Gauhati HC: De-freeze bank accounts post-ITAT remand

Gauhati High Court Orders De-freezing of Bank Accounts Post-ITAT Remand

The Gauhati High Court has ruled in favor of petitioners whose bank accounts were frozen due to income tax demands for Assessment Years 2021–2022 and 2022–2023. The court directed the de-freezing of these accounts, allowing the petitioners to operate them pending a fresh adjudication by the First Appellate Authority, as ordered by the Income Tax Appellate Tribunal (ITAT).

Background of the Case: Tax Demands and Account Freezing

The case originated from assessment orders issued on March 14, 2024, and March 16, 2024, which imposed significant income tax demands. Specifically, the demand for Assessment Year 2021–2022 amounted to ₹1,45,71,045, and for Assessment Year 2022–2023, it was ₹3,07,81,392. The petitioners’ initial appeals to the First Appellate Authority were dismissed on August 25, 2025.

Following this dismissal, the petitioners filed second appeals with the ITAT, Guwahati Bench, under Section 253 of the Income Tax Act, 1961. During the pendency of these appeals, the income tax department proceeded to freeze the petitioners’ bank accounts. However, the ITAT, in its orders dated January 22, 2026, and February 2, 2026, allowed the appeals and remanded the matters back to the First Appellate Authority for a fresh review.

Impact of Frozen Accounts and Court’s Intervention

Despite the ITAT’s remand orders, the petitioners reported that their bank accounts remained frozen. They argued that this continued freezing severely disrupted their business operations. The Revenue, in its defense, cited a previous Gauhati High Court decision, which in turn relied on a Kerala High Court ruling, suggesting that enforcement of demands could be deferred during appellate proceedings.

The Gauhati High Court, taking into account the submissions from both sides and referencing prior judicial pronouncements, acknowledged the predicament faced by the petitioners. The court emphasized the need for a swift resolution of the pending appeals.

Court’s Directives for Expedited Resolution and Account Operation

In its judgment, the High Court issued the following key directives:

• The First Appellate Authority is mandated to dispose of the pending appeals expeditiously, with a target of completion preferably within two months from the date of the order.
• Until the appeals are finally decided, the bank accounts of the petitioners are to be de-frozen.
• The petitioners will be permitted to operate their bank accounts during this period.
• This permission to operate the accounts is explicitly subject to the final outcome of the appellate proceedings.

The writ petition was accordingly disposed of based on these directions, aiming to balance the interests of the revenue with the operational necessities of the petitioners while the appeals are being re-adjudicated.

Readers should treat this as a tax and compliance update, not as personal advice.

This article is for general information based on available source information. It should not be considered legal, tax, investment, or financial advice.