Provisional attachment: Section 281B: A. Y. 2011-12: Provisional attachment should be commensurate with claim of revenue:

For the A. Y. 2011-12, the assessee company had filed return of income computing loss of Rs. 2,67,00,000. Subsequently, pursuant to survey u/s. 133A of the Income-tax Act, 1961, the Assessing Officer impounded books of account and documents. The Assessing Officer also passed provisional attachments of properties and also the debts and security deposits due from third parties.

The Madras High Court allowed the writ petition filed by the assessee and held as under:

“i) The provisional attachment made in terms of section 281B of the Income-tax Act, 1961, should be commensurate with the claim of Department, more particularly to safeguard the interests of the Revenue. The Assessing Officer should form an opinion as to what extent of property is required to protect the interest of the Revenue. It cannot be an arbitrary claim based on no materials. It should stand the test of reasonableness and avoid arbitrariness.

ii) If the petitioner were able to establish the valuation of the property as stated by cogent and proper materials acceptable to the Department subject to final assessment, the property could continue to be under provisional attachment as per section 281B and all other debts and security deposits due from third parties could be released from the provisional attachment.”