AO freezes 13 Bank Accounts of Company blocking its Operations: Delhi HC orders Dezfreeze on Payment of 20% [Read Order]

The Delhi High Court, in a petition challenging the Income Tax Department’s action of freezing a company’s 13 bank accounts, which blocked its operations including employee salaries, statutory dues..etc, ordered defreeze on payment of 20%.

The petitioner, Boang Technology Private Limited had approached the Court seeking relief against the order of the Assessing Officer (AO) rejecting its stay application and the subsequent communication issued to HDFC Bank directing attachment of thirteen of its accounts under Section 226(3) of the Income TaxAct, 1961.

The company contended that the AO’s action was arbitrary and disproportionate. It was argued that the rejection of the stay application on September 23, 2025, was immediately followed the next day by the attachment of all bank accounts, leaving no opportunity for the petitioner to approach the Commissioner of Income Tax (CIT) in appeal.

The Counsel for the petitioner said that the freezing of all accounts blocked the company’s operations, preventing the payment of employee salaries and statutory dues, thereby causing severe hardship and prejudice.

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On the other hand, counsel for the Revenue, appearing on advance notice, submitted that the accounts would be released if the petitioner deposited 20% of the disputed demand. The Revenue clarified that upon such payment, necessary communication would be issued to the bank to de-freeze the accounts.

The Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar noted the submissions and recorded that the petitioner agreed to deposit 20% of the demand, which was stated to be approximately ₹1.65 crores.

The Court directed that the said amount be deposited on or before October 3, 2025. After such a deposit, the AO was to immediately communicate with the bank to de-attach the thirteen accounts to enable the company to resume its financial operations.

Further, the Court granted liberty to the petitioner to file an application before the CIT within one week, challenging the AO’s order in respect of the balance 80% of the disputed demand.

The CIT was directed to consider such application on its merits, keeping all rights and contentions of both parties open. The Court clarified that failure to deposit the 20% within the stipulated time would invite serious consequences.

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