2013 (10) TMI 108 - HC - Income Tax

Court denies recall of attachment order under Income-Tax Act; clarifies extension vs. time limit.

The court rejected the request for the recall of an order dated April 16, 2013, in Special Civil Application No.16617 of 2012. The applicants' argument ... Extension of attachment u/s 281B(2) of the Income Tax Act – petition for recall of order where request for extension was rejected - Held that:- Third proviso to Section 281B(2) of the Act provides is for exclusion of the period of two years provided in first proviso, during which the proceedings of assessment are stayed by any Court. This is not the issue in the present matter at all – In the present case, after extension there was no further extension – High court has never precluded the applicant-Department from extending the attachment if it was otherwise open to do so in law. The extension of attachment and extension of uppermost time limit for attachment are two vastly different aspects - Request for recall is rejected – Decided against the Revenue. Issues:1. Recall of order dated April 16, 2013 passed in Special Civil Application No.16617 of 2012.2. Interpretation of Section 281B(2) of the Income-Tax Act, 1961 regarding extension of attachment order.3. Exclusion of the period of assessment proceedings stayed by any Court as per the third proviso to Section 281B(2) of the Act.Issue 1: Recall of OrderThe applicants sought the recall of the court's order dated April 16, 2013, in Special Civil Application No.16617 of 2012. The basis for this request was the contention that the order of attachment under Section 281B(2) of the Income-Tax Act, 1961 had not been extended due to a stay on assessment proceedings by the Court. The applicants argued that the third proviso to Section 281B(2) allowed for the exclusion of the period of assessment proceedings stayed by any Court. However, the Court found this argument insufficient to review the previous order, emphasizing that the extension of attachment and the extension of the uppermost time limit for attachment are distinct matters. Consequently, the request for recall was rejected, and the application was disposed of accordingly.Issue 2: Interpretation of Section 281B(2)The Court's original order highlighted that an order of attachment of a bank account under Section 281B(2) of the Income-Tax Act, 1961 would have a life of six months from the date of the order. The proviso to this section allowed for an extension of the attachment period by up to two years, subject to reasons recorded in writing. In this case, the Court noted that no further extension had been made beyond the initial six-month period. The Court clarified that since the attachment order had lapsed by the end of January 2013 due to no further extension, the petitioner was free to operate the bank account. The Court emphasized that the absence of a further extension meant that the legality of the order was not in question, and the applicant was not precluded from extending the attachment if legally permissible.Issue 3: Exclusion of Stayed Assessment PeriodThe third proviso to Section 281B(2) of the Income-Tax Act, 1961 deals with the exclusion of the two-year period provided in the first proviso during which assessment proceedings are stayed by any Court. However, in the present case, the issue was not related to the exclusion of the assessment period but rather the lack of a further extension of the attachment order. The Court clarified that the situation agreed upon by the applicant-Department was that no further extension had been granted after the initial period. The Court differentiated between the extension of attachment and the extension of the uppermost time limit for attachment, ultimately rejecting the request for recall based on this distinction.This detailed analysis of the judgment from the Gujarat High Court in 2013 provides a comprehensive overview of the issues surrounding the recall of an order, the interpretation of Section 281B(2) of the Income-Tax Act, 1961, and the exclusion of the period of assessment proceedings stayed by any Court as per the third proviso to the Act.