Fixed Deposits Attachment Upheld; Property Attachment Lapsed under Income Tax Act

The court clarified that the attachment of Fixed Deposits would continue despite the petitioner being allowed to file a stay application before the Assessing Authority. In a separate case, the attachment of a property under Section 281B of the Income Tax Act was deemed to have lapsed as the 60-day period post-assessment order had expired. As a result, the attachment was lifted, and the petitioner incurred no costs in the matter.

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Issues:
1. Challenge to the attachment of Fixed Deposits under the Income Tax Act, 1961.
2. Challenge to the attachment of property under Section 281B of the Income Tax Act, 1961.

Analysis:

Issue 1: Challenge to the attachment of Fixed Deposits
In W.P.No.24176 of 2021, the petitioner contested the attachment of Fixed Deposits amounting to Rs.15,93,21,139 under an assessment order dated 19.08.2021. The petitioner had filed a stay application before the Principal Commissioner of Income Tax, which was pending. The Department stated that the stay application was disposed of on 12.10.2021, directing the petitioner to file a stay application before the Assessing Authority. The petitioner was granted permission to move the stay application before the Assessing Authority, and it was decided that the application, when filed, would be disposed of by the Assessing Authority after due hearing and in compliance with the law. Consequently, W.P.No.24176 of 2021 was disposed of, with a clarification that the attachment of Fixed Deposits would persist.

Issue 2: Challenge to the attachment of property under Section 281B
In W.P.No.24180 of 2021, the petitioner challenged the attachment of a property named 'FIRHAVEN' under Section 281B of the Income Tax Act, 1961. Section 281B aims to safeguard revenue interests during assessment proceedings, with provisions for provisional attachment. The law specifies that such attachments cease to have effect after six months from the order, extendable to two years or 60 days post assessment order, whichever is later. As the assessment order was issued on 19.08.2021, the 60-day period ended on 19.10.2021, with no further extension permissible under Section 281B. Consequently, the attachment dated 17.02.2021 was deemed to have lapsed. Therefore, W.P.No.24180 of 2021 was allowed, with no costs incurred.

This comprehensive analysis of the judgment from the Madras High Court addresses the challenges related to the attachment of Fixed Deposits and property under the Income Tax Act, 1961, providing a detailed breakdown of the legal proceedings and outcomes for each issue.

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