Order Freezing Bank Accounts not to Remain in Force Sixty Days from Date of Order under Sub-Section (8-A) to Section 132 of Income Tax Act: Delhi HC [Read Order]

The Delhi High Court observed that the order freezing bank accounts not to remain in force for more than sixty days from date of order under sub-section (8-A) to Section 132 of the Income Tax Act, 1961.

The petitioners sought directions to de-freeze the bank accounts and to set aside the letter issued by the respondents.

Pranay Jain, counsel for the petitioners, submitted that vide letter, while calling for information under Section 133(6) of the Income Tax Act, the bank accounts of the petitioners were unjustifiably frozen. According to him, as per the mandate of Section 132(8-A) of the Income Tax Act, the freezing of bank accounts ceases to have effect after the expiry of a period of sixty days.

It was therefore, submitted that since the maximum period for which the bank accounts could have been frozen had already expired on 30.06.2023, there is no reason to proscribe the petitioners to operate the bank accounts under consideration.

Sanjay Kumar, the counsel appearing on behalf of the respondents submitted that a search and seizure operation dated 28.04.2023 under Section 132(1) of the Income Tax Act was conducted in the case of Humming Bird Advertising Private Limited, Jai Prakash Singhal and others. During the aforesaid operation, it was found that several persons/entities were involved in hawala transactions through bogus RTGS and cryptocurrencies. It was contended that pursuant to the said search and seizure operation and on the basis of certain suspicious transactions, the accounts of the petitioners were debit frozen to avoid leakage of revenue.

A Division Bench of Justices Purshaindra Kumar Kaurav and Yashwant Varma observed that “Undisputedly, a plain reading of sub-section (8-A) to Section 132 of the Act would unambiguously signify that in the instant case, the order of freezing the bank accounts could not remain in force for a period exceeding sixty days from the date of the order. Admittedly, the said period of sixty days had already expired before the filing of the present petitions and no subsequent order appears to have been passed for extending the freezing of accounts.”

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