Overview on Powers of Income-tax Authorities
Section 131 to 136 deal with powers of Income-tax Authorities. Below are the headings of these sections.
|131||Power regarding discovery, production of evidence, etc.|
|132||Search and seizures|
|132A||Powers to requisition books of account, etc.|
|132B||Application of seized or requisitioned assets|
|133||Power to call for information|
|133A||Power of survey|
|133B||Power to collect certain information|
|133C||Power to call for information by prescribed income-tax authority|
|134||Power to inspect registers of companies|
|135||Power of Principal Director General or Director General or Principal Director or Director, Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and Joint Commissioner|
|136||Proceedings before income-tax authorities to be judicial proceedings|
These above sections of Income Tax Act empower Income tax authorities will several powers.
Discovery, Production of evidence etc. (Section 131)
This section gives certain powers to Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, Commissioner (Appeals), the Principal Chief Commissioner or Chief Commissioner and the Dispute Resolution Panel referred to in section 144C. They are conferred powers vested in a Civil Court under the Code of Civil Procedure, 1908 while dealing with the following matters –
- Discovery and inspection
- Enforcing the attendance of any person, including any officer of a banking company and examining him on oath
- Compelling the production of books of account and documents, and
- Issuing commissions
Although these powers are exercised by a Court, the authorities act in a quasi-judicial capacity and ought to conform to the principles of judicial procedure. This section has given powers to AO to use his discretion to use these power if he suspects that any income is either concealed or likely to be concealed. These powers can be exercised even if there are no pending proceeding with him or with any income tax authority.
Some Important Points –
- Such Authorities not below the rank of Assistant Commissioner of income-tax, as may be notified by the Board have powers to inquire or investigate in respect of any person or class of persons relating to an agreement for the exchange of information under section 90 and 90A. This allows such authorities to collect information about any person even outside India. This is possible even if there are pending cases with such authority or any other Income-tax Authorities.
- This section also gives unrestricted powers to income-tax authorities (except for Assessing Officer and Assistant Director or Deputy Director) to impound or retain the books of account or other documents produced before it in any proceeding under this Act. However, AO or Assistant Director or Deputy Director don’t enjoy such unrestricted power. They are subject to two restrictions – (i) he must record his reasons for impounding books of account or other documents; and (ii) if he desires to retain in his custody any such books or documents for a period exceeding 15 days (excluding holidays), he must obtain the prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Commissioner or Principal Commissioner or Principal Director or Director, as the case may be, for the purpose.
Search and Seizure (Section 132)
This section provides income-tax authorities with wide powers related to conducting searches and seizures. In short, provisions of Criminal Procedure Code relating to searches and seizure would as far as possible be applicable to searches and seizures under this Act. Any contravention of the orders issued under this section would be punishable with imprisonment and fine under section 275A.
This search and seizure can be authorized by authorities including Joint Commissioner or Joint Director and those above their ranking as may be empowered by the Board. However, those above Joint Director or Joint Commissioner may authorize authorities subordinate to it down to Income Tax officers and in between his rank. This section has placed high powers with Income-Tax Authorities. This allows them to enter any places including buildings, vehicles, vessels or aircraft if they have reason to suspect that books of account, documents, articles including money, jewelry, valuables etc. are being kept. They are given the power to seize them, place marks of identification on them or make a note or inventory thereof for the purpose. But, for things like bullion, jewelry or another valuable article that are kept as stock-in-trade, they are not supposed to seize them. However, they can take inventory of the same.
This section also requires those with electronic documents or books of account to assist authorities to access it.
Some important Points –
Authorities are authorized to break keys of locks in case they are not readily available.
Books of Accounts or such seized documents must be returned within 30 days after the completion of assessment order is passed under section 153A or 158BC. However, on recording the reasons, Commissioner or Director and above them can allow for no longer than 30 days from the day after the assessment proceedings for the relevant year are over.
The person from whose custody such books of account or documents are seized can make copies of the same.
This section also allows income-tax authorities to search any person present or who boards off at such place if he suspects of their involvement in concealing articles, books of account or documents.
Commissioner or Principal Commissioner of Income-tax has the power to authorize the search of any building, place, vessel, vehicle, aircraft etc., within his territorial jurisdiction and also in cases where he has no jurisdiction if he has a reason to believe that delay in obtaining approval from those under whose jurisdiction it is, would be prejudicial to the interest of revenue.
It is assumed that those books of account or handwritten notes found are true and can reasonably be assumed to have signed true.
Where it is not practical due to weight or size or any other reason for the authorities to take possession of such seized articles, Authorized officer shall serve an order that owner or person who has its possession shall not remove them unless they obtain a previous permission of such authorized officer. This is also called a restraint order.
Where there is any other reason due to which authorities don’t seize it but serve the order to take previous approval, and the reason for not seizure is other than mentioned above, restraint order shall still be valid. However, serving of such order shall not be deemed to be seizure of such valuable article or thing. An order under this clause shall not be enforced for a period exceeding 60 days from the date of order.
Examination of any person may be not merely in respect of any books of account, other documents or assets found as a result of the search but also in respect of all matters relevant to an investigation under the Act.
Where authorized person who seized such articles or books of accounts doesn’t have jurisdiction over it, he shall transfer their possession to the authorized authority under whose jurisdiction it lies within 60 days from the date of which the last of the authorizations for the search was executed.
Important points of Sections related to Powers of Income-tax Authorities
As discussed above, Income Tax Act has given a lot of powers to Income-tax Authorities. These powers are mainly in nature of search and seizures. Some important points other than those discussed above are –
- Where a person makes application to AO within 30 days from the end of the month in which the asset was seized, for release the same and explains the nature as well as a source of acquisition of seized assets to his satisfaction, AO shall within 120 days return the same. Further, such assessee shall be entitled to simple interest of 0.5% per month or part of the month on the amount that exceeds the liabilities. This interest is applicable for the period that exceeds the 120 days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under section 153A or under Chapter XIV-B.
- Authorities have the power to call for information with virtually any entity or persons in India under section 133.
- Income Tax Authorities are also granted power to survey and order persons to submit certain information.
Important Notes – Government has proposed to increase the power of Income Tax Authorities. Such proposed powers to be increased are –
- Apply retrospectively that in order to conduct searches, authorities will not have to answer reasons right from 1962. While this seems good provision for curbing Black Money, it opens up a wide possibility of tax terrorism from the department and government itself.
- There are also some other matters like making easy for issuing orders and allowing tax authorities to open assessments of previous 10 years if during any search unexplained amount above 50 lakhs is discovered. These amendments are proposed to ease curbing black money and better tax collections.