Section 281B — Provisional Attachment to Protect Revenue

Function in the statutory architecture

Section 281B lets the Assessing Officer attach property before any demand exists. It applies during the pendency of a proceeding for assessment, for assessment or reassessment of escaped income, or for a penalty under s. 271AAD where the penalty likely to be imposed exceeds two crore rupees. If the Assessing Officer is of the opinion that it is necessary to protect the interests of the revenue, he may, with the previous approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director, attach provisionally any property of the assessee in the manner provided in the Second Schedule.

The attachment ceases after six months from the date of the order. The approving authority may extend it, for reasons recorded in writing, but the total extension cannot exceed two years or sixty days after the date of the assessment or reassessment order, whichever is later.

Operative consequences

• If the assessee furnishes a guarantee from a scheduled bank for not less than the fair market value of the property, the Assessing Officer must revoke the attachment; a lower guarantee may be accepted if he is satisfied it is sufficient.
• For valuation, the Assessing Officer may refer the property to the Valuation Officer under s. 142A, who must report within thirty days.
• The revocation order must be made within forty-five days of receipt of the guarantee where a valuation reference is made, and within fifteen days in any other case.
• If a notice of demand is not paid in time, the guarantee may be invoked wholly or in part; it must be invoked if the assessee fails to renew it, or to furnish a new one for an equal amount, fifteen days before its expiry.
• The amount realised is adjusted against the existing demand and any balance goes to the Personal Deposit Account of the Principal Commissioner or Commissioner; the guarantee is released once it is no longer needed.

Status

Section 281B is operative for assessment year 2026-27. It is not time-limited, and its Explanation now appears as "[***]". The Finance Act, 2026 did not amend this section.

The 1961 Act governs assessment year 2026-27 and earlier; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 500.