Provisional Tax Attachment Revoked: Court Confirms No Outstanding Demand, Ensures Compliance with Legal Safeguards. The HC disposed of the writ petition challenging the provisional attachment under Section 281B of the Income Tax Act, noting that there was no outstanding ...
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Provisional Tax Attachment Revoked: Court Confirms No Outstanding Demand, Ensures Compliance with Legal Safeguards.
The HC disposed of the writ petition challenging the provisional attachment under Section 281B of the Income Tax Act, noting that there was no outstanding tax demand. The court acknowledged the corrective action taken by the revenue authorities, which included revoking all provisional attachments on the FDRs. The issue of improper attachment was resolved, and the petition was concluded with the release of the attachments, ensuring compliance with statutory safeguards.
Issues: Provisional attachment under Section 281B of the Income Tax Act, statutory safeguards violation, existence of outstanding tax demand, extension of provisional attachment, revocation of attachment, corrective action taken.
Analysis: The writ petition was filed seeking the quashing of a provisional attachment order dated 07.02.2024 under Section 281B of the Income Tax Act and directing the release of attached FDRs. The High Court noted that there was no outstanding tax demand, yet a fresh provisional attachment order was issued. The court granted time for the revenue counsel to obtain instructions and take corrective steps if necessary. On 18.04.2024, the court considered a communication approving the extension of provisional attachment and questioned if statutory safeguards were violated. The court observed multiple assessment orders had been passed, and demands were satisfied, raising concerns about the perpetual existence of the attachment order. The revenue counsel was given time to file a counter affidavit.
Subsequently, a counter affidavit was filed disclosing that corrective action had been taken. A communication dated 16.04.2024 revoked all provisional attachments of the FDRs in question. The communication referenced the High Court's order and directed the release of the attachments, emphasizing immediate action and reporting back within a week. The court acknowledged the corrective action and disposed of the writ petition accordingly. The revocation of the attachment resolved the issue raised in the petition regarding the improper provisional attachment under Section 281B of the Income Tax Act.
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