Bank Account Attached by Income Tax Dept: Madras HC Allows Instalment Payment of 20% Tax, Orders De-Freezing After 1st instalment [Read Order]
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
The Madras High Court has set aside an Income Tax attachment order on the condition that the taxpayer pays 20% of the disputed demand in instalments. The court has directed to defreeze the bank account after payment of 1st instalment.
The company, M/s Devadharshan Food Products, engaged in manufacturing fruit pulp, had challenged notices issued under Section 226(3) of the Income Tax Act, 1961, 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.
The petitioner had already filed an appeal before the Commissioner of Income Tax (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.
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Considering the nature of the business and the willingness of the taxpayer to make a partial deposit, Justice Krishnan Ramasamy directed that the petitioner shall 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.
With these directions, the writ petitions were disposed of.
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