2021 (8) TMI 572 - HC - Income Tax

Attachment of properties u/s 132(9B) - Single member bench of HC granted interim relief to the Assessee - No proper opportunity given to the department - Department sought few days for production of records as directed on 01.04.2021, as the concerned officer has returned from Election duty only the previous day - HELD THAT - The order lifting the attachment forthwith would amount to allowing the writ petition itself, as what was impugned in the writ petition is the order of attachment under Section 132(9B) of the Act. If the order of attachment is lifted, then the respondent/assessee would get the entire relief as prayed for in the main writ petition. Thus, in our considered view, the prayer for interim stay of the order of attachment, if granted before filing the counter and before adjudicating the issues, would result in granting the main relief at the interim stage itself, which is normally not granted unless and until the pleadings are complete and the arguments are heard on the prayer for interim relief. In the Memorandum of Grounds of Writ Appeal, it is stated that the scope of provisional attachment under Section 132(9B) is wide and should not be construed to be limited to the searched persons alone, as the scheme of search assessment under the Act is not limited to the searched persons alone and it will include any other person to whom the seized materials may relate. - Several other grounds have also been raised touching upon the merits of the matter. The above ground and the other grounds raised in the Writ Appeals are touching upon the merits of the matter, which need to be agitated in the writ petitions, for which, a counter affidavit of the Department is essential. As reasonable opportunity was not afforded to the appellant/Department to place their submissions on record in the form of counter affidavit. In fact, in the impugned order, the Court has directed counter to be filed. Therefore, we are inclined to interfere with the impugned order. For the reasons set out, these Writ Appeals are allowed and the impugned common order is set aside. No costs. Consequently, connected miscellaneous petitions are closed. The appellant/Department is granted eight weeks' time to file their counter affidavit and after serving copies of the counter along with Annexures, if any, in the form of Typed Set of Papers, the counter is to be filed in the Registry. List the writ petitions before the appropriate Single Bench after twelve weeks.

Summary

Issues:
1. Challenge to interim order granted in writ petitions regarding attachment of properties under Section 132(9B) of the Income Tax Act, 1961.
2. Adequacy of opportunity given to the Department to present facts in the form of a counter affidavit.
3. Consideration of grounds raised in Writ Appeals regarding the scope of provisional attachment and merits of the matter.
4. Decision on lifting the attachment forthwith and its implications on the main relief sought in the writ petition.
5. Compliance with court directions and subsequent actions by the Department.

Analysis:
1. The High Court of Madras heard Writ Appeals challenging the correctness of an interim order regarding the attachment of properties under Section 132(9B) of the Income Tax Act, 1961. The interim order favored two writ petitioners who had not been subjected to search and seizure under Section 132 of the Act, leading to a finding that there was no justification for the provisional attachment of their assets.
2. The Department argued that they were not granted a reasonable opportunity to present facts through a counter affidavit. The court noted that the Department was directed to file a counter affidavit, and the lack of such an opportunity led to interference with the impugned order.
3. Several grounds were raised in the Writ Appeals concerning the scope of provisional attachment and the ongoing investigation into unaccounted income. The court emphasized that these merit-based arguments should be addressed in the writ petitions with the submission of a counter affidavit by the Department.
4. The court highlighted that lifting the attachment forthwith would essentially grant the main relief sought in the writ petition prematurely, emphasizing the importance of completing pleadings and hearing arguments before granting interim relief.
5. Following the court's decision to set aside the impugned order, the Department withdrew the warrant of attachment against the respondents. The court directed the Fixed Deposits to remain in the bank, prohibiting the respondents from withdrawing or liquidating them until the main writ petitions are resolved. The Department was granted eight weeks to file a counter affidavit, and the writ petitions were scheduled for hearing after twelve weeks before the appropriate Single Bench.