Law: Income Tax Act, 1961

Section: 281,281B.

Income-tax---Provisional attachment of property---Provisional attachment of property during pendency of assessment or reassessment proceedings---Condition precedent for provisional attachment---Sufficient material on record to show that assessee would dispose of property in order to avoid payment of tax---Attachment should be made as far as possible of immovable property--­Attachment of Bank accounts and trading assets should be made only as a last resort---Finding that value of immovable property according to departmental value was sufficient to cover anticipated demand---Provisional attachment of Bank account and FDRs not valid---Indian Income Tax Act, 1961, S.281B. It is clear from a plain reading of section 281B of the Income Tax Act, 1961, that it is intended to empower the Assessing Officer to make a provisional attachment of any property of the assessee during the pendency of any proceedings or assessment or reassessment of any income, even though there is no demand outstanding against the assessee, if he is of the opinion that it is necessary to do so to protect the interests of the Revenue. To ensure that this power is not misused, a number of safeguards have been provided in the section itself. The power of attachment under this section is in the nature of attachment before under the Code of Civil Procedure. It is a drastic power. It should, therefore, be exercised with extreme care and caution. It should not be exercised unless there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of the whole or any part of his property with a view to thwarting the ultimate collection of the demand. Moreover, attachment should be made of the properties and to the extent it is required to achieve the above object. It should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee. Attachment should be made as far as possible of immovable properties if that can protect the Revenue. Attachment of bank accounts and trading assets should be resorted to only as a last resort. In any event, attachment under section…

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