Court allows Revenue's appeal, overturns order favoring Assessee on provisional attachment of residential flats.

The court partially allowed the appeal filed by the Revenue, setting aside the Single Judge's order that favored the Assessee in challenging the provisional attachment of residential flats under Section 281B of the Income Tax Act, 1961. The court clarified that provisional attachment can occur before the final assessment or reassessment order is issued, similar to attachment before judgment in civil cases. The parties were permitted to continue their respective courses in the ongoing reassessment proceedings without interference. The judgment underscores the purpose of protecting revenue interests during assessment or reassessment proceedings under Section 281B.

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Issues:
Provisional attachment of property under Section 281B of the Income Tax Act, 1961.

Analysis:
The judgment involves a writ appeal filed by the Revenue against a learned Single Judge's order allowing the writ petition filed by the Assessee against the provisional attachment of residential flats under Section 281B of the Income Tax Act, 1961. The provisional attachment was challenged by the Assessee on the grounds of no notice under Section 143(2) of the Act or assessment order raising any demand. The appellant argued that provisional attachment is permissible even before assessment is framed, especially after a reassessment notice was issued. The respondent contended that the Tax Recovery Officer was unjustified in attaching the property without raising any demand against the Assessee, causing significant harm to the Assessee's real estate business. Subsequently, reassessment orders were passed, and appeals were pending before the Commissioner of Income Tax (Appeals).

The court examined Section 281B of the Act, which allows provisional attachment to protect revenue during assessment or reassessment proceedings. The provision does not mandate the final assessment or reassessment order before attachment, similar to attachment before judgment in civil cases. The judgment highlighted the distinction between provisions in Chapter XXIII of the Act dealing with 'Miscellaneous' and those assisting the implementation of other Act provisions. The court disagreed with the Single Judge's view that a demand notice under Section 156 was necessary for provisional attachment under Section 281B. Consequently, the court partially allowed the appeal, setting aside the Single Judge's order.

Regarding the recovery of dues, since reassessment orders were passed, and appeals were pending, the court allowed the parties to pursue their respective courses in those proceedings without interference. The writ appeal was partly allowed only to the extent indicated, with no order as to costs. The judgment provides clarity on the scope and application of provisional attachment under Section 281B, emphasizing the protection of revenue interests during assessment or reassessment proceedings.

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