Provisional attachment requires tangible material and minimum procedural safeguards; permitting deposit protects honest taxpayers.

Provisional attachment under Section 281B is a draconian preventive power that must be exercised only upon formation of an opinion supported by tangible material and subject to minimum procedural safeguards; accordingly attachment should not proceed where the taxpayer is a regular payer, there is no final demand, limited additions from search exist, and a deposit option is available. The document endorses permitting deposit of a prescribed percentage of the provisionally assessed demand as a safeguard to protect reputation and banking credit, and records quashing of the impugned attachment with a direction for a 20% deposit and refund with interest if demand is reduced.

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Issues: Whether the provisional attachment dated 01.01.2026 under Section 281B of the Income-tax Act, 1961 of the petitioner's industrial property was justified and lawful.

Analysis: The Court examined the statutory power under Section 281B in light of precedents requiring strict fulfilment of conditions before ordering provisional attachment, including the need for formation of opinion based on tangible material that attachment is necessary to protect government revenue. The Court considered the petitioner's status as a regular taxpayer with substantial tax payments, the absence of any finalized demand for the relevant years, the limited additions disclosed by search, and the appellant's ability to deposit a percentage of the disputed/provisionally assessed demand as provided in CBDT office memoranda. The Court applied the principle that provisional attachment is a draconian preventive measure and must be exercised with caution so as not to damage the reputation and banking credit of an honest taxpayer; therefore minimum safeguards, including allowing deposit in terms of CBDT guidance, ought to be observed.

Conclusion: The provisional attachment order dated 01.01.2026 is quashed. The petitioner is directed to deposit 20% of the provisionally assessed demand within one week; if the demand is later found unjustified or reduced, the deposited amount shall be refunded with interest.

Ratio Decidendi: Provisional attachment under Section 281B of the Income-tax Act, 1961 is a draconian preventive power that must be exercised only upon formation of an opinion supported by tangible material and subject to minimum procedural safeguards including permitting deposit of the prescribed percentage of the disputed/provisionally assessed demand as per CBDT guidance before effecting attachment.

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