by the learned A.S.G.I.
reads as below:
"OFFICE ORDER-01/2026
It is hereby directed that no action in respect of matters sub judice before any court shall
be taken without first verifying the status of the pending judicial proceedings and, interim
order/stay/direction, if any. Officers shall exercise due caution in such matters and
ensure that the pendency of the matter before Hon'ble Court/Tribunal is duly taken into
account when any action is contemplated. Wherever required,
leave/permission/clarification of the Hon'ble Court/Tribunal must be sought under the
guidance of standing counsel. All the developments in such cases must be brought to the
notice of the undersigned without delay.

These instructions shall be followed scrupulously by all officers/formations under DRI
Lucknow Zonal Unit. Any deviation shall be viewed seriously.


Sd/-
25/05/2026
(Dr. Vidyut Vikash)
Additional Director General"

WTAX No. 2070 of 2026
14
33. In view of such facts, learned A.S.G.I. assures the Court that in future
the authorities of the DRI will act in accordance with law such that
wherever any cash may be seized, it may be returned to the person from
whom such seizure may have been affected, subject to any show cause
notice issued to proceed against such cash and/or subject to time
extension order that may be passed, in accordance with law, as discussed
above, in the main part of the order.
34. In such facts, he further prays that the costs may be made easy.
35. On the other hand, learned counsel for the petitioners has opposed the
prayer made. He would submit that loss has already been caused to the
petitioners. Thus, impost of exemplary costs may be maintained.
36. In view of the assurance given by the learned A.S.G.I., while some
relaxation in the award of costs may be made, at the same time, in view of
the discussion contained in the main part of the order as also recognising
the fact that the money was retained by the DRI for long duration of three
months, after the expiry of the statutory period under Section 110(2) of
the Customs Act, 1962, loss has been caused to the petitioners for act of
deliberate omission and/or commission. Accordingly, the original
proposal to impose costs Rs. Ten Lacs is modified to Rs. One Lac.
37. Civil Misc. Application No. 5 of 2026 is disposed of.
38.The writ petition is thus
disposed of.
(Indrajeet Shukla,J.) (Saumitra Dayal Singh,J.)
May 27, 2026
Faraz/Mohit
Digitally signed by :-
FARAZ AHMAD
High Court of Judicature at Allahabad