CHINA FIRST METALLURGICAL CONSTRUCTION INDIA PVT. LTD. vs. DY DIRECTOR OF INCOME TAX( INV) AND ORS

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WP/9592/2021HC BombayHCBM01015018202126 September 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE KAMAL KHATA2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the writ petition. The Court noted the Revenue's submission that the order passed under Section 281B of the Income Tax Act, 1961, was no longer operative. The Petitioner's counsel argued that the extension of the provisional attachment order was illegal due to the absence of an original Section 281B order. The Revenue stated that since the orders are no longer operative, it would be an academic exercise to decide the issue. The Court found that as the attachments were no longer operative, the petition was disposed of. The Court clarified that it would be open for the petitioner to challenge the orders passed under Section 226(3) and the assessment orders in the appropriate forum, without making any observations on the merits of such future actions.

What were the facts?

The petitioner, China First Metallurgical Construction India Pvt Ltd., filed a writ petition challenging an order under Section 281B of the Income Tax Act, 1961. The Revenue, through an affidavit, stated that the Section 281B order is no longer operative. However, the affidavit also revealed that scrutiny assessments for Assessment Years (AY) 2015-2016 to AY 2020-2021 were completed on March 31, 2022, raising a demand of Rs. 123,96,51,364. A further assessment for AY 2021-2022 was completed on September 16, 2022, with a demand of Rs. 10,70,49,677. Penalties were also imposed, resulting in an outstanding demand of Rs. 145.52 crores. To protect revenue interest, the petitioner's bank accounts were attached under Section 226(3) on May 7, 2022, with prior approval.

What were the issues?

1. Whether the extension of the provisional attachment order dated June 3, 2021, under Section 281B of the Income Tax Act, 1961, was illegal, given the absence of an original Section 281B order attaching the bank accounts. (Question of law and fact) The Petitioner argued that they were unaware of the actions taken by the Revenue and that the extension of the provisional attachment order was illegal as there was no original order under Section 281B. The Revenue, relying on an affidavit, contended that since the Section 281B orders are no longer operative, the matter has become academic.

Which sections of the Income-tax Act were involved?

Section 281B,Section 153A,Section 226(3)

AI-generated summary — verify with the full judgment below

1/2 410-wp-9592-21.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.9592 OF 2021

China First Metallurgical Construction India Pvt Ltd. ..Petitioner Vs. Dy. Director of Income Tax & Ors. ..Respondents ---- Ms Ritika Agarwal a/w Ms Ayesha Ansari a/w Ms Kshitija Shinde for Petitioner. Mr. Suresh Kumar for Respondent Nos.1 & 2. Mr. Bijal Gogri i/b GNP Legal for Respondent No.3.

---- CORAM : K.R. SHRIRAM & KAMAL KHATA, JJ

DATED : 26th SEPTEMBER 2023

P.C. : 1 Further to our order dated 8th September 2023, Mr. Suresh Kumar states an affidavit of one Ms Katyayani Bhatia affirmed on 19th September 2023 has been filed. We have perused the affidavit, in which it is stated that the order passed under Section 281B of the Income Tax Act 1961 (the Act) is no longer operative. At the same time, the said Ms Bhatia has stated that the scrutiny assessment under Section 153A of the Act for A.Y.2015-2016 to A.Y.-2020-2021 was completed on 31st March 2022, whereby a demand of Rs.123,96,51,364/- was raised and subsequently, assessment for AY 2021- 2022 was completed on 16th September 2022 raising demand of Rs.10,70,49,677/-. The penalty has also been imposed on assessee and there is a demand outstanding in the case of assessee of Rs.145.52 crores. In the affidavit, it is stated that to protect the interest of Revenue, petitioner’s bank Meera Jadhav MEERA MAHESH JADHAV Digitally signed by MEERA MAHESH JADHAV Date: 2023.09.27 15:10:04 +0530

2/2 410-wp-9592-21.doc accounts were attached under Section 226(3) of the Act on 7th May 2022 after obtaining prior approval from PCIT (Central)-2, New Delhi. 2 Ms Agarwal states that petitioner has not been aware about any such action and it is for the first time these details are made available to petitioner. Ms Agarwal further submitted in any case, the extension of provisional attachment order dated 3rd June 2021 was illegal because there was no original order under Section 281B attaching the bank accounts. Mr. Suresh Kumar states relying on affidavit of Ms Bhatia that since those orders are no longer operative, it would be only an academic exercise. 3 Petition was basically challenging the attachment under Section 281B of the Act. Since those attachments are no more operative, we dispose the petition. It will be open to petitioner to challenge the orders passed under Section 226(3) of the Act and the assessment orders in accordance with law in the appropriate Forum. We are not making any observation on the merits of such action to be taken by petitioner. 4 Petition disposed.

(KAMAL KHATA, J.) (K.R. SHRIRAM, J.) Meera Jadhav

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