Thermoelectric (TE) materials have gathered much attention due to their ability to harvest waste heat energy. To fulfill the goal of sufficient efficiency conversion two important parameters are required (1) low thermal conductivity and (2) high power factor (PF). Two dimensional (2D) hexagonal boron nitride (h-BN) is isostructural with graphene and composed of excellent opto-electronic properties, high mechanical and chemical stability, further exhibiting wide range of applications in diverse areas. Insulating nature of 2D h-BN can be tuned by different approaches such as functionalization, doping or hybrid structures. Therefore, present work focuses on the oxygenation of h-BN, i.e. BNO, for optimization of electronic and phonon transport properties using the state-of-the-art density functional theory (DFT) and Boltzmann transport equation. The presence of oxygen in out-of-plane direction leads to the buckling in h-BN resulting in 65% decrement in the lattice thermal conductivity of BNO (103.66 W/mK) at room temperature. Further, the giant reduction (from 4.63 to 0.7 eV) in electronic bandgap after oxygenation in h-BN is found, leading to the nine times larger electrical conductivity as compared to h-BN. The calculated power factor is almost double in case of BNO. Present study suggests, BNO might have promising utilization in high temperature thermoelectric applications.