The power arises only during the pendency of an assessment or reassessment proceeding — and, under the 2025 Act, also a large penalty proceeding — and only where the Assessing Officer forms the opinion that attachment is necessary to protect the interests of the revenue. It needs the previous approval of a Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General, or Principal Director or Director, and the attachment itself has to be by order in writing. It lapses after six months and can be extended only for a total that does not exceed two years or sixty days after the assessment or reassessment order, whichever is later. A bank guarantee bought it off.
Take the current provision first, because the departmental page for s.281B of the 1961 Act prints an older text. Section 500 of the Income-tax Act 2025 provides that where, during the pendency of any proceeding for (a) the assessment of any income or for the assessment or reassessment of any income which has escaped assessment, or (b) imposition of penalty under section 444 where the amount or aggregate of amounts of penalty likely to be imposed exceeds two crore rupees, the Assessing Officer is of the opinion that for protecting the interests of the revenue it is necessary so to do, he may, with the previous approval of the Competent Authority, by order in writing, attach provisionally any property belonging to the assessee in the manner prescribed. Sub-section (12) defines the Competent Authority as "the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director" — so a note that leaves out the Director General designations is incomplete. Note also where the words "by order in writing" sit in sub-section (1): they govern the attachment order, not the approval, so the section does not in terms require the previous approval itself to be recorded in writing.
The life of the order is fixed. Sub-section (2): "Every provisional attachment under sub-section (1) shall cease to have effect after the expiry of six months from the date of the order made under the said sub-section." Sub-section (3): "The Competent Authority may, for reasons to be recorded in writing, extend the period referred to in sub-section (2) and the total period of such extension shall not exceed two years or sixty days after the date of order of assessment or reassessment, whichever is later." Two years is therefore the floor of the outer limit, not the whole of it — where the assessment order comes late, the attachment can run sixty days past it. The departmental page for s.281B of the 1961 Act prints the same six-month rule and a two-year cap on extension, but with the pre-amendment list of approving authorities and without the bank-guarantee sub-sections, and it should not be quoted as the current provision.
The way out is written into the section. Sub-sections (4) and (5) of section 500 allow the attachment to be revoked where the assessee furnishes a bank guarantee for the fair market value of the attached property, or for a lower amount that the officer considers sufficient; sub-section (8) lets the officer invoke the guarantee if the assessee fails to pay the sum within the time specified. That is the shape of the relief the courts give too. The corpus holds FCS Manufacturing, where the Gujarat High Court set aside the continuation of an attachment on the footing that continuation was not necessary because the interest of the revenue could be safeguarded by a bank guarantee and directors' undertakings — the application succeeded because it came with an offer of security, not merely a grievance.
Three checks are worth making on the order itself before arguing anything about hardship. Is there a proceeding for assessment or reassessment actually pending on the date of the order — the power does not survive the proceeding. Was the previous approval obtained before the order and is it in writing and by an authority within the list — approval recorded after the event, or by an authority not named, goes to jurisdiction. And has the order been extended, by whom, and are the reasons recorded in writing — the extension is not automatic and the six months run from the date of the original order, not from the date the demand arose. Where the attachment followed a search, note also that s.132(9B) is a separate and shorter-lived power and the two are sometimes conflated in the file.
Provisional attachment is the one recovery power that bites before any demand exists, and it is usually met with a request for sympathy rather than with the three jurisdictional checks that actually work. The time limits are the strongest of them, because an attachment that has run past its life needs no argument on merits at all — it has simply ceased to have effect, and the bank or the registrar can be told so.
My assessment was reduced in appeal after the officer had already sent a recovery certificate to the Collector and my property was attached. Can he carry on with the old certificate?
The TRO has attached property the defaulter transferred years ago and calls the transfer void. Can he do that?
Can a bank account be provisionally attached under s.281B at all, and how much can be attached?
Your bank accounts are provisionally attached and the business cannot operate. Is there a way out short of paying?
The department has provisionally attached my bank accounts under s.281B while the assessment is still going on. What are the limits on that power?
The CPC has adjusted my entire refund against a demand that is under appeal. Do I have to file a separate stay application before I can complain?
I want to sell an asset or mortgage business assets while a tax demand is pending. How do I get permission?
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