No prescribed format for issuing provisional attachment orders: CAG report


New Delhi, March 28 (IANS) A CAG audit on ‘Attachment of property of an assessee by ITD under Section 281B’ observed that there is no prescribed format for issuing provisional attachment orders resulting in missing essential information such as estimated tax liability, validity period and not providing assessees with the option of furnishing bank buarantee in lieu of the attached property etc. from the provisional attachment orders which are not in conformity with the provisions or rules.

The audit report observed that the assessing officer (AOs) is not adequately establishing and documenting the basis/grounds for invoking these provisions and in the absence of documentation, audit could not draw assurance whether the applicability of the provisions is justified in those cases.

A notification of provisional attachment orders to registering authorities was found to be inadequate, which eventually defeated the purpose of such notification in a few cases.

The report also noted that as per available records, the AOs did not comply with the Board’s instructions of ascertaining details of all assets in the possession of assessees that could be considered for provisional attachment. In the majority of the cases for which records were made available, the list of assets prepared by the investigation wing as reflected in the appraisal report was not shared with audit. Therefore, audit could not verify the role of the investigation wing in supplementing the efforts of the AO in selection of appropriate property for provisional attachment.

CAG’s aubject specific compliance audit on ‘Attachment of property of an assessee by ITD under Section 281B’ on direct taxes was presented in the Parliament on Tuesday.

As per the report, the audit also noticed deficiencies in respect of list of assets provided in the appraisal report which resulted in incorrect attachment of a property. The process of identification of assets was found to be deficient, thereby reducing the effectiveness of the provisional attachment.

The audit observed that the time gap from the date of search to the date of initial order under Section 281B ranged between 208 days and 1,220 days. Absence of a prescribed time limit for issuing order of provisional attachment has an inherent risk of the assessee alienating property(ies), which are being considered for attachment, in the intervening period in case of abnormal delay in issuance of orders under Section 281B, it said.

The audit also noticed certain cases wherein the assessee was able to dispose of the attached property inspite of notification of the order under Section 281B to the concerned registering authority.

The CAG audit recommended that the CBDT may prescribe a format for the order under Section 281B to include all the elements of essential information required for provisional attachment to ensure consistency and legal sustainability.

The CBDT may frame specific criteria for opinion formation, perhaps with illustrative examples, and clarify ‘exceptional circumstances’ to facilitate the AOs in initiating provisional attachment proceedings in an effective, transparent and legally sustainable manner, it recommended.


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