Case Law Details
Devadharshan Food Products Vs ITO (Madras High Court)
Conclusion: Attachment order for freezing of bank accounts of assessee was lifted on the condition that the taxpayer pays 20% of the disputed demand in instalments and if the taxpayer defaulted on any instalment, the attachment would stand revived automatically.
Held: Assessee was engaged in manufacturing fruit pulp, had challenged notices issued under Section 226(3) by which its bank accounts with DBS Bank, HDFC Bank, and Lakshmi Vilas Bank were attached to recover a demand of over ₹1.41 crore for Assessment Year 2023-24. Assessee had already filed an appeal before CIT (Appeals) and a stay petition was pending. The company argued that premature attachment of its bank accounts before the expiry of the time granted for payment had severely impacted its seasonal fruit business. It was held that considering the nature of the business and the willingness of the taxpayer to make a partial deposit, assessee should pay 20% of the disputed tax in five equal monthly instalments of ₹6 lakh each, starting from July 2025. The Court directed the Income Tax Department to lift the attachment and instruct the banks to de-freeze the accounts upon payment of the first instalment. However, the Court made it clear that if the taxpayer defaults on any instalment, the attachment would stand revived automatically.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
These writ petitions have been filed challenging the impugned notices dated 23.06.2025 issued by the first respondent.
3. The learned counsel for the petitioner would submit that in this case, the petitioner is engaged in production of fruit pulp from seasonal fruit, especially Mango. This being the fact, the petitioner filed its return of income for the previous year relevant to the Assessment Year 202324, returning a total income of Rs.96,11,670/-, but the fifth respondent raised a demand of Rs.1,41,19,087/- Challenging the same, the petitioner has filed an appeal before the Commissioner of Income Tax (Appeals) on 28.03.2025, pending the said appeal, the first respondent issued a reminder letter dated 18.06.2025, requiring the petitioner to pay the demand immediately and granted time till 04.07.2024. However, the first respondent even before completion of the time granted by him, issued notices under Section 226(3) dated 23.06.2025 to the respondents 3 & 4, seeking to attach the bank accounts of the petitioner. Subsequently, the petitioner filed a stay petition before the Appellate Authority, seeking stay of entire demand, which was also pending. Hence, challenging those notices dated 23.06.2025, the petitioner has come forward with these writ petitions.
4. Further, she would submit that the attachment of petitioner’s bank account severely impacted the petitioner’s business. If the attachment is not lifted, the petitioner will be put to great hardship. Further, she submitted that the petitioner is also willing to deposit 20% of the disputed tax amount to the first respondent in 10 equal monthly instalments
5. On the other hand, the learned Senior Standing Counsel appearing for the respondents 1, 2 & 6 would submit that in the present 7/11 case, the petitioner may be directed to deposit 25% of the disputed tax amount, immediately.
7. In the case on hand, it is evident that fifth respondent raised a demand of Rs.1,41,19,087 /-, against which an appeal was filed by the petitioner on 28.03.2025. The first respondent even before completion of the time granted by him, issued notices under Section 226(3) dated 23.06.2025 to the respondents 3 & 4, seeking to attach the bank accounts of the petitioner. Aggrieved over the same, these writ petitions have been filed.
(i) The order impugned herein is set aside on condition that the petitioner pays 20% of disputed tax amount to the first respondent in five (5) equal monthly instalments of Rs.6,00,000/- (Rupees Six Lakhs only) each, on or before 18th of every month, commencing July 2025 till November 2025.
(iii) It is also made clear that if the petitioner fails to pay any one of the instalments, the attachment order passed by the first respondent shall stands restored.
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