Document Fragment View

Matching Fragments

The petitioner No. 1, VLS Finance Limited, had filed this writ petition in October, 2005, impugning and seeking quashing of the order dated 28th July, 2005 passed under Section 281B of the Income Tax Act, 1961 (Act, for short). Prayer for payment for the refunds is also made.

2. The petitioner No. 1 has stated and claimed that they are entitled to refund of Rs.3,85,35,158/- in respect of assessment years 1998-99, 1999-2000, 2001-02 and 2004-05. Various allegations have been made in the writ petition. However, in view of the subsequent developments these need not be adverted to and in fact no arguments were raised with reference to the first order dated 28th July, 2005, under Section 281B of the Act.

3. The petitioner No. 1 was subjected to search under Section 132 of the Act resulting in initiation of block assessment proceedings for the period 1st April, 1988 to 22nd June, 1998. The impugned order dated 28th July, 2005 passed under Section 281 B of the Act records as under:

" Please refer to block assessment proceedings for the period 1.4.1988 to 22.6.1998 pending in your case. In this connection since the undisclosed income for the block period is yet to be ascertained/assessed and the regular assessment for assessment year 2003-04 and 2004-05 are pending, a provisional attachment u/s 281B in your case has been authorized by the Commissioner of Income Tax (Central)-II, New Delhi vide No. CIT ©-II 281B 2005-06/346 dated 26.7.2005 to protect the interest of revenue. The following refunds determined in you(sic) case are provisionally attached for a period of 6 months i.e. upto 25.01.2006 DETAILS OF PROPERTY S. NO. A.Y. Amount of Refund (Rs.)

9. Sub-section 1 to Section 281B stipulates that an order provisionally attaching any property of the assessee can be passed during pendency of any proceedings for assessment/reassessment, if the Assessing Officer is of the opinion that such an order is necessary for purpose of protecting interest of the Revenue. The order can be only passed with the previous approval of the Chief Commissioner, Commissioner, Director General or Director. The order has to be in writing. Sub-section 2 to Section 281B states that the order for provisional attachment under sub-section (1) shall cease to have effect after six months. Thus, sub-section 2, provides the period during which an order of provisional attachment remains in force, i.e., six months. The first proviso to Section 281B states that the Chief Commissioner, Commissioner, Director General, Director may for reasons recorded in writing extend the said period or periods, which shall not exceed two years. Thus, the total period for which extension can be granted is two years, after the first order of provisional attachment, which is valid for six months, comes to an end. The period of provisional attachment, therefore, cannot be for more than two years and six months. The said period in the present case, as the first attachment order was issued on 28th July, 2005, came to an end on 24th January, 2008.

12. As we perceive, we are not required to go into the said aspects and contentions raised by the petitioner No.1 in the present case. Pursuant to the order dated 10th January, 2011, the Revenue has produced before us the original file and we find that the last order under Section 281B was passed on 19th July, 2007. The said order extended the period of provisional attachment upto 24th January, 2008. Thereafter, no order under Section 281B has been passed even after the third proviso to Section 281B was inserted by the Finance (No. 2) Act of 2009 with retrospective effect from 1st April, 1988. As no order as of now has been passed by the Revenue under Section 281B after insertion of the third proviso, we need not examine and go into the legal issues and contentions raised. These aspects and legal issues can be examined in an appropriate matter or when and if at all the respondents pass a fresh order under Section 281B of the Act. The contention relating to communication of the order also need not be decided as there is no order extending the provisional attachment under Section 281B on or after 24th January, 2008. We may also note that it is not the contention of the Revenue and it was not urged and in our opinion rightly that the third proviso incorporates a deeming provision, which has the effect of continuation or extension of the last order under Section 281B dated 19th July, 2007 which was upto and valid till 24th January, 2008. The said proviso quoted above states that the period pursuant to which assessment/reassessment proceedings have been stayed due to injunction or stay order, shall be excluded from the period of two years mentioned in the first proviso. It does not stipulate that the provisional attachment order issued, shall be deemed to be effective and continue beyond the stipulated period mentioned in the order, when there is an injunction or an order by a Court staying the assessment/reassessment proceedings. Injunction/stay order does not on its own or by deeming friction extend the period stipulated/mentioned in an order under Section 281B.