The Income Tax Act, 1961 (ITA), holds provisions for provisional attachment of property during ongoing income assessment proceedings. The question arises: Whether any Officer authorized under the Income Tax Act (ITA), 1961 can exercise the power of extension of provisional attachment under 1 st proviso of section 281B(2) of the Income Tax Act, 1961? To answer this, we’ll delve into the relevant sections of the ITA and examine judicial interpretations.
1. Before going to discuss the interpretation of section 281B of the Income Tax Act, 1961 (Hereinafter referred to as “ITA”). We would like to produce the relevant extract of section 281B of the ITA as under:
“281B. Provisional attachment to protect revenue in certain cases.
(1) Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment or for imposition of penalty under section 271AAD where the amount or aggregate of amounts of penalty likely to be imposed under the said section exceeds two crore rupees, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, he may, with the previous approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule.
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1):
Provided that the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years or sixty days after the date of order of assessment or reassessment, whichever is later.”
2. I would like to states here that sub section 1 of section 281B of the ITA proclaims that during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income etc, the assessing officer may provisionally attach the property of the asesssee with the prior approval of approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director etc for protecting the interest of revenue.
3. Further, sub section (2) of section 281B of ITA proclaims that Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order of provisional attachment.
4. 1 st proviso of section 281B (2) of ITA proclaims that the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director may extend the provisional attachment further period but not more than 2 years with recording reasons.
5. Now let us determine whether extension of period of provisional attachment of property can be done by the assessing officer or only the officer who is authorized under 1 st proviso of Section 281B (2) of the ITA. For that we will discuss the judgments/ orders pronounced by various Hon’ble court in favour of assesse as well as in favour of revenue.
Judgment pronounced by Hon’ble Court in favour of assesse and against the Assessee
Sr. No.
Nimitya Properties Limited vs Commissioner of Income Tax and Others
“8. Insofar as orders dated 03.08.2009 extending this attachment is concerned, his submission was that this order was passed by the AO who was not the Competent Authority, as such an extension order could be passed only by the Commissioner.
17. This argument is found to be factually incorrect and militates against the record. We find that the Assistant Commissioner of Income Tax (Central Circle-22) had addressed a letter dated 24.07.2009 to the Commissioner of Income Tax pointing out about the attachment orders dated 26.02.2009 passed by the AO with prior approval of the Commissioner of Income Tax. It was further mentioned in this communication that in many of the group cases, the orders under Section 127 of the Act were yet to be passed, the case records were yet to be received, further notices to be issued, inquiries, investigations to be made and thereafter only assessment orders could be passed. The request was, therefore, made for extension to the provisional attachment. On this, the Commissioner gave his approval on 31.07.2009 in the following manner:
“I have gone through the proposal of the AO. In view of the facts mentioned in the proposal, I am satisfied that this is a fit case to extend the provisional attachment upto 31.07.2010. The A.O. shall make efforts to complete the assessments as early as possible.”
18. After the aforesaid approval was given on the file, letter dated 31.07.2009 was written by the Deputy Commissioner of Income Tax to the Assistant Commissioner of the Income Tax informing him about the approval. The led to passing of the orders dated 03.08.2009 and in this order also it is specifically mentioned that the same is issued after taking approval from the CIT (Central)-III, New Delhi.
6. As we know the statue gives power to do certain thing in certain way, in the same manner when we peruse 1 st proviso of section 281B(2) of ITA which is empower to exercise of extension of provisional attachment to the officer prescribed under 1st proviso of section 281B(2) of ITA.
7. For that I rely upon the judgment pronounced by Bombay High Court in the case of Nazir Ahmad Vs Emperor (No. 2) on 16 June, 1936 wherein the Hon’ble court held that whenever the statue gives power to do certain things in certain way, then the things to be done in that way not any other way. The relevant extract of the judgment is reproduced as under:
“13. As a matter of good sense, the position of accused persons and the position of the magistracy are both to be considered. An examination of the Code shows how carefully and precisely denned is the procedure regulating what may be asked of or done in the matter of examination of accused persons and as to how the results are to be recorded and what use is to be made of such records. Nor is this surprising in a jurisdiction where it is not permissible for an accused person to give evidence on oath. So with regard to the Magistracy: it is for obvious reasons most undesirable that Magistrates and Judges should be in the position of witnesses in so far as it can be avoided. Sometimes it cannot be avoided, as under Section 533, but where matter can be made of record and therefore admissible as such, there are the strongest reasons of policy for supposing that the legislature designed that it should be made available in that form and no other.”
Conclusion: it is clear that if the statue empowers to do certain things by specify officer (Designated officer), then such power must be exercised by the specify officer (Designated officer) rather than any of the Officer authorized under ITA.
