Lifting of provisional attachment without providing reasonable opportunity to revenue is not justified: HC

Case Details: DDIT v. Ms. Sigapi Muthiah - [2021] 131 taxmann.com 173 (Madras)

Judiciary and Counsel Details

• • T.S. Sivagnanam and Sathi Kumar Sukumara Kurup, JJ.
  • R. Sankara Narayanan, Addl. Solicitor General and A.P. Srinivas, Sr. Standing Counsel for the Appellant. A.L. Somiyaji, Sr. Counsel and R. Sivaraman for the Respondent.

Facts of the Case

A search action under section 132 was conducted upon a group case to which the assessee belonged. During search, evidence indicating generation of unaccounted income to the tune of certain amount was found. The Department proceeded to provisionally attach assets of huge amounts, including bank deposits of the assessee.
The assessee filed a writ petition before the High Court seeking lifting attachment of her bank deposits, contending that the assessee had not been subjected to search. Therefore, there was no justification for the provisional attachment of her assets. The court granted permission to the assessee to operate her bank accounts.
Aggrieved-revenue filed the instant writ petition before the Madras High Court, contending that it was not granted a reasonable opportunity to put forth the facts in the form of a counter affidavit.

High Court Held

The Madras High Court held that in the Memorandum of Grounds of Writ Appeal, it was stated that the scope of provisional attachment under section 132(9B) is broad and should not be construed to be limited to the searched persons alone.
Several other grounds had also been raised touching upon the merits of the matter, pointing out that search was conducted under section 132 in the group case and evidence indicating generation of unaccounted income to the tune of Rs. 650 Crores had been found. The Department had proceeded to attach assets worth nearly Rs. 260 Crores which was to the extent of the likely tax liability only. The investigation in the group case was still in progress, and the order of attachment was only a provisional order of attachment, which is temporary.
The above-ground and the other grounds raised in the Writ Appeals were touching upon the merits of the matter, which need to be agitated in the writ petitions, for which a counter affidavit of the Department is essential. Thus, a reasonable opportunity was not afforded to the Department to place their submissions on record in the form of a counter affidavit.