Remove Lacuna for Provisional Attachment of Property during search or seizure in Income Tax
There is a discrepancy between two sections of India’s Income Tax Act, 1961, that deal with the provisional attachment of property. Here’s a breakdown:
Section 132(9B) of the Income Tax Act is as follows
” Where, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, the authorised officer, for reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee, and for the said purposes, the provisions of the Second Schedule shall, mutatis mutandis, apply.”
Section 132(9B): Search and Seizure
- Purpose: Allows authorities to provisionally attach a taxpayer’s property during a search or seizure operation to protect revenue interests.
- Duration: The attachment lasts for a maximum of six months.
- Lacuna: Unlike a similar provision (Section 281B), Section 132(9B) does not explicitly empower the officer to revoke the attachment if the taxpayer provides a suitable security or guarantee.
Section 281B: Assessment Proceedings
- Purpose: Similar to 132(9B), but applies during assessment proceedings.
- Key Difference: Explicitly allows the Assessing Officer to revoke the attachment if the taxpayer provides an equitable security or guarantee.
Problem:
- Hardship: The lack of a revocation provision in Section 132(9B) creates difficulties for both taxpayers and the tax department.
- Taxpayers: May face undue hardship due to prolonged attachment of their property, even if they can provide adequate security.
- Revenue Department: May face administrative burdens and potential legal challenges due to the inability to release attached property in deserving cases.
Recommendation:
- Remove Lacuna: The passage suggests amending Section 132(9B) to include a provision for revoking the attachment based on an equitable security or guarantee, similar to Section 281B. This would provide flexibility, fairness, and efficiency in handling provisional attachments during search and seizure operations.