PROVISION FOR BANK GUARANTEE UNDER SECTION 281B
As per the existing provisions of the Act, the Assessing Officer may provisionally attach any property of the assessee during the pendency of assessment or reassessment proceedings, for a period of 6 months with the prior approval of the specified income- tax authorities, if he is of the opinion that it is necessary to do so for the purpose of protecting the interests of the revenue. Further, the attachment is extendable to a maximum period of 2 years or 60 days after the date of assessment order, whichever is later.
It is proposed that the provisional attachment of property could be substituted by a bank guarantee subject to fulfilment of certain conditions. In this regard, the following propositions to be considered:-
– The Assessing Officer shall revoke provisional attachment of property in case assessee furnishes a bank guarantee from a scheduled bank for an amount not less than the fair market value of such provisionally attached property or for an amount which is sufficient to protect the interests of the revenue
– The Assessing Officer may make reference to Valuation Officer to determine the fair market value of property, who is required to submit a report of valuation to Assessing Officer within 30 days from the date of receipt of such reference
– The Assessing Officer shall pass an order revoking the attachment of property within 15 days of receipt of guarantee from the assessee, however, if a reference is made to a Valuation Officer, within 45 days of receipt of such guarantee
– The Assessing Officer may invoke the bank guarantee to recover the demand amount specified in notice served to assessee if the assessee fails to pay such amount within the period specified in the notice
– Where an assessee fails to renew the bank guarantee or fails to furnish a new guarantee from a scheduled bank for an equal amount, 15 days before the expiry of such guarantee, the Assessing Officer may in the interests of the revenue, invoke the bank guarantee. The amount realised by invoking the bank guarantee shall be utilised against the existing demand which is payable and the balance amount, if any, be deposited in the Personal Deposit Account of the Principal Commissioner or Commissioner in the specified branch
– If the Assessing officer is satisfied that the bank guarantee is not required anymore to protect the interests of the revenue, he shall release that guarantee forthwith.
These amendments will take effect from 1stday of June, 2016.