9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (2) TMI 52 - HC - Income TaxBank account property liable to attachment u/s 281B - HELD THAT - Section 281B (1) provides for provisional attachment of any property . The prefix any to the word property has much significance. It indicates that the word property occurring therein is not to be comprehended in a restricted sense. Therefore any property mentioned in Section 281B (1) would take within its sweep money lying in Bank account also. Section 281B (1) provides for provisional attachment of any property belonging to the assessee in the manner provided in the Second Schedule to the Act. The Second Schedule to the Act is titled Procedure for Recovery of Tax . It provides the mode for recovery of Tax. Evidently except for the property exempted from attachment under the Code of Civil Procedure 1908(CPC) other properties are liable to attachment. Section 60 CPC provides the property liable to attachment. Noticeably Section 60(1) CPC specifically states that money is an attachable property. Properties which are not liable to attachment have been specified in the proviso to the section. Therefore money in Bank account is property liable to attachment. There could be instances where the assessee does not own immovable property sufficient enough to secure the likely demand but there are sufficient funds in the bank account. The power for provisional attachment is provided to protect the interest of the revenue. There is no warrant to hold that money lying in a Bank account is not liable to attachment. The mere fact that Bank account is not explicitly provided under Section 281B unlike the GST Act 2017 which specifically mentions the same cannot lead to the conclusion that Bank account is not liable to be attached under Section 281B of the Act. We hold that money in Bank accounts is a property liable for provisional attachment under Section 281B of the Act. We are unable to concur with the finding of the learned Single Judge to the contrary. Whether the security furnished before the Judicial First Class Magistrate s Court could be considered as sufficient security for the purposes of the Act - Evidently the authorities need to form an opinion with regard to the probable demand which of course could not be stated with exactitude at that stage. However the extent of the property attached including attachment of the money in the Bank accounts should be commensurate with the probable demand including the penalty. The proviso to Section 281B (3) indicates that the security required need only be to the extent sufficient to protect the interest of the revenue. Therefore orders of provisional attachment u/s 281B should be commensurate with the probable demand including penalty and should not be blanket orders attaching properties the value of which would be much higher than the probable demand. WP allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment is whether cash in a bank account qualifies as "property" liable to attachment under Section 281B of the Income Tax Act, 1961. Additionally, the court examined whether the security furnished before the Judicial First Class Magistrate's Court was sufficient to secure the interests of the revenue and if the provisional attachment of bank accounts was justified. ISSUE-WISE DETAILED ANALYSIS 1. Definition and Scope of "Property" under Section 281B - Relevant Legal Framework and Precedents: Section 281B of the Income Tax Act allows for the provisional attachment of "any property" to protect the interests of the revenue. The court referred to precedents, including the Supreme Court's definition of "property" in Jilubhai Nanbhai Khachar v. State of Gujarat, which describes property as an aggregate of rights, including tangible and intangible assets. - Court's Interpretation and Reasoning: The court emphasized the broad interpretation of "property," noting that the prefix "any" before "property" in Section 281B suggests an inclusive scope. The court concluded that money in bank accounts falls within this definition. - Key Evidence and Findings: The court noted that Section 60 of the Code of Civil Procedure (CPC) explicitly mentions money as attachable property, reinforcing the interpretation that bank accounts can be attached. - Application of Law to Facts: The court applied this broad interpretation to conclude that the money in bank accounts is subject to provisional attachment under Section 281B. - Treatment of Competing Arguments: The respondents argued that the term "property" in Section 281B should only refer to immovable property, supported by subsections 3 and 4, which discuss valuation and bank guarantees. The court rejected this argument, emphasizing the inclusive nature of "any property." - Conclusions: The court held that money in bank accounts is indeed "property" liable for provisional attachment under Section 281B. 2. Sufficiency of Security Furnished before the Magistrate's Court - Relevant Legal Framework and Precedents: The court examined Section 451 of the Code of Criminal Procedure, which deals with interim custody of property, and the Supreme Court's interpretation in V. Prakashan regarding the temporary nature of such custody. - Court's Interpretation and Reasoning: The court reasoned that the security furnished before the Magistrate's Court was only for ensuring compliance with the court's orders and did not secure the revenue's interests under the Income Tax Act. - Key Evidence and Findings: The court highlighted that the security was for interim custody pending criminal proceedings and not related to tax assessments. - Application of Law to Facts: The court concluded that the security before the Magistrate's Court was insufficient for securing the potential tax demand. - Treatment of Competing Arguments: The respondents contended that the security was adequate, but the court disagreed, emphasizing the distinct purposes of the security in criminal proceedings and tax assessments. - Conclusions: The court concluded that the security furnished before the Magistrate's Court did not suffice to protect the revenue's interests under the Income Tax Act. 3. Validity of Provisional Attachment and Formation of Opinion - Relevant Legal Framework and Precedents: The court referred to Radha Krishnan Industries v. State of Himachal Pradesh, which emphasizes the need for tangible material to justify provisional attachment. - Court's Interpretation and Reasoning: The court noted that the provisional attachment of bank accounts is a drastic measure and should be based on concrete evidence that the assessee might thwart tax recovery. - Key Evidence and Findings: The court acknowledged that the assessment proceedings had been completed, and the department had provided detailed considerations for the attachment. - Application of Law to Facts: Given the completion of assessment and the detailed considerations, the court found no need to further scrutinize the sufficiency of the initial opinion for attachment. - Treatment of Competing Arguments: The respondents argued against the sufficiency of the opinion formed, but the court found the department's documentation adequate. - Conclusions: The court upheld the provisional attachment, finding that the department had acted within its powers and provided sufficient justification. SIGNIFICANT HOLDINGS - The court established that "property" under Section 281B includes money in bank accounts, broadening the scope of attachable assets to include both tangible and intangible assets. - The court rejected the notion that security furnished in criminal proceedings could secure tax demands, emphasizing the need for distinct security measures under the Income Tax Act. - The court affirmed the validity of provisional attachments when supported by detailed considerations and tangible evidence, reiterating the need for careful exercise of such powers to prevent harassment. - The court highlighted the need for proportionality in provisional attachments, ensuring that the extent of attachment aligns with the probable tax demand, as per the proviso to Section 281B (3). In conclusion, the court allowed the appeals, set aside the judgments of the learned Single Judge, and dismissed the writ petitions, reinforcing the department's provisional attachment orders under Section 281B of the Income Tax Act.
|
