Bank Accounts Attached Despite Pending Appeals: Punjab & Haryana High Court Grants Relief to Baddi University, Orders Expeditious Decision
Case Name: Baddi University of Emerging Sciences & Technology v. Commissioner of Income Tax (Exemptions), Chandigarh and Others
Date of Judgment: 12 February 2026
Citation: CWP-3121-2026
Bench: Hon’ble Mr. Justice Deepak Sibal and Hon’ble Ms. Justice Lapita Banerji
Held: The Punjab and Haryana High Court held that while recovery proceedings may not suffer from procedural infirmity, attachment of bank accounts of an educational institution during pendency of statutory appeals requires balancing of equities. The Court directed the Commissioner (Appeals) to decide all pending appeals within one month and permitted limited withdrawal of funds subject to furnishing bank guarantee.
Summary: The petitioner-University, registered under Section 12AA and 12A(1)(ac)(i) of the Income Tax Act, 1961 and claiming exemption under Section 80G(5), challenged a letter dated 14.01.2026 issued by the National Faceless Assessment Centre to Punjab National Bank attaching its bank accounts for recovery of outstanding tax demand of ₹18.63 crores pertaining to Assessment Years 2020-21 and 2022-23.
For AY 2020-21, an assessment order dated 23.09.2022 under Section 143(3) read with Section 144B resulted in addition of ₹1.34 crore and demand of ₹61.32 lakhs. An appeal along with stay application was filed on 20.10.2022 and remained pending.
For AY 2022-23, an assessment order dated 30.03.2024 resulted in addition of ₹24.29 crores and demand of ₹12.84 crores. Appeal was filed on 29.04.2024 without stay application. A penalty of ₹5.17 crores under Section 270A was imposed on 29.08.2024 and appeal against penalty was filed on 19.01.2026 along with stay application.
During pendency of these appeals, multiple recovery notices were issued. The petitioner contended that replies were not filed as the accountant handling tax matters had left employment and notices were sent to his email. It was submitted that due to attachment of bank accounts, the University was unable to meet monthly fixed expenditure of ₹1.38 crores including salaries and statutory liabilities, affecting thousands of students.
The Revenue argued that attachment was lawful as no replies were filed and no stay application was moved in the second appeal until after attachment.
The Court observed that although there may be no procedural infirmity in issuance of recovery notices and penalty order, the petitioner is an educational institution imparting education to several students, which is a beneficial cause. The Court noted that considerable time had elapsed since filing of the first two appeals and they remained undecided.
Balancing equities, the Court held that pendency of appeals coupled with the nature of the institution warranted limited protection.
Decision: The writ petition was disposed of with the following directions:
The Commissioner (Appeals) was directed to decide all three pending appeals (filed on 20.10.2022, 29.04.2024 and 19.01.2026) or at least the stay application dated 19.01.2026 within one month from receipt of certified copy of the order.
In the meantime, upon furnishing bank guarantee(s) to the tune of ₹1 crore in favour of the competent authority, the petitioner-University was permitted to withdraw up to ₹1 crore from its attached bank accounts for meeting daily expenses.