The Delhi High Court has directed the Income Tax Department to lift the lien over fixed deposit receipts worth ₹84.88 crore upon receipt of a ₹50 crore post-dated cheque. The company must also undertake that it will not transfer its assets or create third-party rights over them.
The Bench of Justice Dinesh Mehta and Justice Aditi Choudhary while disposing of the company’s challenge to the lien and the provisional attachment imposed under Section 281B of the Income Tax Act, 1961. The arrangement followed the company’s offer to pay ₹50 crore under protest against pending tax demands, citing severe financial distress.
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The dispute concerned fixed deposit receipts aggregating to ₹84,88,21,938.85, provisionally attached through an order dated November 10, 2021.
Appearing for the company, Senior Advocate Aseem Chawla argued that the lien had ceased to operate because Section 281B prescribed a six-month life for provisional attachment.
The Income Tax Department submitted that, at the company’s own instance, the High Court had passed an interim order restraining the department from passing the final assessment order for assessment year 2020–21.
The department relied on the first proviso to Section 281B(2), arguing that the attachment could continue for the extended statutory period or until sixty days after the assessment order, whichever was later. Since the assessment for 2020–21 had not been completed, it maintained that the attachment continued to operate.
The company submitted that an assessment order for assessment year 2021–22 had been passed on October 30, 2025, while referring to an order dated July 28, 2025, in W.P.(C) 10308/2025 staying recovery of the demand. For assessment year 2022–23, it stated that the assessment order dated January 14, 2026, was under challenge before the Income Tax Appellate Tribunal.
According to the submissions recorded in the judgment, demands already raised aggregated to ₹157.14 crore. Counsel also referred to a further anticipated demand of ₹45.7 crore, bringing the overall exposure to approximately ₹200 crore.
The company argued that some demands had yet to crystallise and most had been stayed by the High Court. Nevertheless, the continuing lien prevented it from accessing the fixed deposits and accrued interest, together stated to amount to approximately ₹107 crore.
Highlighting the impact on its operations, counsel submitted that the company, which manufactures displays for mobile phones and cameras, had employed around 1,800 people in 2021 but was left with only ten employees. It claimed that the restriction on its funds had contributed to a serious financial crunch and impaired its ability to run the business.
To secure access to the deposits, the company offered to pay ₹50 crore under protest against the pending demands.
The department stated, on instructions, that it had no in-principle objection to the proposal. It nevertheless sought protection of the Revenue’s interests so that recovery would remain possible if the demands were ultimately upheld.
The Bench considered that a ₹50 crore payment would represent approximately 25% of the roughly ₹200 crore outstanding amount. It also referred to the prevailing CBDT circular concerning a 20% deposit for securing a stay of demand during appeal.
Against that background, the Court accepted the proposed arrangement and directed the company to furnish the cheque, together with safeguards concerning its assets.
The Court directed Holitech India to hand over a post-dated cheque dated November 15, 2026, for ₹50 crore, drawn in favour of ACIT, Central Circle 13, New Delhi. The cheque must be delivered to the Assessing Officer within one week of the judgment.
Immediately upon receiving the cheque, the Assessing Officer must pass the requisite order lifting the lien imposed through the November 10, 2021 order and/or recall the provisional attachment under Section 281B. A copy of the order must also be sent to the bank concerned.
The company must furnish an undertaking before the Assessing Officer that it will not subsequently transfer its assets or create third-party rights over them. It must enclose a list of its assets and any existing encumbrances, and place a copy of the undertaking on the Court’s record.
Although the parties advanced competing interpretations of the permissible duration of attachment under Section 281B, the Court disposed of the petition through the payment and asset protection arrangement. It did not expressly decide whether the November 2021 attachment had automatically expired.
The operative relief therefore permits the company to regain access to its deposits upon delivery of the specified cheque, while protecting the Revenue through the ₹50 crore payment obligation and the undertaking concerning the company’s assets. The writ petition and pending interlocutory applications were disposed of.
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