Court rules against tax authority's unlawful bank account attachments under Income-tax Act The court ruled in favor of the petitioners, finding the provisional attachment of bank accounts and F.D.Rs. by the Assistant Commissioner of Income-tax ...
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Court rules against tax authority's unlawful bank account attachments under Income-tax Act
The court ruled in favor of the petitioners, finding the provisional attachment of bank accounts and F.D.Rs. by the Assistant Commissioner of Income-tax under section 281B of the Income-tax Act unlawful. The court directed the Revenue to release the attachment on bank accounts and F.D.Rs., emphasizing the need for judicious exercise of attachment powers to protect revenue without harassing the assessee. However, the attachment on immovable properties was to continue until further orders. The judgment highlighted the importance of fairness and careful consideration in applying section 281B.
Issues involved: Challenge to provisional attachment of bank accounts, F.D.Rs., office premises, and residential flat u/s 281B of the Income-tax Act, 1961.
Judgment Details:
The petitioners challenged the provisional attachment of their bank accounts, F.D.Rs., office premises, and residential flat by the Assistant Commissioner of Income-tax u/s 281B of the Act. The petitioners argued that the attachments were unlawful, unconstitutional, and without due application of mind. The total value of the attached property was over Rs. 2.11 crores against an anticipated liability of Rs. 2.68 crores.
The petitioners contended that the valuation of the attached premises was understated to justify the attachments. They provided a valuation report showing significantly higher values. The Revenue, however, disagreed with the valuations provided by the petitioners' approved valuer and obtained a valuation from the departmental valuer.
The departmental valuer valued the attached properties at Rs. 2.66 crores. Despite this valuation, the Revenue sought to retain the attachment on bank accounts and F.D.Rs., citing potential fluctuations in property values. The court found this stance unreasonable and directed the Revenue to lift the attachment on bank accounts and F.D.Rs. The attachment on the immovable properties was to continue until further orders.
The court emphasized that the power of attachment u/s 281B should be exercised judiciously to protect the revenue and not used to harass the assessee. The attachment of bank accounts and assets should be a last resort, and the Revenue should lift attachments once the property values are sufficient to cover liabilities.
In conclusion, the court directed the Revenue to release the attachment on bank accounts and F.D.Rs. while continuing the attachment on the immovable properties. The judgment highlighted the need for careful exercise of powers under section 281B to ensure fairness and protection of the revenue.
Certified copy of the judgment was expedited for compliance.
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