TAXMAN
FREE TO ATTACH ASSETS
Fiscally challenged, the government is frantically exploring
ways to tap into the towering mountain of tax dues. Since that
option provides a fast way to boost revenues, it is now going
to any lengths to recover arrears. Among the latest moves is
a new circular from the Central Board of Direct Taxes ( CBDT),
which could potentially affect every tax-payer in the country,
be it an individual or a corporate.
The circular stipulates
that the income tax department can attach anyone's assets
and properties, if the assessing officer thinks that a company
or an individual may not pay up the tax demand. The circular
says that even the "apprehension" that there could
be difficulty in recovering the tax demanded , once the assessment
is completed, would be sufficient ground for provisional attachment
of assets. In short, the assessing officer has just been vested
with extensive powers.
Tax-payers are
used to a regime in which assets and properties are attached
to recover unpaid income tax. But the CBDT instruction, issued
in September '04, has instructed tax authorities to provisionally
attach properties and other assets if the assessing officer
thinks that persuading the assessee to pay might be difficult.
The assessing officer can do this even while the scrutiny
process is on.
The assessing officers
are expected to exercise this power in cases where the demand
is likely to be Rs 5 lakh or more, if the tax-payer is from
a city. The cities identified for this purpose are Delhi,
Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune and Bangalore.
The threshold limit for exercising the power in other places
is a likely tax demand of Rs 1 lakh.
The decision to
issue these orders has been left entirely to the discretion
of the assessing officer. The circular also stipulates that
the assessing officer will be held responsible in the event
of any revenue loss arising from any lapse on his part. The
circular reads: "If any demand becomes irrecoverable
due to the failure of the assessing officer to follow these
guidelines, he shall be held acceptable for the loss caused
to the government, regardless of his subsequent postings."
The circular also urges the officers to explore the possibility
of provisional attachment in raid cases.
Provisional attachment
under Section 281B of the I-T Act is for a maximum of two
years. However, according to the circular, if the tax is not
recovered during the period of provisional attachment, it
can be upgraded into regular attachment under Section 226
of the Act. An I-T officer of the rank of chief commissioner
told ET, "The powers for provisional attachment have
been in existence under Section 281B. There is nothing new
about it. The recent CBDT note is to instruct the assessing
officers to invoke the provision of attachment diligently."
