2011 (1) TMI 340 - HC - Income Tax

Recovery of tax Provisional attachment to protect revenue in certain cases Limitation - Department shall produce the file to show whether the time was extended as required under the law and the same was communicated to the assessee

Summary

Issues:
1. Assessment orders under section 143(3) for multiple assessment years.
2. Application for grant of refund based on quashed reassessment orders.
3. Provisional attachment of refunds under section 281B during block assessment proceedings.
4. Interpretation of section 281B and its provisos regarding the period of attachment.
5. Compliance with time extensions for provisional attachment under section 281B.

Analysis:

1. The petitioner was assessed under section 143(3) of the Income-tax Act for various assessment years. Subsequently, a notice under section 148 was issued for certain years, leading to reassessment orders. The petitioner sought a refund based on the quashed reassessment orders, which resulted in a reduction of the initial demand amount.

2. The Commissioner of Income-tax (Appeals) quashed the reassessment orders, prompting the petitioner to apply for a refund. However, a provisional attachment of refunds under section 281B was authorized during block assessment proceedings, affecting the refunds due to the petitioner for different assessment years.

3. The provisional attachment under section 281B was subject to specific provisions regarding the period of attachment. The law stipulates that such attachment ceases to have effect after six months unless extended by the competent authority. In this case, the initial period was extended for a further six months, as per the first proviso to sub-section (2) of section 281B.

4. The issue of compliance with the time extensions for the provisional attachment arose during the proceedings. The court considered the interpretation of the second proviso to sub-section (2) of section 281B, emphasizing the requirement for a positive and affirmative act to extend the period of attachment. The court sought clarification from the Revenue Department regarding the extension of time and communication to the assessee.

5. The matter was adjourned for further hearing to address the unresolved issues regarding the compliance with time extensions for the provisional attachment under section 281B. The court directed the Revenue Department to produce relevant documentation to verify if the time extension was carried out in accordance with the law and duly communicated to the petitioner.

This detailed analysis of the judgment highlights the complex legal issues surrounding assessment orders, refunds, provisional attachments, and compliance with statutory provisions, providing a comprehensive overview of the case.