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TMI Blog2012 (12) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 days time to the assessee to deposit the tax due - petitioner that the appeal has been filed against the said assessment order on 9.11.2012 and stay application has also been filed at a later date before the Income Tax Appellate Tribunal, New Delhi - to safeguard the interests of the revenue till the expiry of 30 days period allowed to discharge the liability of a huge amount of Rs. 2,10,57,87,648/-, learned counsel for the petitioner submitted that till 8.12.2012, the assets to the extent of Rs. 100 crores which are lying with the Bank shall not be utilised - Accordingly, while holding that the provisional attachment order Annexure P.2 dated 1.11.2012 and notices/letters dated 2.11.2012, appended collectively as Annexure P.9 shall also cease to operate after 8.11.2012, it is directed that in terms of the statement made by the Senior counsel for the petitioner, the assets to the extent of Rs. 100 crores shall not be utilised and shall remain in the same form till 31.12.2012. - It shall however, be open for the petitioner to approach the Tribunal for stay of recovery or for the revenue to take proceedings for recovery in accordance with law. - CWP NO. 22229 OF 2012 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached this Court through the present petition. 3. Upon notice having been issued, reply on behalf of the respondents has been filed wherein action of provisional attachment under Section 281B of the Act has been sought to be justified. It has been averred that though the assessee has substantial liquid funds and other assets available with it, recovery of outstanding amount from the balances available in bank accounts and debtors would not cause any irreparable damage to the petitioner. It has further been stated that the order dated 1.11.2012 has been passed in accordance with the provisions of the Act for protecting the interests of the revenue. 4. We have heard learned counsel for the parties at length and perused the record. 5. Learned Senior counsel appearing on behalf of the petitioner submitted that during the pendency of this writ petition, the assessment order has been passed on 8.11.2012 and, therefore, the provisional attachment order Annexure P.2 ceases to operate. Support was drawn from certain observations in paras 55 and 68 of the judgment of Madras High Court in Devarajan and others v. Tamil Nadu Farmers Service Cooperative Federation and others, 1981 (51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for attachment before judgment and would become inoperative after the passing of the assessment order. It was also pointed out that after the passing of assessment order, under Proviso to sub-section (1) of Section 220 of the Act relating to recovery of outstanding demand, the Assessing Officer is authorised to give lesser period than 30 days for depositing the outstanding amount after obtaining approval of the Joint Commissioner provided the Assessing Officer has reason to believe that allowing of full period of 30 days would be detrimental to the revenue. 6. Further, the impugned order was also sought to be challenged on merits as well pointing out that no satisfaction as required under the provisions of Section 281B of the Act had been fulfilled in as much as the Assessing Officer was influenced by the fact that in the immediately preceding year, a demand of Rs. 161 crores had been made against which the assessee had moved a stay application before the Income Tax Appellate Tribunal, New Delhi and order for stay of demand had been passed by the Tribunal and as a result, the revenue could not recover any amount from the assessee. It was also urged that the Assessing off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director-General or Director, by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule. Explanation : For the purposes of this sub-section, proceedings under sub-section (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1) : Provided that the Chief Commissioner, Commissioner, Director-General or Director may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years : Provided further that where an application for settlement under section 245C is made, the period commencing from the date on which such application is made and ending with the date on which an order under sub-section (1) of section 245D is made shall be excluded from the period specified in the preceding proviso. Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he approval of the Commissioner. Such provisional attachment will ordinarily cease to have effect after the expiry of the period of six months but, in appropriate cases, the Commissioner may, for reasons to be recorded by him in writing, extend this period from time to time so, however, that the total period of extension shall in no case exceed two years. This provision has been made in order to protect the interests of the revenue in cases where the raising of demand is likely to take time because of investigations and there is apprehension that the assessee may thwart the ultimate collection of that demand." 11. The above circular clearly envisages that where during the pendency of any proceeding for assessment or reassessment of any income, the raising of demand is likely to take time due to investigations and there is apprehension that the assessee may thwart the collection of that demand, provisional attachment can be made. This supports the interpretation that it is only till actual demand is created by passing an assessment order that the provisional attachment order will remain in operation. Another factor which deserves to be noticed relates to first Proviso to Sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 9.11.2012 and stay application has also been filed at a later date before the Income Tax Appellate Tribunal, New Delhi. On a query being put to the learned counsel for the petitioner as to how the assessee would safeguard the interests of the revenue till the expiry of 30 days period allowed to discharge the liability of a huge amount of Rs. 2,10,57,87,648/-, learned counsel for the petitioner submitted that till 8.12.2012, the assets to the extent of Rs. 100 crores which are lying with the Bank shall not be utilised. 15. Accordingly, while holding that the provisional attachment order Annexure P.2 dated 1.11.2012 and notices/letters dated 2.11.2012, appended collectively as Annexure P.9 shall also cease to operate after 8.11.2012, it is directed that in terms of the statement made by the Senior counsel for the petitioner, the assets to the extent of Rs. 100 crores shall not be utilised and shall remain in the same form till 31.12.2012. Needless to say, anything observed herein shall not be treated to be an expression of opinion on the merits of the controversy involved in this case. It shall however, be open for the petitioner to approach the Tribunal for stay of recovery or f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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