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2023 (12) TMI 138 - MADRAS HIGH COURTValidity of attachment orders u/s 281B - power of the Department to issue fresh attachment order again and again, i.e. for the fourth time - as argued impugned orders u/s 281B have been issued in a mechanical manner for the fourth time and in a routine fashion stating that 'For the purpose of protecting the interest of the Revenue, it is necessary to attach the immovable properties of the petitioners'' - HELD THAT:- First charge holders of the properties are the Bankers and the respondent-Income Tax Department are only the second charge holders of the petitioners properties. Therefore, the first charge holders of the petitioner's properties, being the Bankers, the petitioner has to first satisfy the Bankers, for availing loan facility and only the Bankers are satisfied they would come forward to lend loan facility to the petitioners. This Court would like to point out that, if it had been the real intention of the the respondent-Department to protect the interest of the revenue, they would acted in a way, as pointed out by this Court in the preceding para, however, the way the respondent-Department has acted, i.e. issuing attachment orders again and again, that too, without assigning any valid reason, in respect of similar properties of the petitioners, would only go to show that the respondent with a view to put a spoke to the petitioner's business activities, has passed such impugned orders, since, by means of the impugned orders of attachments, the properties that were mortgaged with the Bankers were attached, due to which, the Bankers would obviously, deprive themselves from extending the working capital loan to the petitioners and the petitioners, owing to non-extension of working capital loan, would find it difficult to run their business, resulting in financial crisis and consequently, the petitioner would be not in a position either to continue the business or repay the loan, ultimately, resulting in closure of business and 5000 workers employed in the petitioner-Company would loose their job, which would automatically affect the welfare of the State. Therefore, this Court is of the view that the respondent-Department under the guise of impugned attachment orders, shall not cause any unnecessary hardships to the Bankers in getting back their loans, which were lent by them to the petitioners. Section 281B(1) of I.T. Act grants power AO to provisionally attach the property of an assessee during the pendency of any proceedings for assessment or reassessment of any income or for imposition of penalty, and in terms of Sub-section 2 of Section 281B, every such provisional attachment shall cease to have effect after the expiry of six months, however, the total period shall not exceed 2 years or 60 days after the order of assessment, whichever is later and such power of extension is subject to the condition that the Principal Commissioner should record his reasons in writing for granting such extension. In the present case, whenever, the attachment orders were passed, the respondent-Department has mentioned the reason for issuance of such attachment order, by stating that ''To protect the interest of the Revenue.'' instead of stating so, the respondent- Department ought to have formed an opinion and pass orders not affecting the business activities of the petitioner in any way. In the present case, attachment orders, which are under challenge in these Writ Petitions are only provisional attachment orders and the same have been passed before quantification of final assessment of tax. Thus, the respondent-Department, while passing such provisional attachment order shall bear in mind the following aspects:- 1) Running Business Activities of an Assessee should not come to stand still by virtue of the provisional attachment. 2) The interest of the Bankers, who are the first charge holders, should not get affected. 3) The welfare of the workers should not be get affected. Thus, for all aforesaid reasons, this Court is inclined to pass the following orders:- i) The petitioners are directed to file a modification application within a period of one week from the date of receipt of a copy of this order to modify the order of provisional attachment issued by the respondent dated 16.08.2023. ii)Thereafter, the concerned respondent is directed to consider the modification applications and directed to pass orders to the extent of lifting the provisional attachment orders dated 16.08.2023 to enable the petitioners to avail the working capital facilities as per the business plan/plan of action, etc., submitted to the bank or to the extent of additional working capital facilities as sanctioned by the Banks to the petitioners, as requested from time to time. iii) The petitioners are directed to file an affidavit/undertaking/status report as required by the respondent-Department, so as to ensure that the fund allotted to the petitioners by the Banks are utilized by the petitioners/has been utilized only for the purpose of working capital facilities.
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