Holitech India Private Limited Vs ACIT (Delhi High Court)
Delhi HC Orders Release of Rs. 84.88 Crore FDR Lien Against Rs. 50 Crore Post-Dated Cheque
The Delhi High Court directed the Income Tax Department to lift the lien over fixed deposit receipts (FDRs) aggregating to Rs. 84,88,21,938.85, upon receipt of a post-dated cheque of Rs. 50 crore from Holitech India Private Limited.
The Court also required the company to furnish an undertaking that it would not transfer or create third-party rights over its assets, along with details of its assets and existing encumbrances.
The petition was disposed of through these directions without a final ruling on the competing interpretations of the duration of provisional attachment under section 281B of the Income-tax Act, 1961.
Facts of the Case
The petitioner challenged the lien imposed on its FDRs and the provisional attachment order dated 10.11.2021 passed under section 281B.
The company, engaged in manufacturing mobile phone and camera displays, submitted that the continued restriction on its funds had caused severe financial hardship. According to its counsel, its workforce had declined from approximately 1,800 employees in 2021 to only 10 employees.
The petitioner stated that the attached FDRs, together with accrued interest, represented approximately Rs. 107 crore, which it was unable to use for business purposes.
Petitioner’s Submissions
The petitioner contended that the lien had ceased to operate because the life of a provisional attachment under section 281B was six months.
It also referred to the status of assessment and recovery proceedings for different assessment years. For Assessment Year 2021-22, counsel submitted that an assessment order had been passed and recovery of the demand had been stayed by the High Court. For Assessment Year 2022-23, the assessment order was under challenge before the Income Tax Appellate Tribunal.
The petitioner placed the overall demand exposure, including an amount stated to be likely to arise, at approximately Rs. 200 crore. It argued that some demands had not crystallised and recovery of much of the demand had been stayed.
To obtain release of the funds and address its financial difficulties, the company offered to pay Rs. 50 crore under protest against the pending demand.
Revenue’s Submissions
The Revenue disputed the contention that the attachment had expired.
It relied on the first proviso to section 281B(2), arguing that the attachment could continue until 60 days after the assessment order, where that period was later than the other prescribed period.
The Revenue pointed out that the High Court, by an interim order dated 27.03.2025 in separate proceedings, had restrained it from passing the final assessment order for Assessment Year 2020-21. Since that assessment had not been completed, it contended that the attachment continued.
On instructions, the Revenue stated that it had no in-principle objection to the petitioner’s Rs. 50 crore offer. However, it sought protection against difficulty in recovering dues if the demands were ultimately upheld.
Observations of the High Court
The Court considered the petitioner’s offer against the approximately Rs. 200 crore demand exposure discussed before it.
Referring to the prevailing CBDT circular concerning deposit of 20% of disputed demand for securing a stay, the Court considered it appropriate to direct payment of Rs. 50 crore, representing approximately 25% of that amount.
It coupled release of the FDR lien with an undertaking restricting transfer of assets or creation of third-party rights.
Directions Issued by the Court
The High Court disposed of the petition with the following directions:
1. Post-dated cheque: The petitioner must hand over a cheque for Rs. 50 crore, dated 15.11.2026 and drawn in favour of ACIT, Central Circle 13, New Delhi, to the Assessing Officer within one week of the judgment.
2. Immediate lifting of lien: Immediately upon receiving the cheque, the Assessing Officer must pass the requisite order lifting the lien over the FDRs and/or recall the section 281B attachment order dated 10.11.2021.
3. Communication to the bank: The Assessing Officer must send a copy of the release order to the concerned bank.
4. Undertaking concerning assets: The petitioner must undertake not to transfer or create third-party rights over its assets. It must furnish a list of assets and encumbrances, if any, and place a copy of the undertaking on the Court’s record.
Decision
The writ petition and pending applications were disposed of on these terms.
The release of the lien was directed immediately upon receipt of the post-dated cheque, subject to the accompanying asset-protection undertaking. The Court did not decide whether the original attachment had automatically expired under section 281B.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. By way of the present writ petition, the petitioner has challenged the lien which the respondents have imposed upon the Fixed Deposit Receipts (FDRs) aggregating to a sum of Rs.84,88,21,938.85/-.
2. The provisional attachment order dated 10.11.2021 passed in exercise of powers under Section 281B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) whereby above FDRs were provisionally attached, has also been challenged.
3. Mr. Aseem Chawla, learned Senior Counsel for the petitioner, contended that the lien which was imposed on the aforesaid FDRs has ceased to operate by virtue of provisions contained in Section 281B of the Act of 1961, as the life of the lien is only six months.
4. Mr. Indruj Singh Rai, learned Senior Standing Counsel, on the other hand submitted that the provision contained under Section 281B of the Act of 1961 cannot be read as suggested by Mr. Aseem Chawla. He argued that at petitioner’s own instance, in W.P.(C) 266/2025 this Court has granted interim order dated 27.03.2025 and restrained the respondents from passing final assessment order qua assessment year 2020-21.
5. He submitted that the first proviso to Section 281B(2) of the Act of 1961 clearly provides that the provisional attachment shall continue for a period of six months (extendable up to two years) or sixty days from the date when the assessment order is passed, whichever is later.
6. Having read the proviso, Mr. Indruj Singh Rai argued that since the assessment order for assessment year 2020-21 has not been passed, the provisional attachment over the FDRs which was imposed by order dated 10.11.2021 still continues.
7. Mr. Aseem Chawla, learned Senior Counsel for the petitioner, submitted that so far as assessment year 2021-22 is concerned, the assessment order has been passed on 30.10.2025 but recovery of the demand has been stayed in W.P.(C) 10308/2025 vide order dated 28.07.2025.
8. So far as assessment year 2022-23 is concerned, he submitted that assessment order has been passed on 14.01.2026 and the same is sub-judice before the Income Tax Appellate Tribunal.
9. He, however, submitted that if the demands as raised by the Assessing Officer are added, the aggregate demand comes to Rs.1,57,14,06,363/- and if the demand of Rs.45.7 Crores (which is likely to be raised for assessment year 2021-22) is added, the total demand against the petitioner roughly comes to Rs.200 Crores.
10. Learned Senior Counsel argued that for demand of Rs.200 Crores, out of which some demand is yet to be crystallized and most of it has been stayed by this Court, the respondents are continuing with the lien over the FDRs due to which the petitioner is unable to use funds of Rs.84.88 Crores and interest thereupon roughly amounting to Rs.107 Crores.
11. Highlighting the petitioner’s plight, learned Senior Counsel submitted that the petitioner-company which is engaged in the business of manufacturing the display of Mobile Phones and Cameras had 1800 employees in the year 2021 and is now left with only 10 employees is in a real financial crunch and is unable to run its business.
12. He submitted that though the demand against the petitioner has been stayed by this Court, petitioner would offer to pay Rs.50 Crores under protest against the pending demand, the respondents be however directed to lift the lien towards the FDR so that the petitioner can utilize the amount for its business purposes and tide over the financial distress.
13. Mr. Indruj Singh Rai, learned Senior Standing Counsel, on instructions submits that the department does not have any in-principle objection to petitioner’s such offer. But, they want to secure the revenue’s interest so that if ultimately the demand against the petitioner is upheld, the department does not find it difficult to recover its legitimate dues.
14. Heard learned counsel for the parties.
15. Considering that even if the petitioner were to avail remedy of appeal, as per the prevailing circular of CBDT having deposited 20% of the amount, it would have easily secured stay of the demand, we deem it appropriate to direct the petitioner to pay a sum of Rs.50 Crores (25% of the total outstanding) of roughly Rs.200 Crores.
16. We dispose of the writ petition with following directions:-
(i) The petitioner shall hand over a post-dated cheque dated 15.11.2026 drawn in the name of ACIT, Central Circle 13, New Delhi for a sum of Rs.50,00,00,000/- (Rupees Fifty Crores) to the Assessing Officer within a period of one week from today.
(ii) Immediately on receipt of cheque, the Assessing Officer shall pass requisite order lifting the lien over the FDRs, which he had imposed vide order dated 10.11.2021 and/or he shall recall the order which he had passed under Section 281B of the Act of 1961 by giving reference to the order instant.
(iii) The Assessing Officer shall send a copy of such order to the concerned Bank.
(iv) The petitioner shall file an undertaking before the Assessing Officer while placing a copy thereof on the record of this case that it shall not hereinafter transfer or create third party rights qua its assets. While furnishing the undertaking, the petitioner shall enclose a list of its assets and encumbrances (if any) created.
17. Interlocutory applications also stand disposed of.
