IT: Revenue cannot attach entire amount standing to credit of assessee, in excess of demand raised on completion of assessment
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HIGH COURT OF PUNJAB AND HARYANA
Nirmal Singh
v.
HEMANT GUPTA AND MS. RITU BAHRI, JJ.
C.W.P. NO. 24380 OF 2011
JANUARY 29, 2013
Section 281B of the Income-tax Act, 1961 – Provisional attachment to protect revenue in certain cases [Extent of attachment] – Bank accounts of assessee were provisionally attached under section 281B – After filing of writ petition, regular assessment was framed and total tax demand was raised against assessee – Whether, where assessment had been completed, revenue was unjustified in attaching entire amount standing to credit of assessee over and above demand raised against assessee – Held, yes [Para 4] [In favour of assessee]
FACTS
| ■ | Bank accounts of assessee were provisionally attached to protect revenue’s interest under section 231B | |
| ■ | Subsequently, regular assessment was framed and total tax demand was raised against assessee. | |
| ■ | The assessee filed instant writ petition claiming that amount attached standing to his credit over and above the demand raised against him should have been released by revenue on completion of assessment. |
HELD
| ■ | The argument raised by the assessee is meritorious. The bank accounts of an assessee are provisionally attached to secure the interest of the revenue pending assessment proceedings to meet the eventuality of demand of tax to be raised against such assessee. Once the assessment has been completed, the revenue would be justified to attach the account to the extent of demand raised against an assessee and not the entire amount standing to the credit of the assessee. The action of the revenue in extending the period of attachment in respect of all the bank accounts of the assessee is wholly unjustified and illegal. [Para 4] | |
| ■ | Consequently, the present writ petition is allowed and the respondents are directed to release provisional attachment except to the extent of tax demand raised against the assessee. Such tax demand shall not be realized till such time, the appeal filed by the assessee is not decided by the competent authority. [Para 5] |
V.K. Rana for the Petitioner. Vivek Sethi for the Respondent.
JUDGMENT
Hemant Gupta, J. – The challenge in the present writ petition is to the orders dated December 12, 2011 (annexures P.9 and P.10), whereby the bank accounts of the petitioner were provisionally attached in exercise of the powers conferred under section 281B of the Income-tax Act, 1961 (for short, “the Act”).
2. The amount of Rs. 12,13,023 as on May 27, 2011, was attached, vide annexure P.9 whereas the amount of Rs. 16,87,031 and Rs. 5,35,481 as on November 17, 2011, were attached, vide annexure P.10. Though the attachment was said to be operative for a period of two years up to December 12, 2003, in the aforesaid orders but by virtue of a subsequent corrigendum (annexure R.6), the period of attachment was corrected up to June 11, 2012. Subsequently, vide annexures P.11 and P.12, the period of attachment has been ordered to be extended by another six months and still another six months subsequently.
3. Learned counsel for the petitioner has pointed out that after the filing of the writ petition, the regular assessment has been framed on December 20, 2011, and the total tax demand raised against the petitioner is Rs. 9,62,378. Learned counsel for the petitioner vehemently argued that the provisional attachment could be operative only prior to the assessment but once assessment has been framed, the Revenue is entitled to attach the amount to the extent of demand raised and not all the bank accounts of the petitioner.
4. We find that the argument raised by the learned counsel for the petitioner is meritorious. The bank accounts of an assessee are provisionally attached to secure the interest of the Revenue pending assessment proceedings to meet the eventuality of demand of tax to be raised against such assessee. Once the assessment has been completed, the Revenue would be justified to attach the account to the extent of demand raised against an assessee and not the entire amount standing to the credit of the assessee. We find that the action of the Revenue in extending the period of attachment in respect of the all the bank accounts of the petitioner and in respect of over Rs. 33 lakhs in these circumstances is wholly unjustified and illegal.
5. Consequently, we allow the present writ petition and direct the respondents to release provisional attachment except to the extent of tax demand raised against the petitioner. Such tax demand shall not be realized till such time, the appeal filed by the assessee is not decided by the competent authority.
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