Coercive tax recovery and duplicate notice barred where no crystallised demand existed and provisional attachment lacked necessity.

Coercive retention of post-dated cheques during a departmental visit, before any crystallised tax demand, was impermissible and the cheques had to be returned. A fresh notice under section 74(3) could not be issued for the same period already covered by a notice under section 74(1), so the second notice was without jurisdiction and quashed. Provisional attachment of bank accounts under section 83 is an extraordinary measure requiring a demonstrable necessity to protect revenue during pending proceedings; absent such material, the attachment could not stand and was removed. The original adjudication proceedings were left open to be decided on merits.

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Issues: (i) Whether the departmental authorities could retain cheques collected during the visit without crystallised tax liability; (ii) Whether a fresh notice under section 74(3) could be issued for the same period already covered by a notice under section 74(1); (iii) Whether provisional attachment of bank accounts was justified during the pendency of proceedings.

Issue (i): Whether the departmental authorities could retain cheques collected during the visit without crystallised tax liability.

Analysis: Coercive collection of post-dated cheques during a raid, before any confirmed or crystallised demand, is impermissible. Such recovery is not a lawful substitute for adjudication of liability, and the record did not show any voluntary handing over of cheques by the assessee to avoid lawful coercive action.

Conclusion: The cheques could not be retained and were required to be returned to the assessee.

Issue (ii): Whether a fresh notice under section 74(3) could be issued for the same period already covered by a notice under section 74(1).

Analysis: Section 74(1) deals with tax not paid, short paid, or wrongly availed credit by reason of fraud, wilful misstatement, or suppression of facts. Section 74(3) permits a statement for periods other than those already covered by a notice under section 74(1). The scheme of the provision does not permit the department to enlarge or repeat the same liability for the same period by issuing a second notice under section 74(3).

Conclusion: The second show-cause notice for the same period was without jurisdiction and liable to be quashed.

Issue (iii): Whether provisional attachment of bank accounts was justified during the pendency of proceedings.

Analysis: Provisional attachment under section 83 is an extraordinary and drastic measure, available only when proceedings are pending and the Commissioner forms an opinion that attachment is necessary to protect revenue. The power cannot be exercised routinely or merely because proceedings are pending. In the absence of material showing why attachment was necessary, the action could not be sustained.

Conclusion: The provisional attachment of the bank accounts was not justified and was ordered to be removed.

Final Conclusion: The assessee succeeded on the challenges to coercive collection, the second notice, and the provisional attachment, while the original adjudication proceedings remained open for decision on merits.

Ratio Decidendi: A fresh notice under section 74(3) cannot be issued to cover the same period already covered by a notice under section 74(1), and provisional attachment under section 83 can be sustained only on a demonstrable necessity to protect revenue during pending proceedings.

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