Provisional FDR lien must be lifted upon furnishing a ₹50 crore post-dated cheque and asset undertaking.

The petitioner challenged a lien over fixed deposit receipts (FDRs) aggregating approximately ₹84.88 crore and the provisional attachment order dated 10 November 2021 made under Section 281B of the Income Tax Act, 1961.

It argued that the attachment had ceased to operate, while the Revenue contended that it continued because the assessment order for AY 2020–21 had not been passed, following an interim order restraining its passage.

Assessment orders had been passed for AYs 2021–22 and 2022–23; the related demands were stayed or under appeal.

The petitioner offered to pay ₹50 crore under protest in exchange for release of the FDR lien, and the Revenue stated that it had no in-principle objection, provided its recovery interests were secured.

1. Whether the provisional attachment and lien over the FDRs continued under Section 281B while the assessment order for AY 2020–21 remained unpassed.

2. Whether the lien should be lifted on the terms proposed by the petitioner, having regard to the outstanding tax demands and the need to protect the Revenue’s recovery interests.

Section 281B of the Income Tax Act, 1961 provides for provisional attachment of property to protect the interests of the Revenue; the first proviso to Section 281B(2), as advanced by the Revenue, provides that an attachment continues for six months, extendable up to two years, or until 60 days after the assessment order, whichever is later.

The Court also considered the prevailing CBDT circular concerning a 20% deposit for obtaining a stay of demand in an appeal.

The judgment does not finally determine the parties’ competing interpretations of Section 281B; it resolves the petition through directions securing the Revenue while permitting release of the lien.

The Revenue relied on the pending AY 2020–21 assessment to contend that the attachment remained in force, while the petitioner pointed to the substantial funds immobilised and its financial distress, alongside stayed or contested demands.

Rather than decide the duration issue under Section 281B, the Court considered the petitioner’s offer and the Revenue’s stated need for security.

It reasoned that a ₹50 crore payment—approximately 25% of the estimated total outstanding demand of ₹200 crore—was appropriate, noting that a 20% deposit under the prevailing CBDT circular could ordinarily secure a stay of demand.

The Court conditioned release of the lien on payment and an undertaking restricting transfers or creation of third-party rights over the petitioner’s assets.

It directed the petitioner to deliver to the Assessing Officer, within one week, a post-dated cheque dated 15 November 2026 for ₹50 crore; upon receipt, the Assessing Officer must lift the lien over the FDRs and/or recall the attachment order and send a copy of the order to the concerned bank.

The petitioner must also file an undertaking not to transfer or create third-party rights over its assets, together with a list of its assets and any encumbrances.

The interlocutory applications were also disposed of.