2015 (6) TMI 327 - HC - Income Tax

Attachment of the refund done under Section 281-B - Held that - Petitioners furnishing a Bank Guarantee of a Nationalised Bank for an amount of ₹ 28,79,81,050 to the satisfaction of the Commissioner of Income Tax, the Respondent would vacate the attachment of the refund of ₹ 28,79,81,050 done under Section 281-B of the Act. It is made clear that the Petitioners will keep the Bank Guarantee alive till the final disposal of the re-assessment notice dated 16.07.2014 issued for the assessment year 2009-10 and eight weeks thereafter as it is the amounts likely to become due on the reassessment that the Revenue is seeking to secure by attachment of the refund. Once the Bank Guarantee in the above terms is furnished to the satisfaction of the Commissioner of Income Tax, Panaji, the Respondent-Revenue will hand over to refund of ₹ 28,79,81,050/- to the Petitioners within one week thereafter.

Summary

Issues:
Challenge to order under Section 281-B of the Income Tax Act, 1961 regarding provisional attachment of refund.

Analysis:
The judgment delivered by the Bombay High Court pertains to a petition challenging an order issued under Section 281-B of the Income Tax Act, 1961, which provisionally attached a refund of a significant amount granted to the petitioner for the assessment year 2009-10. The petitioner, facing liquidity issues, sought to secure the release of the attached refund by providing a Bank Guarantee to the satisfaction of the Commissioner of Income Tax. Both parties, represented by learned counsels, agreed to this arrangement. The court directed that upon the petitioner furnishing a Bank Guarantee from a Nationalised Bank for the specified amount, the Revenue would vacate the attachment of the refund. It was emphasized that the Bank Guarantee should remain valid until the final disposal of the reassessment notice issued for the relevant assessment year and an additional eight weeks thereafter. Once the Bank Guarantee met the specified conditions, the Revenue was instructed to hand over the refund to the petitioner promptly.

This judgment highlights the practical approach taken by the court in addressing the liquidity concerns of the petitioner while safeguarding the interests of the Revenue. By allowing the provision of a Bank Guarantee as security, the court ensured that the attachment of the refund was lifted, subject to the specified conditions being met. The judgment reflects a balanced consideration of the petitioner's financial challenges and the Revenue's need to secure potential amounts due on reassessment. The court's decision to dispose of the petition and make the rule absolute based on the agreed terms demonstrates a pragmatic resolution to the dispute, benefiting both parties involved in the matter.