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.
