2015 (8) TMI 51 - HC - Income Tax

Provisional attachment orders passed under Section 281B - Held that - A mere reading of the proviso clearly shows that the submission made by the learned counsel for the petitioners does not carry any merit. Indeed, the proviso says that the period of extension of provisional attachment shall not in any case exceed two years or sixty days after the date of order of assessment or reassessment, whichever is later. Since the provision of sixty days period after the order of assessment or reassessment whichever is later has been introduced by virtue of the amendment with effect from 1.10.2014, this Court is not able to find fault with the provisional attachment orders passed by the respondent-assessing officer. As per Instruction No.1914 dated 2.12.93, the stay application filed before the assessing officer should be disposed of within a period of two weeks from the date of filing of the petition by the tax payer. But it appears that the petitioners have filed the stay applications only before the appellate authority. Even the guideline B(iii) of the Instruction No.1914 also states that the decision in the matter of stay of demand should normally be taken by the assessing officer and his immediate superior, therefore, the stay applications filed by the petitioners deserve to be taken up for hearing and disposed of within a period of two weeks from the date of receipt of a copy of this order. In view of the above, this Court, taking into account that a sum of ₹ 1,33,86,909/- had been realized by the respondents during the pendency of the appeals along with the stay applications, hereby directs the appellate authority viz., the Commissioner of Income Tax (Appeals)-18, Chennai, the second respondent herein to take up the pending appeals for final hearing and dispose of the same on merits and in accordance with law within a period of three months from the date of receipt of a copy of this order. It is made clear that since the stay applications are also pending, the respondents need not resort to any coercive proceedings against the petitioners including the realization of the balance amount of ₹ 23,87,948/- till then. With the above direction, all the writ petitions are dismissed.

Summary

Issues:
Challenging impugned notices under Section 221(1) of the Income Tax Act, 1961 and provisional attachment orders under Section 281B of the Income Tax Act, 1961.

Analysis:

1. Challenging Provisional Attachment Orders:
The petitioners contested the provisional attachment orders issued under Section 281B of the Income Tax Act, extending beyond the permissible period of two years. The petitioners argued that the continuous extensions of attachment orders caused hardship as they were unable to operate their bank accounts. Despite filing appeals and stay applications, the assessing officer kept extending the attachment orders, leading to the realization of a significant sum. The petitioners sought the cancellation of all attachment orders and a refund of the realized amount.

2. Respondent's Defense:
The respondents, represented by senior standing counsel, relied on Section 281B and its proviso, which allows for the extension of provisional attachment orders for a maximum of two years or sixty days after the assessment or reassessment order, whichever is later. The counsel argued that since assessment orders were passed recently, the petitioners' challenge to the validity of the attachment orders was unfounded.

3. Court's Decision:
The Court examined Section 281B and noted that the proviso limits the extension of attachment orders to two years or sixty days post-assessment. As the assessment orders were issued shortly before the petitions, the Court found the respondents' actions in line with the law. However, considering the appeals and stay applications filed by the petitioners, the Court directed the appellate authority to expedite the appeal process and dispose of the pending appeals within three months. The Court also instructed that no coercive actions be taken for the realization of the remaining balance until the appeal process concludes.

4. Stay Applications and Hearing Expedited:
The Court highlighted the need for timely disposal of stay applications, emphasizing that such applications should be addressed promptly by the assessing officer and their superior. The Court directed the appellate authority to expedite the hearing of appeals and stay applications within a specified timeframe to alleviate the financial burden on the petitioners.

In conclusion, the Court dismissed the writ petitions but directed the appellate authority to expedite the appeal process, ensuring a fair and timely resolution while refraining from coercive measures for the balance amount realization.