Facts of the Case

The petitioner, Boang Technology Pvt. Ltd., filed a writ petition challenging the notice dated 24.09.2025 issued under Section 226(3) of the Income-tax Act, 1961 and the order dated 23.09.2025 rejecting its application for stay of demand.

Following rejection of the stay application, the Assessing Officer issued a communication to HDFC Bank directing attachment/freezing of thirteen bank accounts of the petitioner. The petitioner contended that no reasonable time was granted to approach the Commissioner of Income Tax (CIT) against the rejection of stay and that the freezing of accounts prevented payment of salaries and statutory dues, causing severe prejudice.

Issues Involved

Whether immediate attachment of bank accounts under Section 226(3) after rejection of a stay application, without granting time to approach the CIT, is justified, and whether interim protection ought to be granted upon partial deposit of demand.

Petitioner’s Arguments

The petitioner argued that the Assessing Officer acted in haste by directing attachment of thirteen bank accounts immediately after rejecting the stay application, without affording time to avail the statutory remedy before the CIT. It was submitted that such coercive recovery paralysed business operations, including payment of employee salaries and statutory liabilities, and warranted immediate judicial intervention.

Respondent’s Arguments

The Revenue, appearing on advance notice, submitted on instructions that if the petitioner deposited twenty percent of the outstanding demand, the attached bank accounts would be released and an appropriate communication would be issued to the bank. The Revenue did not oppose grant of liberty to the petitioner to approach the CIT for stay of the balance demand.

Court Order / Findings

The Delhi High Court recorded the statement of the Revenue and directed that upon deposit of twenty percent of the demand, the thirteen bank accounts attached by the Department shall be immediately released/de-attached to enable the petitioner to make the deposit. The Court noted that the approximate twenty percent amount was stated to be ₹1.65 crores.

The Court further granted liberty to the petitioner to approach the CIT by filing an application challenging the Assessing Officer’s order within one week, with a direction that the CIT shall consider the request with respect to the balance eighty percent of the demand. All rights and contentions of the parties were expressly kept open.

Important Clarification

The Court clarified that coercive recovery measures such as bank attachment should not be employed in a manner that forecloses the assessee’s statutory remedies. Deposit of twenty percent of the demand affords interim protection, while adjudication of stay of the remaining demand lies before the competent authority.

Final Outcome

The writ petition was disposed of. The Delhi High Court directed immediate de-attachment of the petitioner’s thirteen bank accounts upon deposit of twenty percent of the tax demand on or before 03.10.2025, granted liberty to approach the CIT for stay of the remaining eighty percent, and warned that failure to deposit the stipulated amount would invite serious consequences.

Link to download order- https://www.mytaxexpert.co.in/uploads/1769682397_BOANGTECHNOLOGYPVTLTDVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE30DELHI.pdf

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