TMI Blog2022 (12) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... y to exercise the drastic power u/s 281(B) has not arisen, therefore, there was no justification to exercise such powers. Going by the decision of Vodafone Idea Limited [ 2019 (9) TMI 447 - BOMBAY HIGH COURT] . we can surely say that the assessing officer, for the purpose of protecting interest of the Revenue, in the instant case, with the prior approval of the higher authority has passed an order in writing recording the reasons and provisionally attaching the property belonging to the assessee. These are though drastic powers in a given circumstances, we are satisfied that for the petitioner assessee to continue its business, the continuation of provisional attachment is not necessary and even otherwise, the interest of the Revenue can be safeguarded by directing a particular amount to be furnished by way of a bank guarantee to the authority concerned, that would sub-serve the purpose. We are conscious of the fact that the order has came to be passed in relation to the two of the companies which is said to be the shell companies adding the commission and the main company of Taiwan is said to be benefiting. It is also alleged that the modus is adopted to shift the profit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nued by a letter dated 21.12.2021 indefinitely till further orders. 1.1. The petitioner also challenges the continuing attachment of its Bank Account No. 855210062222 maintained with DBS Bank, Prahalad Nagar Branch, Ahmedabad since 18.11.2021 under Section 132(9B) of the Act by letter No. DDIT (Inv)/Unit 6(1)/132 (9B) 2021-22 dated 18.11.2021 and on expiry of six months of the operation of the said order, under an order dated 13.05.2022 passed by the respondent no.2 under Section 281(B) of the Act. Pursuant thereto, the respondent no.2 has attached the Fixed Deposit No. 552205260019 for an amount of Rs. 2,65,04,306/- (Rupees Two Crore Sixty-Five Lakh Four Thousand Three Hundred Six) of the petitioner in DBS Bank. 1.2. It is the say of the petitioner that the attachment of the HSBC Bank and DBS Bank account of the petitioner since 18.11.2021 under the guise of securing the interest of the revenue is ex-facie bad in law and is passed without any basis or reason which has seriously jeopardized the business operations of the petitioner company. The continuing of the attachment after a period of six months from the date of the order is also alleged to be bad in law and contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai that the case of the petitioner was transferred to ITO, Ward2(1)(1), Ahmedabad to DCIT, Central Circle-2(4), Mumbai. On 16.02.2022, despite the objection on the part of the petitioner, the order under Section 127(2) of the Act was passed. 2.4. By a communication dated 05.02.2022, a request has been made by the respondent no.1 to release the provisional attachment of the bank accounts held with DBS and HSBC Banks by emphasizing that it is not a Chinese Company nor has it evaded the tax obligations and on account of continuing freezing of amount in excess of Rs. 13 crores it is unable to pay wages to the workers, purchase raw materials, make expenditure of day to day running cost of electricity charges etc. The creditors or vendors are also not paid and hence, it has led to the stoppage of supplies. The entire business operations have come to a halt and hence, the request is made to release the provisional attachment of bank accounts. He has further ensured to give undertaking and guarantee to pay the tax liability if imposed eventually. Yet another communication dated 14.02.2022 also has been sent, however, none of them had been replied to. 2.5. It is the say of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 11.11.2022 passed by the Respondent No.2 extending period of provisional attachment of HSBC bank account of the Petitioner bearing No. 101040608001 at Annexure R as well as the order extending period of provisional attachment passed by Respondent No. 2 dated 11.11.2022 freezing the FD No 552205260019 of the Petitioner at Annexure S; (B) Pending admission and final hearing of the present petition, this Hon'ble Court be pleased to stay the operation and implementation of the orders of provisional attachment at Annexure-A and Annexure-B and Annexure R-2, Annexure R and Annexure S and be pleased to restrain Respondents from taking any coercive actions against the Petitioner; (C) This Hon ble Court be pleased to grant exparte ad-interim relief(s) in terms of pare 6(B) above; (D) This Hon ble Court be pleased to grant any other or further reliefs as may just and proper in the interest of justice. 3. Affidavit-in-reply is filed by the respondent no.2 Mr. Uday Shakar, ACIT, Central Circle 2(1), Mumbai where he has denied each and every averment. According to him, search and seizure operation on certain Chinese Controlled Indian Shell Companies and some Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer to follow the procedures given under the Board Instructions No. 08/2004 dated 02.09.2004 and Instruction F. No. 404/22/2004-ITCC dated 05.11.2004. If the demand becomes irrecoverable due to the failure of the assessing officer to follow these guidelines, he shall be held accountable for the loss caused to the Government regardless of his subsequent posting. It is further his case that notices also came to be issued on 13.05.2022 under Section 148 of the Act. It is also denied that the assessment proceedings is not in progress. 4. The rejoinder affidavit has come on record where it is urged that the petitioner company is not a Chinese Company but is a wholly owned subsidiary of Fu Chin Shin (FCS) Machinery Manufacturing Co. Ltd. a public listed company incorporated under the laws of Taiwan incorporated under the Companies Act, 2013 on 27.04.2020. The petitioner company was incorporated under the FDI policy of India and funds received through banking channels was recorded and the company has filed FCGPR in India and has duly complied with the provisions of the FEMA Act. It is engaged in the business of manufacturing of injection molding machines and has attained goodwill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding companies in Taiwan through this channel. Further, it was found that M/s. Tianchao Import Export Trading Private Limited and M/s. Pipeguard Trading Private Limited are just paper companies without any genuine businesses. These companies were used as conduit, to layer the transactions from its parent company based in Taiwan. M/s. Tianchao Import Export Trading Private Limited and M/s. Pipeguard Trading Private Limited are ultimately purchasing from Fu Chun Shin based in Taiwan which is parent company of the petitioner. 5.1. According to the respondent, during the course of search proceedings by the investigation wing, incriminating materials have been found and seized which has been considered and verification of the same is under progress for the assessment year 2021-22. The attachment of the account under Section 281(B) was made after obtaining statutory approval of Principal Commissioner of Income Tax, Central-1, Mumbai and the same is not liable to be disclosed to the petitioner. Each and every allegations in the affidavit-in-rejoinder have been denied. 5.2. It is thus emphasized on the part of the respondent is that petitioner FCS Manufacturing (India) Pvt. Ltd. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax and Others [2019 SCC OnLine Bom 1786] (iv) VLS Finance Limited vs. Commissioner of Income Tax [(2000) 112 TAXMAN 295 (DELHI)] 7. Learned Senior Standing Counsel Mr. Varun Patel appearing with learned advocate Mr. Dev Patel for the Revenue has strongly resisted this along the line of the affidavit-in-reply. At the same time, he has urged that the Court satisfaction to the material which has led the authority to attach the bank accounts would be essential and not the supply of these to the petitioner concerned. It is also urged that there are serious doubts in relation to the conduct of the petitioner company and the Director of which is also not available for answering to the summons issued to him, therefore also, the Court shall need to regard the interest of the Revenue in mind. 8. We could notice from the material on record that central issue revolves around the attachment of the HSBC Bank and DBS Bank accounts of the petitioner on 18.11.2021 under Section 132(9B) of the Act. This was on account of the operation of search at the company premises at Ahmedabad which was concluded on 18.11.2021. This was through the office of Deputy Director of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed deposit and the bank account has been released and not the fixed deposit. Thus, on 11.11.2022 it is the fixed deposit which has been directed to be attached. 9.1. So far as availing the opportunity of furnishing the reasons to the petitioner at the time of provisional attachment, the issue is not being pressed by the other side and we would not like to delve into the same at this juncture, leaving it open to be decided at a future date in as much as in the affidavit-in-reply which has been filed by the respondent before this Court, the reasons which are sufficient enough for the other side to know as to why the order of provisional attachment of the properties belonging to the assessee is being passed, have already come on record. Had it been a case where no information was divulged and the petitioner was completely groping in dark, the Court could have considered the very issue of furnishing the basic and bare minimum details. However, for present, when the assessment proceedings are going on and entire issue is still at large before the authority concerned, the requisite details which can be culled out from the affidavit-in-reply and which have been also dealt with by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased any goods from M/s. Pipeguard Trading Private Limited till date. This argument therefore by the other side that at the best the case of the respondent authority is taken, Rs. 4.51 crores of purchase from M/s. Tianchao Import Export Trading Private Limited would meet the protection to the extent that taxes upto 5% of the aggregate amount is covered under the heading of sale. 10. The decision in case of Commissioner of Income Tax- II vs. Gujarat Ambuja Export Ltd. [(2014) 43 taxmann.com 244 (Gujarat)] , is a case where the Appellate Tribunal has restricted the addition made by the assessing officer to 5% of the total bogus purchases made from one particular company. The Tribunal did not accept the revenue s stand that the purchases were bogus. The purchases have been shown to have been made through one company who had supplied by some other agency. In absence of any other additional facts noted by the Court, the gross ad hoc addition of 25% was not held to be justified. The assessee could produce before the authorities the precise rate at which the purchases were made and other suppliers to demonstrate that the purchases made on the same day carried the same price. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in writing provisionally attaching the property belonging to the assessee. These are drastic powers permitting the assessing officer to attach any property of an assessee even before the completion of assessment or reassessment. These powers are thus in the nature of attachment before judgment, the Court held they should be exercised in appropriate cases for proper reasons that and cannot be exercised merely by repeating the phraseology used in the section and recording the opinion of the officer passing such order. In the matter before the Court, it was held that permitting the department to provisionally attaching the petitioner s refund for the current year on the ground that in the final assessment, the demands are likely to be confirmed, would amount to ignoring the hard fact that for the earlier assessment years, the Tribunal has suspended the recoveries arising out of the demands made by the assessing officer on similar issues. It further held that looking it from any angle, the occasion for the competent authority to exercise the drastic power under section 281(B) of the Act has not arisen, therefore, there was no justification to exercise such powers. 11. Going by ..... 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