2014 (5) TMI 326 - HC - Income Tax

Validity of order u/s 281B(1) Provisional attachment of bank accounts of society requirement of hearing before passing the order - Held that - So far as Section 142 (2A) is concerned, the provisions contained therein have been substantially amended and proviso has been added to Section 142 (2A) with effect from 1.6.2007 which provide that no direction for special audit shall be issued without affording reasonable opportunity of hearing to the assessee. - But so far as provision of section 281B is concerned, statute has not yet decided to make provisions of giving reasonable opportunity to the assessee before passing an order under Section 281B of the Act. The assessment has been completed and the liability of Rs. 840 and odd crores has been fastened against the assessee regarding tax during the relevant assessment year though in fact, the amount attached in the Banks is only of Rs. 22 crores and odd, which is very meagre amount - the amount under attachment shall not be appropriated against the demand raised till the period of preferring appeal against the assessment order is expired - the AO has duly discharged its obligation under the statute while passing the order u/s 281B of the Act which has been validly approved by the Commissioner Decided against Assessee.

Summary

Issues Involved:
1. Legality of the provisional attachment of bank accounts under Section 281B(1) of the Income Tax Act, 1961.
2. Requirement of pre-decisional hearing before passing the order under Section 281B.
3. Validity of the assessment proceedings and tax liability determined.

Issue-wise Detailed Analysis:

1. Legality of the Provisional Attachment of Bank Accounts Under Section 281B(1):
The petitioner, Sahara Credit Cooperative Society Limited, challenged the order of provisional attachment of its bank accounts passed by the Joint Commissioner of Income Tax, Lucknow, dated 5.3.2014, under Section 281B(1) of the Income Tax Act, 1961. The petitioner is a Multi-State Cooperative Society registered under the Multi-State Cooperative Societies Act, 2002. During the assessment proceedings for the assessment year 2011-2012, the Assessing Officer questioned the creditworthiness, genuineness, and identity of the society's investors. Due to non-cooperation in furnishing requisite information, the Joint Commissioner sought approval for provisional attachment to protect the revenue's interest, which was approved by the Commissioner of Income Tax, Lucknow. Consequently, the bank accounts in various banks were attached.

2. Requirement of Pre-decisional Hearing Before Passing the Order Under Section 281B:
The petitioner argued that the attachment caused serious adverse consequences and relied on judgments suggesting that reasonable opportunity of being heard should be provided. However, the court noted that Section 281B does not mandate pre-decisional hearing. Unlike other provisions such as Section 142(2A) and Section 269UD, which have been amended to include hearing requirements, Section 281B remains unchanged. The court emphasized that it is not the role of the judiciary to add provisions to the statute that the legislature has not included.

3. Validity of the Assessment Proceedings and Tax Liability Determined:
The assessment was completed during the pendency of the writ petition, determining a tax liability of Rs. 8,40,11,21,730. The court noted that the amount found in the attached bank accounts was only Rs. 22,89,70,019/-, a meager sum compared to the assessed liability. The court refrained from commenting on the material placed before the assessing authority as the final assessment is subject to appeal. The court found that the Assessing Officer had discharged his statutory obligations, and the provisional attachment order was validly approved by the Commissioner.

Conclusion:
The court dismissed the writ petition, affirming the legality of the provisional attachment under Section 281B. It held that there is no statutory requirement for a pre-decisional hearing under Section 281B and validated the assessment proceedings. The attached amount shall not be appropriated against the demand until the appeal period expires or as per the appellate court's order, but the petitioner cannot withdraw the attached amount.