TaxTMI 
TaxTMI 
2026 (1) TMI 1675
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....name of Dallas E-com Infotech Private Limited (hereinafter 'the Customer') approached the petitioners for the purchase of gold items, including gold bars and coins. 4. It is stated that prior to entering into any transactions, the petitioners undertook due diligence and complied with all applicable Know Your Customer (KYC) norms. It is also stated that the petitioners obtained and verified adequate banking and identification details of the Customer, and the transactions were carried out through regular banking channels. 5. However, it is the petitioners' case that between August 2024 and March 2025, multiple transactions were carried out with the Customer, aggregating to approximately Rs. 14,20,74,954.99/-. Subsequently, certain complaints appear to have been registered against the Customer by third parties. It is, however, stated that no complaint, FIR, or proceeding has been registered against the petitioners. According to the petitioners, despite this, and without any verification or finding regarding the petitioners' involvement or complicity, respondent No. 4 proceeded to communicate directions to respondent Nos. 2 and 3, resulting in the freezing of the petitioners' ban....
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....g for the concerned respondent stated that no further supporting material or updated status report has been filed. It is stated that no additional information is forthcoming, and consequently, the inadequacy of this link noted in the earlier order remained unexplained. Learned counsel has rightly submitted that there is no purpose in filing a fresh status report. 10. In order 02.12.2025, the Court considered the last status report and noted, inter alia, that pursuant to an analysis of certain complaints, a sum of Rs. 1,36,53,559/- deposited in the petitioners' accounts has been marked as a disputed amount, i.e., alleged proceeds of crime, by the concerned bank officials, solely in compliance with instructions issued by law enforcement agencies of various States/UTs. 11. Merely because certain offences may have been committed by the Customer, cannot, by itself, constitute a lawful basis for a unilateral freezing or withholding of the petitioners' bank accounts. The petitioners are, at the very least, entitled to be informed of the reasons for freezing their bank accounts, which they are otherwise legally entitled to operate. 12. In this context, the provisions of Sections 1....
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.... or the Magistrate may issue a notice upon such person calling upon him to show cause within a period of fourteen days as to why an order of attachment shall not be made. (3) Where the notice issued to any person under sub-section (2) specifies any property as being held by any other person on behalf of such person, a copy of the notice shall also be served upon such other person. (4) The Court or the Magistrate may, after considering the explanation, if any, to the show-cause notice issued under sub-section (2) and the material fact available before such Court or Magistrate and after giving a reasonable opportunity of being heard to such person or persons, may pass an order of attachment, in respect of those properties which are found to be the proceeds of crime: Provided that if such person does not appear before the Court or the Magistrate or represent his case before the Court or Magistrate within a period of fourteen days specified in the show-cause notice, the Court or the Magistrate may proceed to pass the ex parte order. (5) Notwithstanding anything contained in sub-section (2), if the Court or the Magistrate is of the opinion that issuance of not....
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....re under Section 106 can be carried out by a police officer and an ex post facto report submitted to the Magistrate. On the other hand, attachment under Section 107 can be effected only upon the orders of the Magistrate. The logic behind this distinction being that the purpose of seizure is more to secure the evidence during an investigation, whereas attachment is intended to secure the proceeds of crime by preventing its disposal and thus ensuring its availability for legal procedure such as forfeiture and distribution to the victim/s. 14. In the case at hand, the reason for directing the bank to debit freeze the petitioner's account, as stated in Annexure B notice is the transfer of some amount from the account of the accused to the account of the company Headstar Trading LLP and from there to the petitioner's account. Even accepting that the Directors of the above mentioned three entities are known to each other or are related to each other, it may, at best, indicate that the money in the petitioner's account is proceeds of the crime committed by the accused. If so, the amount can be attached or the account frozen only by following the procedure prescribed i....
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....the accounts of the account holders resulting into losses to their day-today affairs. 18. Put all together, it is abundantly clear that an Investigating Agency has no power of attachment/debit freezing a Bank Account under Section 106 of the BNSS. 19. The Investigating Agency may, however, proceed in terms of Section 107 of the BNSS to debit freeze or attach a Bank Account." 16. Recently, this Court in Neelkanth Pharma Logistics (P) Ltd. v. Union of India, [2025 SCC OnLine Del 1055] observed that freezing of an entire bank account merely on account of a small and identifiable amount alleged to be proceeds of cyber fraud having been credited therein, is a disproportionate and arbitrary exercise of power, particularly when the account holder is neither an accused nor even a suspect in the offence under investigation. The Court emphasised that such blanket freezing, without recording or communicating any reasons, results in grave civil and financial consequences, including disruption of business operations, dishonour of cheques and severe hardship, and directly impinges upon the right to livelihood. 17. The Court further observed that innocent and unwary accoun....
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....n account of fraud committed by the Customer. 21. Furthermore, it is stated that on 25.03.2025, SBI Commercial Branch, Ernakulam, vide letter bearing No. CCG/CBEKM/MGDL/2024-25, informed petitioner No. 1 that amounts of Rs.14,61,857/- and Rs.36,50,000/-, with respondent No. 2, had been put on hold pursuant to instructions received from police authorities/investigating agencies. Thereafter, it is stated that vide another communication dated 28.03.2025, the said branch informed petitioner No. 1 that a total amount of Rs.22,00,857/- had been put on hold between 18.03.2025 and 26.03.2025 in one account, and an amount of Rs.50,60,000/- had been put on hold between 17.03.2025 and 27.03.2025 in another account maintained with respondent No. 2. 22. Thus, as stated by petitioners, on 28.03.2025, an aggregate amount of Rs.80,10,857/- standing to the credit of petitioner No. 1 in accounts maintained with respondent Nos. 2 and 3 has been put on hold pursuant to instructions issued by police departments/investigating agencies. 23. Furthermore, as per respondents' own stand, as on date, there is no complaint against the petitioners. The respondents have also not been able to demonstrate....