Section 500 — Provisional attachment to protect revenue in certain cases

(1) 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 under the said section exceeds
two crore rupees,
the Assessing Officer is of the opinion that for protecting the interests of the reve -
nue 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 in section 413.
(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.
(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.
(4) Where the assessee furnishes a guarantee from a scheduled bank for an amount
not less than the fair market value of the property provisionally attached under
sub-section (1), the Assessing Officer shall, by an order in writing, revoke such
attachment.
(5) For the purposes of sub-section (4), where the Assessing Officer is satisfied that
a guarantee from a scheduled bank for an amount lower than the fair market value
of the property is sufficient to protect the interests of the revenue, he may accept
such guarantee and revoke the attachment.
(6) The Assessing Officer may, for determining the value of the property provision-
ally attached under sub-section (1), make a reference to the Valuation Officer, who
shall estimate the fair market value of the property in the manner provided under
section 269(3) to (7), and submit a report of such estimate to the Assessing Officer
within thirty days from the date of receipt of the reference.
(7) An order revoking the provisional attachment under sub-section (4) or (5) shall
be made—
( a) within forty-five days from the date of receipt of the guarantee, where a
reference to the Valuation Officer has been made under sub-section (6);
or
( b) within fifteen days from the date of receipt of guarantee, in any other
case.
(8) Where a notice of demand specifying a sum payable is served upon the asses -
see and the assessee fails to pay that sum within the time specified, the Assessing
Officer may invoke the guarantee furnished under sub-section (4) or (5), wholly or
in part, to recover the amount.
(9) The Assessing Officer shall, in the interests of revenue, invoke the bank guaran-
tee, if the assessee fails to renew the guarantee referred to in sub-section (4) or (5),
or fails to furnish a new guarantee from a scheduled bank for an equal amount,
before fifteen days of its expiry.
(10) The amount realised by invoking the guarantee referred to in sub-section (4) or
(5) shall be adjusted against the existing demand which is payable by the assessee;
and the balance amount, if any, shall be deposited in the Personal Deposit Account
of the Principal Commissioner or Commissioner in the branch of, —
( a) the Reserve Bank of India or the State Bank of India; or
( b) any bank as may be appointed by the Reserve Bank of India as its agent
under section 45(1) of the Reserve Bank of India Act, 1934 (2 of 1934)
at the place where the office of the Principal Commissioner or Commis-
sioner is situated.
(11) Where the Assessing Officer is satisfied that the guarantee referred to in sub-sec-
tion (4) or (5) is not required any more to protect the interests of the revenue, he
shall release that guarantee forthwith.
(12) For the purposes of this section, “Competent Authority” means the Principal
Chief Commissioner or Chief Commissioner, Principal Commissioner or
Commissioner, Principal Director General or Director General or Principal
Director or Director.