High Court Orders De-Freezing of Bank Accounts After ITAT Remand

The High Court told the Income Tax Department to unfreeze the petitioner’s bank accounts and wrap up the pending appeals in two months. The Court said freezing the accounts after the assessment orders were sent back for review didn’t make sense.

Also Read
High Court Sets Aside GST Orders for non-generation of Document Identification Number (DIN)

Fact

The petitioners took the Income Tax Department to court because their bank accounts were still frozen even though the huge tax demands for 2021–22 and 2022–23 had already been set aside by the Income Tax Appellate Tribunal (ITAT) for a fresh look. Originally, the department wanted Rs 1.45 crore and Rs 3.07 crore based on orders they passed in March 2024. The petitioners appealed, but the first appellate authority dismissed their case, so they went to the ITAT. The ITAT sided with them, sent the matter back for reconsideration, but despite that, the authorities kept the accounts frozen. This seriously messed with the petitioners’ business.

Issue

The question was pretty straightforward can the Income Tax Department keep someone’s accounts frozen after the assessment orders are canceled and sent for fresh review?

Court Observation

The judges were clear: Once the ITAT sends things back for reconsideration, you can’t keep enforcing the old assessment orders like nothing changed. They said keeping the accounts frozen at this stage isn’t fair and can really hurt a person’s business. They also looked at previous cases including decisions from their own bench and the Kerala High Court and said, look, coercive steps shouldn’t continue while someone’s appeal is pending.

The judgment

The Court ordered the appellate authority to finish the appeals within two months. And until the appeals are decided, the petitioners get their bank accounts back they can operate them again. This relief depends on how the appeals turn out. And with that, the Court closed the writ petition.