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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the provisional attachment of the assessee's bank fixed deposits could continue after the expiry of six months without an extension order passed by the Commissioner under section 281B of the Income-tax Act, 1961. (ii) Whether the attachment order was vitiated for want of application of mind and absence of material showing formation of the requisite opinion for protecting the interests of the Revenue.
Issue (i): Whether the provisional attachment of the assessee's bank fixed deposits could continue after the expiry of six months without an extension order passed by the Commissioner under section 281B of the Income-tax Act, 1961.
Analysis: Section 281B permits only a provisional attachment, operative for six months, and further continuation requires an extension by the Commissioner for recorded reasons. The order placing the fixed deposits under attachment was shown to operate only till further orders, but no extension order was produced before the Court. Once the six-month period expired, the provisional attachment ceased to have effect.
Conclusion: The attachment could not validly subsist beyond six months in the absence of a recorded extension by the Commissioner, and this issue was decided in favour of the assessee.
Issue (ii): Whether the attachment order was vitiated for want of application of mind and absence of material showing formation of the requisite opinion for protecting the interests of the Revenue.
Analysis: The statutory power under section 281B can be exercised only when the Income-tax Officer forms an opinion, on relevant material, that provisional attachment is necessary to protect the Revenue. The record did not disclose material showing such formation of opinion, and the order appeared to have been made without due application of mind.
Conclusion: The attachment order was invalid on this ground as well, and this issue was decided in favour of the assessee.
Final Conclusion: The notices of provisional attachment were held unsustainable and were quashed, resulting in complete relief to the assessee.
Ratio Decidendi: A provisional attachment under section 281B of the Income-tax Act, 1961 cannot continue beyond six months unless validly extended by the Commissioner for recorded reasons, and the power can be exercised only on the basis of a reasoned opinion formed on relevant material.
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