2022 (10) TMI 495 - HC - Income Tax

Provisional attachment to protect revenue in certain cases - Extension of time limit to two years pending assessment or 60 days after the date of order of assessment or reassessment, whichever is later - HELD THAT - In this case, the order of assessment has been passed on 19.08.2021 and thus the period of 60 days after the date of order of assessment, as per the proviso, would expire on 19.10.2021. There can be no further extension of time in terms of Section 281B and the impugned attachment dated 17.02.2021 has thus elapsed, pending Writ Petition.

Summary

Issues:
1. Challenge to the attachment of Fixed Deposits under the Income Tax Act, 1961.
2. Challenge to the attachment of property under Section 281B of the Income Tax Act, 1961.

Analysis:

Issue 1: Challenge to the attachment of Fixed Deposits
In W.P.No.24176 of 2021, the petitioner contested the attachment of Fixed Deposits amounting to Rs.15,93,21,139 under an assessment order dated 19.08.2021. The petitioner had filed a stay application before the Principal Commissioner of Income Tax, which was pending. The Department stated that the stay application was disposed of on 12.10.2021, directing the petitioner to file a stay application before the Assessing Authority. The petitioner was granted permission to move the stay application before the Assessing Authority, and it was decided that the application, when filed, would be disposed of by the Assessing Authority after due hearing and in compliance with the law. Consequently, W.P.No.24176 of 2021 was disposed of, with a clarification that the attachment of Fixed Deposits would persist.

Issue 2: Challenge to the attachment of property under Section 281B
In W.P.No.24180 of 2021, the petitioner challenged the attachment of a property named 'FIRHAVEN' under Section 281B of the Income Tax Act, 1961. Section 281B aims to safeguard revenue interests during assessment proceedings, with provisions for provisional attachment. The law specifies that such attachments cease to have effect after six months from the order, extendable to two years or 60 days post assessment order, whichever is later. As the assessment order was issued on 19.08.2021, the 60-day period ended on 19.10.2021, with no further extension permissible under Section 281B. Consequently, the attachment dated 17.02.2021 was deemed to have lapsed. Therefore, W.P.No.24180 of 2021 was allowed, with no costs incurred.

This comprehensive analysis of the judgment from the Madras High Court addresses the challenges related to the attachment of Fixed Deposits and property under the Income Tax Act, 1961, providing a detailed breakdown of the legal proceedings and outcomes for each issue.