MATRIX INFO SYSTEMS PVT LTD vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 26 & ORS.

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W.P.(C)/512/2026HC DelhiDLHC01000855202610 March 2026Author: HON'BLE MR. JUSTICE VINOD KUMAR,HON'BLE MR. JUSTICE DINESH MEHTA3 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the petition. The Court observed that the demand against Mr. Sunil Jain had been set aside and remanded for fresh assessment, meaning no demand currently existed against him. Consequently, the Rs. 72,34,000 seized amount was lying idle with the Department, with no provision in the Income Tax Act, 1961, allowing it to be held as advance tax or security against a likely demand. Furthermore, the Department had not challenged the ITAT's order dated December 19, 2025, which stayed the petitioner's outstanding demand. The Court found that the seizure of the petitioner's bank account would adversely affect its right to trade and business under Article 19(1)(g) and its right to property under Article 300A of the Constitution. Accordingly, the Court set aside the notice under Section 226(3) of the Income Tax Act, 1961, dated December 1, 2025, and directed the Assessing Officer to forthwith recall or cancel the order of attachment. The appeal before the Tribunal was fixed for hearing on March 30, 2026, and no adjournment would be granted unless compelling circumstances warranted it.

What were the facts?

The petitioner, Matrix Info Systems Pvt Ltd, filed a writ petition before the Delhi High Court challenging the seizure of its bank accounts by the respondents, the Deputy Commissioner of Income Tax and others. The petitioner contended that the seizure was illegal and arbitrary, especially since the Income Tax Appellate Tribunal (ITAT) had stayed the entire outstanding demand against the petitioner in an order dated December 19, 2025. The revenue argued that a cash amount of Rs. 72,34,000 seized on June 9, 2016, had been adjusted against the outstanding demand of Mr. Sunil Jain, the company's director, and therefore could not be adjusted against the petitioner's demand. However, the revenue conceded that the demand against Mr. Sunil Jain had been set aside by the ITAT and remanded for fresh assessment.

What were the issues?

1. Whether the seizure of the petitioner's bank accounts by the revenue is illegal and arbitrary, notwithstanding the ITAT's order staying the outstanding demand against the petitioner? Assessee's Contention: The petitioner argued that the seizure was illegal and arbitrary because the ITAT had stayed the entire outstanding demand against the company. The petitioner also highlighted that the cash seized, Rs. 72,34,000, was lying idle with the department and could not be adjusted against any demand, especially since the demand against Mr. Sunil Jain, to whom it was purportedly adjusted, had been set aside and remanded by the ITAT. Revenue's Contention: The revenue contended that the cash amount of Rs. 72,34,000 seized on June 9, 2016, was adjusted against the outstanding demand of Mr. Sunil Jain, the director of the company, and therefore could not be adjusted against the demand of the petitioner-company. However, the revenue did not dispute that the demand against Mr. Sunil Jain had been set aside by the ITAT and the matter remanded.

Which sections of the Income-tax Act were involved?

Section 226(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~7 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 512/2026 CM APPL. 2491/2026 CM APPL. 2492/2026 MATRIX INFO SYSTEMS PVT LTD .....Petitioner Through: Mr. Kumail Abbas and Ms. Sahar Irfan, Advs. versus DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 26 & ORS. .....Respondents Through: Mr. Gaurav Gupta, SSC, Mr. Shivendra Singh and Mr. Yojit Praeek, JSCs and Mr. Surya Jindal, Adv. CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

O R D E R %

10.03.

2026

1.

Learned counsel for the petitioner invited Court’s attention towards the order passed by the Income Tax Appellate Tribunal, Delhi Bench ‘G’ (hereinafter referred to as ‘the Tribunal’) dated 19.12.2025 passed in the case of petitioner-company and submitted that in terms of the said order, the entire outstanding demand against the petitioner stands stayed.

2.

Learned counsel for the petitioner submitted that regardless of this fact, the respondents have seized petitioner’s bank accounts (first being overdraft account bearing no. 0901651000003988 and second account bearing no.901102000030825). He argued that the action on the part of the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/03/2026 at 13:53:37

Assessing Officer (AO) is illegal and arbitrary.

3.

Mr. Gaurav Gupta, learned Senior Standing Counsel on the other hand submitted that the cash amount of Rs. 72,34,000/-, which was seized on 09.06.2016 has been adjusted against the outstanding demand of Mr. Sunil Jain, the Director of the company and hence, the said amount cannot be adjusted against the demand of the petitioner-company.

4.

He however, did not dispute the position that the demand against Mr. Sunil Jain has been set aside by the Tribunal and the matter has been remanded to the AO.

5.

Having considered the overall facts on record, more particularly in view of the fact that the demand against the said Mr. Sunil Jain stands set aside and fresh assessment proceedings are to be undertaken and that no demand as of today exists against Mr. Sunil Jain we are firmly of the view that the amount of Rs.72,34,000/- is lying idle with the Department. The same can neither be taken as advance tax nor there is a provision under the Act of 1961 permitting to keep this amount as advance or security against the likely demand.

6.

Further, the Department has not challenged the order dated 19.12.2025 passed by the Tribunal by way of any proceedings or by moving any application before the Tribunal. We are therefore, of the view that the seizure of petitioner’s current account will adversely affect the rights of petitioner-company to carry out trade and business enshrined under Article 19(1)(g) and its right to property under Article 300A of the Constitution of India.

7.

In any case, the appeal is fixed for hearing before the Tribunal on 30.03.2026. We therefore, allow the petition and set aside the notice under This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/03/2026 at 13:53:37

Section 226(3) of Income Tax Act, 1961 dated 01.12.2025 (Annexure P-3).

8.

The petitioner shall not be granted any adjournment in the appeal which is fixed on 30.03.2026, unless compelling circumstances or reasons so warrant.

9.

The Assessing Officer shall forthwith issue necessary order of communication and recall/cancel the order of attachment dated 01.12.2025. 10. The petition stands allowed accordingly. DINESH MEHTA, J VINOD KUMAR, J MARCH 10, 2026/cd This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/03/2026 at 13:53:37

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