By TIOL News Service

MUMBAI, APR 11, 2019: THE ISSUE IS - Whether Revenue should not go on provisionally attaching bank account for recovery of tax, interest & penalty, once their interest stands protected on attachment of immovable properties. YES IS THE ANSWER.

Facts of the case

The assessee is an individual. For the year under consideration and pursuent to search conducted u/s 132 at the premises of assessee, the Department collected material to prima facie suggest that the assessee had sizable interest income as well as dividend income despite which the assessee filed no income tax return. The Department had material to suggest that the assessee was a joint account holder in three bank accounts in Barclays Bank in England, which he had not disclosed to the Income Tax Authorities. As per the information of the Department, currently a sum of Rs. 4.97 Crores was shown as a balance in the said three accounts. On the basis of such information, the Dy DIT (International tax) held a belief that the assessee had sizable undisclosed income as well as substantial undisclosed foreign income/investment. In order to protect the interest of the Revenue, therefore, Dy DIT (Intl) placed the assessee's noted immovable properties and bank accounts under attachment. Hence, present petition.

On Writ, the HC held that,

++ the material on record would suggest that the Department proceeded on material collected during the search and has formulated a prima facie belief that the assessee has undisclosed income as well as undisclosed foreign investment. In order to protect the interest of Revenue, therefore, the assessee's bank accounts and two immovable properties have been put under provisional attachment. By such action, the Department has virtually prevented the assessee for accessing his own funds in the bank accounts which would undisputedly cause great difficulty to the assessee in meeting his day to day expenses, to meet with special requirements for medical attention for himself and his aged mother. While, therefore, without harming the interest of the Revenue, this Court would like to give limited relief to the assessee against such action of the Department. While doing so, it must be kept in mind that the approximate tax, interest and penalty liability which the Department has computed, firstly even the basis of maximum penalty which is impossible, secondly the same is in realm of possibilities;

++ the assessee has filed an additional affidavit, in whichg he has stated two things, firstly, that both the flats placed under attachment belong to him. In support of the statement, the assessee has produced copies of the share certificates issued by the respective housing societies. The second declaration that the assessee has made is that the value of the flat at Jivan Building as per the Government ready reckoner is Rs. 9.43 Crores and the Somerset flat is Rs. 6.79 Crores. The combined value of these two flats thus exceeds Rs. 16 Crores. The assessee has also produced valuation report of the Government registered valuer showing the approximate value of these flats at Rs. 10.81 Crores and 6.34 Crores respectively. Going by this valuation, combined value of the flats would be in excess of Rs. 17 Crores. In totality of the facts & circumstances, while maintaining the attachment of the two immovable properties of the assessee, his bank accounts can be released from attachment. Even if the Department were to succeed substantially in its present stand, the assessee's tax, interest and possible penalty liabilities are unlikely to exceed the valuation of the two immovable properties.

(See 2019-TIOL-793-HC-MUM-IT)