Adequate security from attached property made a bank guarantee unnecessary in an interim tax recovery dispute.

A Karnataka High Court note on interim relief under the Income-tax Act, 1961 states that where property had already been taken into possession by the Income-tax Department under section 269UD and the property was said to be worth more than the amount paid by the Department, the property itself could be treated as adequate security for the amount paid. On that footing, requiring the appellants to furnish a bank guarantee was considered unnecessary and the condition was set aside.

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Issues: Whether the condition requiring the appellants to furnish a bank guarantee of Rs. 35,50,000 in support of the interim order was justified.

Analysis: The property had already been taken possession of by the Income-tax Department under section 269UD of the Income-tax Act, 1961, and the property was stated to be worth more than the amount paid by the Department. On these facts, the property itself was treated as adequate security for the amount paid, making the insistence on a bank guarantee unnecessary.

Conclusion: The condition requiring the appellants to furnish a bank guarantee was not justified and was set aside.

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