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of <h1>Court quashes attachment orders for lack of legal requirements. Respondents' tax concerns addressed.</h1> The court quashed the provisional attachment orders dated March 25, 2021, and March 26, 2021, as they did not meet the legal requirements outlined in the ... Recovery proceedings - provisional attachment order - fixed deposit of the petitioners have been attached by respondent No. 1 by passing provisional order of attachment invoking section 281B(1) - HELD THAT:- Applying the principles laid down in Radha Krishan's case (2021 (4) TMI 837 - SUPREME COURT] to the facts of the instant case, a perusal of the impugned provisional attachment order will clearly indicate that except for merely stating that since there is a likelihood of huge tax payments to be raised on completion of assessment and that for the purpose of protecting the Revenue, it is necessary to provisionally attach the fixed deposit of the petitioners, the other mandatory requirements and precondition as laid down by the apex court have neither been complied with nor fulfilled or followed prior to passing the impugned order. It is apparent that the impugned provisional attachment orders at annexures D and D1 do not satisfy the legal requirements as laid down in Radha Krishan's case (supra) and consequently, in view of the fact that the impugned provisional orders are cryptic, unreasoned, non-speaking and laconic, the same deserve to be quashed. In so far as the apprehension of the respondents that in the event huge tax payments are to be raised as against the petitioner-assessees, the assessee may not make payment of the same causing loss to the Revenue is concerned, in the light of the undisputed fact that the proceedings under section 153A of the said Act of 1961 have already been initiated coupled with the fact that section 281 of the said Act of 1961, contemplates that any alienation of any property belonging to the petitioners would be null and void, in addition to the specific assertion made by the petitioner that they own and possess immovable property to the tune of more than Rs. 300 crores, the said apprehension of the respondents is clearly unfounded and without any basis and consequently the said apprehension of the respondents cannot be accepted.The petition is allowed. Issues Involved:1. Validity of the provisional attachment orders under Section 281B of the Income-tax Act, 1961.2. Compliance with mandatory legal requirements for provisional attachment.3. Apprehension of non-payment of tax by the petitioners.Issue-wise Detailed Analysis:1. Validity of the provisional attachment orders under Section 281B of the Income-tax Act, 1961:The petitioners sought quashing of the provisional attachment orders dated March 25, 2021, and March 26, 2021, which attached their fixed deposits. The orders were issued under Section 281B(1) of the Income-tax Act, 1961, by respondent No. 1. The court examined whether these orders were validly issued under the said section.2. Compliance with mandatory legal requirements for provisional attachment:The petitioners contended that the mandatory requirements necessary for passing a provisional attachment order were not met. Specifically, they argued that no reasons were assigned, no satisfaction was recorded, and no valid or cogent reasons were stated for the necessity of the provisional attachment. The court referred to the Supreme Court's decision in Radha Krishan Industries v. State of Himachal Pradesh, which emphasized the need for a formation of opinion by the Commissioner that such an attachment is necessary to protect the interests of the Government revenue. The court noted that the power to levy a provisional attachment is draconian and must be exercised with strict adherence to statutory preconditions, including the necessity of the attachment being based on tangible material and the formation of a valid opinion.3. Apprehension of non-payment of tax by the petitioners:The respondents argued that the provisional attachment was necessary due to the likelihood of huge tax demands upon completion of the assessment. However, the court found that mere apprehension was insufficient for passing a provisional attachment order. It was essential for the authorities to base their decision on tangible material and to conclude that without such an attachment, the interests of the Government revenue could not be protected. The court observed that the impugned orders did not meet these legal requirements and were therefore cryptic, unreasoned, non-speaking, and laconic.Conclusion:The court concluded that the impugned provisional attachment orders did not satisfy the legal requirements as laid down in the Radha Krishan case. Consequently, the orders were quashed. The court also addressed the respondents' apprehension regarding the non-payment of tax by noting that the petitioners possessed immovable property worth more than Rs. 300 crores, making the apprehension unfounded.Order:1. The petition was allowed.2. The impugned orders dated March 25, 2021, and March 26, 2021, were quashed.3. Liberty was reserved for the respondents to take action against the petitioners in accordance with the law, considering the observations made in the judgment.
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