2000 (8) TMI 61 - HC - Income Tax

Recovery Of Tax Provisional Attachment High Court Powers Of High Court Review Words And Phrases

Summary

Issues Involved:
1. Legality of the attachment orders under section 281B of the Income-tax Act, 1961.
2. Compliance with procedural safeguards under section 281B.
3. Judicial review of administrative decisions.
4. Subjective satisfaction of the Assessing Officer regarding the attachment of specific assets.
5. Validity of proceedings initiated under section 158BC.

Detailed Analysis:

1. Legality of the attachment orders under section 281B of the Income-tax Act, 1961:
The petitioner challenged three orders of attachment issued under section 281B of the Income-tax Act, 1961, by the Deputy Commissioner of Income-tax (Central) Circle-II, claiming they were issued without proper application of mind. The orders were purportedly issued to protect the interests of the Revenue, covering assets worth Rs. 23.52 crores, including equity shares and security deposits with Sunair Hotels Ltd., and a debt due from Television (Eighteen) India Ltd.

2. Compliance with procedural safeguards under section 281B:
The petitioner argued that the authorities did not record any finding that the petitioner would avoid its liabilities, and the orders were passed without reasonable grounds. The Revenue countered that the orders were in compliance with section 281B, which requires the Assessing Officer to form an opinion that provisional attachment is necessary to protect the interests of the Revenue. The Revenue provided that due approval was obtained from the Commissioner, and the orders were based on substantial material indicating potential tax evasion by the petitioner.

3. Judicial review of administrative decisions:
The court highlighted the principles of judicial review, emphasizing that administrative actions are subject to scrutiny if there is a manifest error or if the power is exercised arbitrarily. The court referenced various cases to illustrate that discretion must be exercised reasonably and in good faith, considering all relevant factors and excluding irrelevant ones. The court noted that judicial review is not an appeal but a review of the manner in which the decision was made.

4. Subjective satisfaction of the Assessing Officer regarding the attachment of specific assets:
The court acknowledged that the subjective satisfaction of the Assessing Officer regarding which assets to attach is paramount. The petitioner cannot compel the Assessing Officer to attach any particular property. The Revenue's stand was that the assets chosen for attachment were those that could be realized without much difficulty, and the court found no reason to interfere with this discretion.

5. Validity of proceedings initiated under section 158BC:
The petitioner contended that the initiation of proceedings under section 158BC was misconceived and that other provisions could have been used for any escapement of income. The court refrained from expressing an opinion on this matter, stating that it falls within the jurisdiction of the assessing authority to consider.

Conclusion:
The court concluded that the impugned orders did not suffer from any infirmity warranting judicial review. The requirements of section 281B were met, including the necessary opinion of the Assessing Officer and prior approval from the Commissioner. The court dismissed the writ petition, upholding the legality of the attachment orders and the procedural compliance by the Revenue.