Dar International vs Assistant Director of Income Tax

Mital, C.J.—On 17-7-1991, the premises of the petitioner were searched by the Customs authorities u/s 105 of the Customs Act, 1962 and as many as 27 incriminating documents relating to import business were seized. After complying with the procedure, summons were issued u/s 108 of the Customs Act. On 18-7-1991, the Central Economic Intelligence Bureau, Excise and income tax Wing, issued restraint order u/s 132(3) of the income tax Act, 1961 (''the Act'') and served it on the Indian Overseas Bank, so that the petitioner could not operate its account. To challenge the restraint order, Civil Writ No. 3906 of 1992 was filed, in which show-cause notice was issued. While the aforesaid writ petition was pending, on 12-11-1992, the income tax Department issued notice u/s 281B of the income tax Act, attaching the current account No. 3293-CD relating to the petitioner, regarding which restraint order, referred to above, was issued. On the following day, the restraint order was withdrawn with the result the attachment continued. To challenge the attachment order, Civil Writ No. 191 of 1993 has been filed. During the pendency of this writ petition, on 18-2-1993 the income tax Department completed the assessment for the year 1990-91 and assessed the income at Rs. 32,19,789 resulting in demand of Rs. 13,56,149.

In para 4 of the counter-affidavit, it is also stated that show-cause notice u/s 271(1)(c) of the Act has been served on the petitioner, which proceedings are pending. Besides these proceedings, the assessment for the assessment year 1991-92 is under process and there is likelihood of total demand for the two years to be about Rs. 40 lakhs.

In view of the release order, the contention against the restraint order in the first writ petition, i.e., CW 3906 of 1992 has become infructuous.

The other argument raised in the first writ petition is that the books of account of the petitioner are being retained beyond the period of sixty days without the period having been extended by the authorised officer as provided by section 132(8A). This argument is also devoid of force as the authorised officer for reasons to be recorded has extended the operation of the order beyond sixty days after obtaining the approval of the Director/Commissioner within the prescribed time.

Accordingly, CW No. 3906 of 1992 is dismissed.

As regards the attachment order, it is said that the order did not satisfy the requirement of section 281B of the Act. On a consideration of the matter, we are not satisfied with the argument of the petitioner''s counsel that the requirements of section 281B were not attracted for issuing an attachment order. The section reads that if during the pendency of any proceeding for the assessment of any income, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the revenue, it is necessary to do so, he may with the previous approval of the Chief Commissioner or Commissioner by order in writing attach provisionally the property belonging to the assessee in the manner provided in the Second Schedule. The fact that 27 documents were recovered in the search was enough material to justify the taking of action u/s 281B. It is further strengthened by the fact that the assessment order has been made and for the present, there is existing demand of Rs. 13,56,149 while the assessment proceedings for 1991-92 are pending, besides the penalty proceedings have been initiated.

It was then argued that the order of attachment was illegal when it was made as the assessment proceedings were pending and the demand had yet to be made. We do not find any merit in the argument. The provision relating to making an attachment before judgment, i.e., before assessment order is made, is not illegal if the assessing authority is of the opinion that it is necessary to protect the interests of the revenue and the same is supported by supervening factors. In the present case, the case of the revenue is that 27 documents were recovered, which showed that imports were much more than shown in the books of account. Moreover, now there is subsisting demand of Rs. 13,56,149 and in writ jurisdiction we are not bound to interfere unless manifest injustice is shown, which is not the case here. Hence, we reject the argument.

The last argument raised is about the vires of section 281B of the Act. The argument is that it does not give the guidelines for making provisional attachment. We are not satisfied with the argument-firstly, the Assessing Officer has to make his opinion that he is satisfied that it is a fit case for protecting the interests of the revenue and secondly, he makes a reference to the Chief Commissioner or Commissioner as the case may be, and after approval is given, only then he makes the order. Moreover, if in a given case an arbitrary order is passed, it is open to an aggrieved party to approach this Court under article 226 of the Constitution. Accordingly, CW No. 191 of 1993 is devoid of merits and is also dismissed.