[Part-2] Demystifying “The Income-Tax Raid”

The Power of Search and Seizure was discussed earlier in Part – I of this article. In this part, the Power of Survey and the Power to Collect Information i.e. the other two powers of the income tax officials have been discussed.

Power of survey – Section 133A

Income-Tax Authority with respect to “Power of Survey” means any of the following:

  • Principal Commissioner
  • Commissioner
  • Joint Commissioner
  • Principal Director
  • Director
  • Joint Director
  • Assistant Director
  • Deputy Director
  • Assessing Officer
  • Tax Recovery Officer

While exercising the power of survey an income tax authority may enter—

  • Any place within the limits of the area assigned to the income-tax authority, or
  • Any place occupied by any person which falls under the income-tax authority’s jurisdiction, or
  • Any place in respect of which such income-tax officer is authorised (for conducting a survey) by such income-tax authority, who has jurisdiction over the area.
  • Any place at which a business/profession/charitable activity is carried on, whether such place is the principal place of such business/profession/charitable activity or not.

Note: Such place of business/profession/charitable activity also includes any other place in which the person carrying on such business/profession/charitable activity states that any of his

  • books of account
  • other documents
  • any part of his cash/stock
  • other valuable article
  • related things

is/are kept. Whether any business/profession/charitable activity is carried on therein or not does not matter.

Such authorised officer is authorised for requiring any proprietor/trustee/employee/any other person who may at that time and place be attending in any manner to/helping in the carrying on of such business/profession/charitable activity to afford the authorised officer the necessary facility of any/all of the following:

  • Inspection of such books of account/other documents as the authorised officer may require and which may be available at such place. This can be done by an “Inspector of Income Tax” also.
  • Checking or verifying the cash, stock or other valuable article or thing which may be found therein, and
  • Furnishing such information as the authorised officer may require as to any matter which may be useful for, or relevant to, any proceeding under the Income-Tax Act, 1961.
  • Verifying that tax has been deducted or collected at source in accordance with the provisions of the Income-Tax Act, 1961.
  • Placing marks of identification on the books of account or other documents inspected by the authorised officer and make or cause to be made extracts or copies therefrom, if he so deems necessary. This can be done by an “Inspector of Income Tax” also.
  • Impounding and retaining in his custody (for such period as he thinks fit) any books of account or other documents inspected by the authorised officer.
  • Making an inventory of any cash, stock or other valuable article or thing checked or verified by the authorised officer.
  • Recording the statement of any person which may be useful for, or relevant to, any proceeding under the Income-Tax Act, 1961.
  • Requiring
    • an assessee by whom expenditure is incurred in connection with any function, ceremony or event, or
    • any person who, in the opinion of the income-tax authority, is likely to possess information as respects the expenditure incurred

to furnish such information as the authorised officer (including an Inspector of Income Tax) may require as to any matter which may be useful for/relevant to any proceeding under this Act. For this purpose the authorised officer may have the statements of the assessee or any other person recorded and any statement so recorded may thereafter be used in evidence in any proceeding under the Income-Tax Act, 1961.

  • Using same powers as are vested in a court under the Code of Civil Procedure, 1908 when trying a suit in respect of the following matters, namely:—
    • 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 other documents
    • issuing commissions.

Only when a person during a survey evades or refuses to afford facility to the income-tax authority to

  • inspect books of account/other documents
  • check/verify any cash, stock or other valuable article/thing
  • furnish any information
  • have his statement recorded

Such powers cannot be used by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner.

Rights of the person at whose place the survey is being conducted under Section 133A

The authorised officer may enter the place of business/profession/charitable activity or the place where the person carrying on such business/profession/charitable activity states that any of his books of account, other documents, any part of his cash/stock, other valuable article or related things are kept.

  • Only during the hours at which such place is open for the conduct of business/profession
  • In the case of any other place, only after sunrise and before sunset.
  • Such income-tax authority can not
    • Impound any books of account or other documents except after recording reasons for so doing; or
    • Retain in custody any such books of account or other documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General or the Principal Commissioner or the Commissioner or the Principal Director or the Director.
    • On any account, remove/cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing.

Power to collect certain information – Section 133B

Income-Tax Authority with respect to “Power to collect information” under Section 133B means any of the following:

  • Joint Commissioner
  • Assistant Director
  • Deputy Director
  • Assessing Officer
  • An Inspector of Income-tax if authorised by the Assessing Officer having jurisdiction over the area

While exercising the power to collect information under Section 133B, an income tax authority may for the purpose of collecting any information which may be useful for/relevant to, the purposes of the Income Tax Act, 1961 enter—

  • Any building or place within the limits of the area assigned to such authority ; or
  • Any building or place occupied by any person which falls under the income-tax authority’s jurisdiction
  • Any place at which a business/profession is carried on, whether such place is the principal place of such business or not.

Such authorised officer is authorised for requiring any proprietor/employee/any other person who may at that time and place be attending in any manner to/helping in the carrying on of such business/profession to furnish such information as may be prescribed.

Rights of the person at whose place the information is being collected under Section 133B

An income-tax authority can enter any place of business or profession for collecting information under Section 133B during the hours at which such place is open for the conduct of business or profession.

An income-tax authority which has come for only for collecting information under Section 133B shall, on no account after entering the place/building remove or cause to be removed from the building or place, any books of account or other documents or any cash, stock or other valuable article or thing.

-Tushar Kaushik

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