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2014 Supreme(Mad) 1586
MADURAI BENCH OF MADRAS HIGH COURT
R. SUBBIAH, J.
T. Senthil Kumar
Versus
Commissioner of Income Tax-I & Another
W.P. (MD) No. 1455 of 2014 & M.P. No. 1 of 2014
Decided On : 25-06-2014
For the Petitioner:K.M. Vijayan, Senior Counsel for Shanmuga Selvam, Advocate.
For the Respondents:R. Krishnamoorthy, Advocate.
The main legal point established in the judgment is that for a provisional attachment under Section 281B of the Income Tax Act, there must be a notice to pay arrears, and without such notice, the attachment is invalid.
Headnote:
Attachment - Income Tax - Section 281B - The court discussed the provisions of Section 281B of the Income Tax Act, 1961 and highlighted the requirement of a notice to pay arrears for provisional attachment. The court emphasized that without a notice of demand or notice under Section 156 of the Act, the petitioner cannot be termed as assessee in default or deemed to be in default. The impugned orders were quashed based on these grounds.
Fact of the Case:
The petitioner challenged the impugned order of attachment of their property under Section 281(b) of the Income-Tax Act, 1961. The petitioner contended that the attachment was issued without any prior demand of income tax or notice, and without any opportunity of filing an appeal.
Finding of the Court:
The court found that the provisional attachment order was invalid as it was issued without a notice of demand or notice under Section 156 of the Act. The court also noted that the respondents themselves admitted to mistakes in issuing the impugned order.
Issues: The main issue was the validity of the provisional attachment order under Section 281B of the Income Tax Act, specifically regarding the requirement of a notice to pay arrears for provisional attachment.
Ratio Decidendi: The court held that without a notice of demand or notice under Section 156 of the Act, the petitioner cannot be termed as assessee in default or deemed to be in default. Additionally, the court emphasized the requirement of a notice to pay arrears for provisional attachment under Section 281B of the Act.
Final Decision: The writ petition was allowed, and the impugned orders were quashed. The connected Miscellaneous Petition was closed, and no costs were awarded.
R. Subbiah, J.
1. This writ petition has been filed by the petitioner challenging the impugned order of attachment of the property of the petitioner, passed by the 2nd respondent under Section 281(b) of the Income-Tax Act, 1961.
2. The case of the petitioner, as set out in the affidavit, is as follows:-
2(a) The petitioner is an assessee on the file of the 2nd respondent under PAN-AVQPS2344J. During the year 2011, the petitioner purchased a piece of land admeasuring about 15698 sq.ft, comprised in S.F.No.643 situated at Andankoil East Village, Covaik Road, Reddi-Palayam, Karur, with the object of constructing 25 flats under the name and style of Apple Paradise. For the execution of the said project, loans were raised by the petitioner from the banking agencies like Can Fin Homes Ltd., Axis bank and prospective buyers, apart from obtaining periodical credits from supplier of building and other materials necessary for construction. Out of the 25 flats, 18 flats have been constructed and sold and remaining 7 flats are yet to be sold. As per project completion method, a recognized accounting method, the profit from the said project can accrue or arise or be ascertained only after completion of the entire project.
2(b) While so, on 23.10.2013 and 24.10.2013, survey operations were conducted under Section 133A of the Income Tax Act, with the primary object of collecting information. In the process of survey, books of accounts and documents were retained by the Income Tax Department. The petitioner has filed regularly his income tax returns for the assessment years 2010-11 to 2013-14, and the particulars of the same are as follows:-
2010-11 11.05.2011 Rs.5,70,655/- Rs.77,690
(Advance Tax Rs.75,000/-)
2011-12 14.11.2011 Rs.7,04,320/- Rs.77,924/-
(Advance Tax Rs.75,000/-)
2012-13 31.12.2013 (Loss) Rs.2,26,475/-
(Advance Tax Rs.25,000/-)
2013-14 31.12.2013 (Loss Rs.3,02,356/-
According to the petitioner, the Return-Income furnished by the petitioner has been accepted by the Department. Neither any notice under Section 143(2) nor an assessment order was passed raising any demand whatsoever till date. The time limit for completion of assessment is either 18 months or 24 months under Section 153 of the Income Tax Act, as the case may be, from the end of the relevant assessment year.
2(c) While so, to the shock and surprise of the petitioner, without any prior demand of income-tax or without any prior notice to the petitioner and without any opportunity of filing an appeal, the 2nd respondent issued an order of attachment, dated 29.10.2013, to the Joint-II Sub Registrar, Sub-Registration Office at Karur, directing him to attach 7 flats in the above said apartments of the petitioner, which are yet to be sold. The said notice was affixed in the 7 flats, which are remaining unsold. On receipt of the attachment order, the petitioner has filed two petitions before the 1st respondent, one on 30.10.2013 and another on 16.11.2013, seeking to lift the attachment. But, instead of reply to the said petitions, the petitioner had received a copy of the letter/order sent to the Joint-II Sub Registrar, Karur, directing him to attach the property of the petitioner, under Section 281-B of the Income Tax Act. Subsequently, a corrigendum was issued by the 2nd respondent correcting para 3 of the order of attachment under Section 281B of the Act. Hence, challenging the order of attachment and Corrigendum, the present writ petition has been filed by the petitioner.
3. Pending the writ petition, this Court has granted an order of interim stay, vide order dated 23.04.2014 made in M.P. (MD) No.1 of 2014 in W.P. (MD) No. 1455 of 2014.
4. Opposing the claim of the petitioner, the respondents have filed a counter affidavit, inter alia, stating that Return of Income filed by the assessee was accepted as per the provisions of the Income Tax Act, 1961 and however, if reasons exist to suspect concealment of income, discovery of new evidence, survey and search, it
