The order is set aside only if the company pays 20% of the disputed tax amount to the tax officer in five equal monthly instalments.
Nidhi | Aug 2, 2025 |
HC Orders Bank De-freeze on 20% Tax Payment in Instalments Amid Pending Appeal
The Madras High Court, in a recent ruling, granted relief to a fruit pulp manufacturing company, Amutha Aseptic Food Products, by setting aside an income tax order, which was issued before the payment deadline.
The company filed its Income Tax Return (ITR) for AY 2023-24, declaring a total income of Rs 96,56,970. However, the Income Tax Department raised a demand of Rs 1,93,73,458. Aggrieved by the demand, the company filed an appeal before the Commissioner of Income Tax (Appeals) on 28.03.2025, which is still pending.
The Income Tax Officer sent a reminder letter to the company asking it to pay the demand before 04.07.2025. But even before this deadline, the officer sent a notice to the firm’s bank on 23.06.2025 to attach accounts under Section 226(3) of the Income Tax Act.
The company filed an appeal before the Appellate authority to stay the entire demand, and it was also pending. Therefore, the company filed a writ petition before the Madras High Court to challenge the notices dated 23.06.2025.
The company submitted that since the bank accounts are attached, it is affecting the operations of the company. The company also came forward to pay 20% of the disputed tax amount to the Income Tax Officer in 10 equal monthly instalments.
The Madras High Court observed that the Tax Officer issued notices under Section 226(3) even before the payment deadline (04.07.2025) mentioned in its earlier letter (dated 18.06.2025). Therefore, the court set aside the order but imposed a few conditions:
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