2024 (5) TMI 1084 - HC - Income Tax

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 ... Provisional attachment order u/s 281B - seeking revocation of the attachment of Fixed Deposit Receipts (FDRs) - HELD THAT:- By communication issued by ACIT (Hq) on behalf of PCIT (Central), Kanpur Nagar, as intimated to the DCIT approval was accorded for extension of provisional attachment u/s 281B of the FDRs in the above mentioned case. Reference is also invited to the letter dated 07.02.2024 filed by the assessee to this office vide which the assessee has requested for releasing the FDR in view of the hardship faced in the business of the assessee. Your attention is also invited to the Hon'ble High Court order [2024 (5) TMI 979 - ALLAHABAD HIGH COURT] in the above matter. Considering the petition of the assessee and Hon'ble High Court Order as directed to convey that the Ld. PCIT (Central) Kanpur has been pleased to revoke all the provisional attachments made u/s 281B of the IT. Act, 1961 of the FDRS in the above mentioned case Therefore directed to request you to kindly take immediate necessary steps for releasing all the FD etc, under intimation to this office. An action taken report must be sent to this office positively within a week of receipt of the letter. In view of the above, we find corrective action has been taken, in the present petition. 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.