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Income Tax Authorities.

VARIOUS AUTHORITIES.

Section 116 of the Income-Tax Act, 1961 provides for the administrative and judicial authorities for administration of this Act. The Direct Tax Laws ( Amendment) Act, 1987 has brought far-reaching changes in the organisational structure. The implementation of the Act lies in the hands of these authorities. The change in designation of certain authorities and creation of certain new posts in the structure are the main features of amendments made by The Direct Tax Laws ( Amendment) Act, 1987. The new structure of authorities has been properly depicted in a chart on the facing page. These authorities have been grouped into two main wings :

(1) Administrative.

Under this wing authorities are :

(1) The Central Board of Direct Taxes.

(2) Principal Director General of Income Tax / Principal Chief Commissioner of Income-tax.

(3) Director Generals of Income-tax / Principal Commissioner of Income-tax.

(4) Principal Director of Income-tax / Principal Commissioner of Income-tax.

(5) Directors of Income-tax / Commissioners of Income-tax / Commissioners of Income-tax ( Appeals).

(6) Additional Directors of Income-tax, or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeal)

[ Inserted by Finance Act 1994 ]

(7) Joint Director of Income-tax / Joint Commissioner of Income-tax.

(8) Deputy Directors of Income-tax / Deputy Commissioners of Income-tax / Deputy Commissioners of Income-tax (Appeals).

(9) Assistant Directors of Income-tax / Assistant Commissioner of Income-tax.

(10) Income-tax Officers.

(11) Inspectors of Income-Tax.

(2). Assessing officer.

It means the Assistant Commissioner on the Income-tax Officer who is vested with relevant Jurisdiction u/s 120 (1) or 120 (2) or any other provisions of this Act. It also includes the Deputy Commissioner who is directed u/s 120 (4)(b) of this Act to act as Assessing Officer.

.Importance of Assessing Officer.

In the organisational set-up of the income tax department Assessing Officer plays a very vital role. He is the primary authority who initiates the proceedings and is directly connected with the public. Form the time of filing of return till the assessment is completed he plays a pivotal role. He can start proceedings for non filing of return, imposition of penalties etc. Orders passed by him can be challenged only on appeal. The department can revise his orders only if it is proved that these are prejudicial to the revenue and that too only by the Commissioner of Income tax.

(3). Appointment of income-tax authorities [ Section 117 ]

(a) Power of Central Government. The Central Government may appoint such persons as it thinks fit to be income-tax authorities. It kept with itself the powers to appoint authorities upto and above the rank of an Assistant Commissioner of Income-tax [ Section 117(1) ]

(b) Powers of the Board and other higher authorities. Subject to rules and regulations of the Central Government regarding the conditions of service of persons in public services, the Central Govt. has authorised the Board, or a Director General, a Chief Commissioner, a Commissioner or a Director to appoint income-tax authorities below the rank of Assistant Commissioner. [ Section 117 (2) ].

(c) Powers to appoint executive and ministerial staff. U/s 117 (3) the Board has been empowered to appoint such executive or ministerial staff as may be necessary to assist the income-tax authorities in the execution of their functions.

(4) Control of income-tax authorities [ Section 118 ]

The income-tax authorities will be subordinate to such authorities as may be prescribed in a notification to be issued by the Board in this behalf.

1. CENTRAL BOARD OF DIRECT TAXES (C. B. D. T)

In the administrative set up of the Income-tax department highest authority is the Central Board of Direct Taxes, constituted under the provisions of Central Board of Revenue Act, 1963. The Board functions under the control of Ministry of Finance, Government of India. Its jurisdiction is whole of India.

The Central Government is empowered to appoint its members and the Government can increase the number upto a maximum of five. At present there are four members besides the Chairman. One of the members of the Board is appointed as its Chairman.

.Powers of C. B. D. T.

The whole of income-tax department is to be looked after by the Board. It has to perform the functions of administration, supervision and control of entire Income-tax structure in India. The orders and directions issued by the Board are to be complied with by all the subordinate authorities. The orders and directions issued by the Board will not interfere in the performance of appellate functions of Appellate Commissioner .

The Income-tax Act provides following specific powers to the Board :

(1) The Board can declare any association whether incorporated or not and whether Indian, or Non-Indian, as company under the provision of Section 2(17).

(2) The Board has power to determine the jurisdiction of various authorities mentioned in this Act. [ Section 118 ] .

(3) The Board may issue directions for the exercise of powers and performance of the functions by all or any of these authorities. While issuing such directions the Board will keep in mind any of the following criteria :

(a) territorial area :

(b) persons or classes of persons :

(d) cases or classes of cases [ Section 120 (1)

and (3) ].

(4) The Board may authorise, by general or specific order, Director General or Director to perform the powers of any of the income-tax authorities. [ Section 120 ].

(5) The Board may empower Director General or Chief Commissioner or Deputy Director to exercise the powers of assessing authority in respect of any specified area, person, incomes or cases or class of persons, class of incomes or class of cases. [ Section 120 (4) ].

(6) The Board may authorise any of the authorities to exercise its powers concurrently with any other authority. In case such notification is issued by the Board, the lower authority ( in rank ) shall exercise such powers as are directed to it by higher authority. [ Section 120 (5) ] .

(7) To carry out the different provisions of the Act the Board makes rules for whole of India.

[ Section 295 ]

(8) The Central Board of Direct Taxes has been empowered by Taxation Laws ( Amendment) Act 1975 to make rules regarding the maintenance of accounts and documents required under Section 44 AA. It is obligatory for professionals to maintain such books and documents as may enable the Assessing Officer to compute his total income.

The Board has the power to make rules and issue orders, instructions, directions etc., to all the persons employed for the proper and efficient administration of the Act, but the Board cannot issue orders, directions etc. of the following nature :

(a) To require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner.

(b) To interfere with the discretion of the Deputy Commissioner of Income-tax ( Appeals) in the exercise of his appellate functions.

(9). Section 119 (2) empowers the Board to issue general or special circulars or orders which are not prejudicial to assessees and Board feels that these are necessary or expedient for the purpose or proper and efficient management of the work of assessment and collection of revenue. Section 119 (2) (b) says that to avoid genuine hardship in any case or class of cases, the Board, if it thinks desirable can authorise any income-tax authority not being a Deputy Commissioner ( Appeal) or Commissioner ( Appeals) or to admit an application or claim for any exemption, deduction, refund or any relief under this Act after the expiry of specified period fixed for such an application, claim etc. The Supreme Court has also held the validity and binding nature of such type of circulars which are beneficial to the assessee and the tax-payer has right to get them enforced in a court.

(10). To avoid undue hardship in any case or class of cases, the Board may relax any of the requirements given under the chapters of Aggregation, Carry Forward and set off of losses or Deductions u/s 80 of the Act. Such relaxation has to be provided in general or special order to be issued by the Board for reason to be specified therein. Such relaxation may relate to failure of the assessee to comply with any of the requirements regarding claim of deduction subject to following conditions :

(1). The default of the assessee was due to circumstances beyond the control of assessee : and

(2) Assessee has complied with such requirements before the completion of assessment is relation to the previous year in which such deduction is claimed. However each such order is to be placed before each house of parliament.

2. PRINCIPAL DIRECTOR GENERAL / DIRECTOR GENERAL / PRINCIPAL CHIEF COMMISSIONER / CHIEF COMMISSIONER OF INCOME TAX.

(1) Appointment. The Central Government may appoint such persons as it thinks fit to be the Director General / Chief Commissioner of Income-tax.

(2) Jurisdiction. The jurisdiction of these authorities shall be determined by the C. B. D. T. Keeping in view the area, persons, incomes or cases.

(3) Function. The C. B. D. T. may be general or special order and subject to such conditions, restrictions or limitations, authorise any Principal Director General / Director or Chief Commissioner to perform such functions of any other income-tax authority as may be assigned to him in such order.

(4) Powers.

(a) The Principal Director General / Director General or Principal Chief Commissioner / Chief Commissioner may be empowered to authorise a Deputy Commissioner to exercise the powers of an Assessing Officer in respect of a person, case, income or an area.

(b) These authorities may be empowered by the Board to appoint income-tax authorities below the rank of an Assistant Commissioner.

(c) These authorities may, after giving the assessee a reasonable opportunity of being heard in the matter, and after recording his reasons, transfer the case from one Assessing Officer subordinate to him.

(d) The Director General or Director or any other officer so authorised, may exercise the powers of Assessing Officer, in case he has reason to suspect that any income has been concealed or is likely to be concealed by an assessee coming within his jurisdiction.

(e) Section 119 (3) empowers the Director to issue instructions to the Assessing Officers and such instructions are issued for their guidance and are binding on them.

(f) Taxation Laws ( Amendment) Act, 1975 has given the power to the Director to make any inquiry or investigation in case of such type of assessee who falls within his jurisdiction and in whose case he has reason to suspect that any income has been concealed or is likely to be concealed. This section also confers on the Director such powers which are vested in a court under the Code of Civil Procedure, 1908.

(g) The Director shall be competent to make any inquiry under this Act and for this purpose shall have all the powers that an Assessing Officer has under this Act in relation to the making of inquiries. [ Section 135 ].

3.PRINCIPAL COMMISSIONER / COMMISSIONER / PRINCIPAL DIRECTOR / DIRECTORS / ADDITIONAL COMMISSIONER / ADDITIONAL DIRECTORS OF INCOME TAX.

(1) Appointment. The Central Government may appoint such persons as it thinks fit to be the Commissioners of Income-tax.

(2) Jurisdiction. The jurisdiction of Commissioners is to be determined by the Central Board of Direct Taxes keeping in view the area, persons, incomes or cases.

(3) Functions. The Board may, by general or specific order and subject to such conditions, restrictions or limitations, authorise any commissioner to perform such functions of any other income tax authority as may be assigned to him in such order.

(4) Powers.

(a) Under the directions of the Board, a Commissioner may exercise the powers of an Assessing Officer.

(b) A Commissioner has the power to transfer any case from one or more Assessing Officers subordinate to him to any other Assessing Officer or Officers also subordinate to him. He can do so only after giving the assessee an opportunity of being heard and after recording the reasons for doing so.

(c) The Commissioner has been empowered to grant approval for an order issued by the Assessing Officer asking a non-company assessee to get it's accounts audited from a Chartered Accountant. [ Section 142 (2A) ].

(d) The prior approval of the Commissioner is required for reopening of an assessment [ Section 147 ] beyond the time limit of 4 years.

(e) The Commissioner has the power to revise an order passed by Assessing Officer, if in his opinion it is erroneous or prejudicial to the interests of the revenue. He can do so only after giving the assessee an opportunity of being heard. [ Section 263 ].

(f) The Commission has the power to revise any other order issued by I. T. O. and not covered under section 263, either of his own motion or on application by the assessee for such revision. [ Section 264 ].

(g) The Commissioner may direct the Assessing Officer to appeal to Appellate Tribunal against the order passed by Commissioner ( Appeals). [ Section 253 (2) ].

4. JOINT COMMISSIONERS / JOINT DIRECTORS OF INCOME-TAX.

(1) Appointment. The Central Govt. appoints Joint Commissioners / Joint Directors of Income-tax and they are subordinate to Commissioners, and Chief Commissioners.

(2) Jurisdiction. The area of operation is specified by the Board or any other authority so authorised. Their jurisdiction can be concurrent with other such authorities.

(3) Functions. They perform such functions as are assigned to them by general or specific order issued by the Board and in respect of specific area, class of persons or specific cases or class of cases.

(4) Powers.

(a) He is empowered to accord sanction to levy additional income-tax on companies in which public are not substantially interested. [ Section 107 ].

(b) He may be authorised by the Board, or Chief Commissioner to exercise the powers of assessing officer.

(d) He has the power to issue instructions to Assessing Officer to revise an order issued by I. T. O. if he has received an application from assessee regarding a pending case. [ Sec. 144A ].

5. ASSESSING OFFICER ( DEPUTY COMMISSIONER / ASSISTANT COMMISSIONER / INCOME TAX OFFICER)

The Assessing Officer is the most important authority in the organisation structure of Income-tax department. He is the primary authority to initiate assessment proceedings and make assessment. He is the only authority to collect tax. He is the authority which comes into contact with the public.

.Jurisdiction [ Section 124 ]

1. Determination by CBDT. The jurisdiction of income-tax authorities shall be determined by the Central Board of Direct taxes. While determining the jurisdiction the Board may consider the following :

(1) Territorial area

(2) Persons or classes of persons

(3) Incomes or classes of incomes

(4) Cases or classes of cases.

2. Instructions by Director General / Chief Commissioner or Commissioner of Income-tax. The Assessing Officer shall perform his functions in respect of such area or such classes of persons or incomes as the above mentioned authorities may instruct. The Assessing Officer shall have jurisdiction within the area assigned to him and in respect of :

(1) Any persons who is carrying on his business or profession in such area, or if he is carrying on business at more than one place, the principal place of business is situated within such area : and

(2) Any other persons who is residing in such area.

3. Concurrent Jurisdiction. If two or more persons are appointed as Assessing Officers in same area, each one will perform such functions as are directed by the Commissioner. If two or more Assessing Officers are required to attend the cases in same area, the directions of that Assessing Officer who is senior in rank shall prevail.

4. Dispute Regarding Jurisdiction. (1) If there is dispute regarding the jurisdiction of different such authorities, it will be decided by the Director / Chief Commissioner or Commissioner of Income-tax.

(2) if dispute relates to areas which fall within the jurisdiction of different such authorities, it will be decided by the concerned Director General or Chief Commissioner or Commissioner.

(3) If such authorities are not in agreement the dispute will be decided by the Board or any other authority so notified.

5. Jurisdiction not to be Disputed.

(1) The jurisdiction of the Assessing Officer shall not be challenged after the expiry of one month from the date on which he has filed a return u/s 139(1) or u/s 115 WD(2) : or after the completion of assessment whichever is earlier.

(2) if he has not filed such return and the time allowed by notice served under sections 142(1) or 148 or 144 or u/s 115WD(2) or u/s 115WH(1) ( first provision) has expired.

(3) If Assessing Officer is not satisfied about the contentions of the assessee regarding the dispute, he will refer the case for decision to the Commissioner / Chief Commissioner or Director General of Income-tax.

Powers.

The Assessing Officer shall exercise the following powers :

1. Power of Civil Court. These authorities shall have the 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 :

(1) Discovery and Inspection :

(2) Enforcing the attendance of any person including any officer of a banking company and examining him under oath :

(3) Compelling a person to produce books of accounts and other documents : and

(4) Issuing commissions. [ Section 131 ].

2. Powers of Search and Seizure. These authorities shall have the power of searching any building, place, vessel, vehicle or aircraft and seize books of accounts, other documents, money, bullion, jewellery or other valuable articles or things. Identification marks shall be put on the seized articles and an inventory shall be made. [ Section 132 ].

The books of accounts or the other documents seized shall not be retained by the authorities for a period exceeding 180 days from the date of seizure unless for the reasons recorded, the approval of Chief Commissioner or Commissioner, is obtained. The extension cannot be granted beyond 30 days in case of books relating to the year to which they are relevant .

[ Section 132 (8) ].

The assets so seized shall be retained by the Assessing Officer in his authority and shall be applied towards the recovery of existing and estimated tax liability of the assessee.

3. Power of Assessment. An Assessing Officer or any other authority acting as Assessing Officer shall have following powers while performing his functions :

(1) Power regarding self-assessment as mentioned in Section 140 A.

(2) Power of making regular assessment under Section 143 and Best judgment assessment under Section 144.

(3) Power to reopen an assessment under Section 146.

(4) Power to reopen an assessment in case income has escaped assessment under Sections 147 and 148.

(5) Power to treat a person as an agent under Section 163.

(6) Power to assess a person leaving India under Section 174 and income of person trying to alienate his assets under Section 175.

4. Power to call for information. The aforesaid authorities have the power to call for necessary information from a firm and H. U. F.

They can ask an assessee to furnish a statement of names and addresses of all the persons to whom he has paid in any previous year rent, interest, commission, royalty or brokerage etc. amounting to more than Rs 1,000 or such higher amount as may be prescribed together with particulars of all such payments. The Assessing Officer can ask any person including a banking company or an officer thereof to furnish information relating to such points or matters or to furnish statements of accounts and affairs verified in the prescribed manner. [ Section 133 ].

5. Power of Survey. Under Section 133A, an Income-tax authority may enter any place where business or profession is carried on, if such place is within the limits of the area assigned to him or is occupied by any person in respect of whom the Assessing Officer exercises jurisdiction. [ Section 133A ].

The Income-tax authority may require the person attending the business or profession to afford necessary facilities to inspect books of accounts or documents, and to check and verify the cash, stocks or other valuable which may be available at the place. [ 133 A (1) ]. The Income-tax authority may enter any place only after sunrise and before sunset. [ 133 A (2) ]. No books of accounts, documents or cash, stock or valuable shall be removed from the place where such authority has entered. [ 133 A (4) ]. The Income-tax authority may ask a person to submit the necessary information relating to expenditure incurred in a particular ceremony or event .[ 133 A (5) ]. These powers may also be exercised by the Director General, the Chief Commissioner, the Director and the Commissioner.

6. Power to Inspect Registers of Companies. [ Section 134 ]. The above - mentioned authority, may inspect, if necessary, take copies or cause copies to be taken of any register of members, debentureholders, mortgages of company or of any entry in such register.

.6. INCOME TAX INSPECTOR.

They are appointed by Chief Commissioner or Commissioner of Income-tax and are subordinate to Assessing Officers. They assist Assessing Officers in performance of their duties. They may be directed to perform any other function by general or specific order.

All the proceedings under this Act conducted before an Income-tax authority shall be deemed to be judicial proceedings within the meanings of Sections 193 and 228 and for the purposes of Section 196 of the Indian Penal Code. [ Section 136 ].

.POWERS OF INCOME TAX AUTHORITIES RELATING TO SEARCH AND SEIZURE [Section 132 ]

Entering and searching the premises.

Where the Director General or Director or the Chief Commissioner or the Commissioner or any such Deputy Director or Deputy Commissioner has been empowered in this behalf by the Board, in consequence of information in his possession, has reason to believe that :

(a) any person to whom summons under sub-section (1) of Section 131 of this Act, or under sub-section (1) of Section 142 of this Act were issued to produce, or cause to be produced, any books of accounts, or other documents as required by such summons or notices : or

(b) any person to whom summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of accounts or other documents which will be useful for, or relevant to any proceeding under the Indian Income-tax Act :

(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purpose of the Indian Income-tax Act.

Then -

(A) The Director General or Director or the Chief Commissioner or the Commissioner, as the cause may be, may authorise any Joint Director / Joint Commissioner , Deputy Director, Deputy Commissioner, Assistant Director, Assistant Commissioner or Assessing Officer : or

(B) Such Joint Director or Joint Commissioner as the case may be, may authorise any Assistant Commissioner or Assistant Director, Deputy Commissioner / Deputy Director or Income-tax Officer.

( the officer so authorised in all cases being hereinafter referred to as the authorised officer) to -

(1) enter and search any building, place, vessel or aircraft where he had reason to suspect that such books of accounts, other documents, money, bullion, jewellery or other valuable articles or things are kept :

(2) search any person who has got out of, or is about to get into, or is in the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing :

(3) break open the lock of any door, box, locker, safe, almirah or other receptacle exercising the powers conferred by clause (1) where the keys thereof are not available :

(4) seize any such books of account, other document, money, bullion, jewellery or other valuable article or thing found as a result of such search. The bullion, jewellery or other valuable article or thing found as a result of such search. The bullion, jewellery or other valuable article or thing held as stock-in-trade of the business and which has been found in the course of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business.

(5) place marks of identification on any books of accounts or other documents or make or cause to be made extract or copies thereof :

(6) make a note or an inventory any such money, bullion, jewellery or other valuable article or thing.

(7) Require any person who is in possession of or in control of any books or documents kept in electronic form to assist the authorities to inspect such electronic information.

Where any building, place, vessel, vehicle or aircraft referred to in clause (1) is within the area or jurisdiction of any Chief Commissioner, but such Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then it shall be competent for him to exercise the power under this sub-section in all cases where he has reasons to believe that any delay in getting the authorisation from the Chief Commissioner having jurisdiction over such person may be prejudicial to the interests of the revenue [ Section 132(1) ].

The Finance Act, 1988 has further provided that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such authorised officer.

.Authorities authorised to issue orders regarding search and seizure.

Section 132 (1) empowers the following income tax authorities to authorize other income tax authorities to conduct search and seizure operations. The authorities empowered to issue authorization are :

1. director general or chief commissioner

2. director or commissioner, and

3. such joint director or joint commissioners as are empowered by the board to do so.

The Finance Act, 2009 has made a clarifactory amendment in section 132 to provide explicitly that additional director or additional commissioner always had the power to issue warrant of authorization under the said provisions.

If is further clarified that joint commissioner or joint director always had the power to issue authorization.

.Premises in the jurisdiction of another officer. [ Section 132 (1A) ]

Where any Chief Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Director General or Director or any other Chief Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board to take action under clauses (1) to (5) of sub-section (1) are or is kept in any building, place, vessel or aircraft not mentioned in the authorisation under sub-authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft.

.Requisition the police help [ Section 132(2) ]

The authorised officer may requisition the service of any police officer or of any officer of the Central Government, or of both to assist him for all or any of the purpose specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition.

.Ordering non removal of assets [ Section 132(2) ]

The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section.

.Administering oath [ Section 132(4) ]

The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Income-tax Act.

Explanation. For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may 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 for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act.

.Ownership of seized books [ Section 132 (4A) ]

Where any books of account, other documents, money, bullion, jewellery or other valuable articles or things are or is found in the possession or control of any person in the course of search, it may be presumed :

(1) that such books of account, other documents, money, bullion, jewellery or other valuable articles or things belongs to such person :

(2) that the contents of such books of account and other document are true : and

(3) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been executed or attested.

.Levying of tax [ Section 132(5) ]

Where any money, bullion, jewellery or other valuable article or thing ( hereinafter in this section and section 132 A and 132 B referred to as the assets) is seized under sub-section (1) or sub-section (1A), as a result of a search initiated or requisition made before the first day of July 1995 , the Assessing Officer, after affording a reasonable opportunity to the person concerned for being heard and making such enquiry as may be prescribed shall, within 120 days of the seizure, make an order, with the previous approval of the Deputy Commissioner,

(1) estimating the undisclosed income ( including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him :

(2) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act :

(3) determining the amount of interests payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, as if the order had been the order of regular assessment :

(4) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230 A in respect of which such person is in default or is deemed to be in default,

and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amount referred to in clause (2),(2a) and (3) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized.

If, after taking into account the material available with him, the Assessing Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax in such income or part as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized and may also determine the interest or penalty, if any, payable or imposable accordingly.

Where a person has paid or made satisfactory arrangement for payment of all the amounts referred to in clause (2), (2a), and (3) or any part thereof, the Assessing Officer may, with the previous approval of the Chief Commissioner / Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case.

.Rules regarding retention of seized books and documents

1. If the Assessing Officer is satisfied that the seized assets or any part thereof were held by such person for or on behalf of any other person, the Assessing Officer may proceed under sub-section (5) against such other person, and all the provisions of this section shall apply accordingly.

2. The books of account or other document shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reason for retaining the same are recorded by him in writing and the approval of the Chief Commissioner/ Director General / Commissioner / Director for such retentions is obtained :

Provided that the Chief Commissioner / Director General / Commissioner / Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, in respect of the years for which the books of account or other relevant documents are completed.

3. The person from whose custody the books of account or other documents are seized may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf.

4. Where the authorised officer has no jurisdiction over the person, the books of account or other documents or assets seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of fifteen days of such seizure and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer.

5. Any books of accounts and documents so seized cannot be retained for more than 30 days from the day assessment is made u/s 158BC. Such books can be retained for a another period of 60 days from the day order for the prior approval are issued by the Director General or Director or Chief CIT or CIT [ 132 (8A) ].

6.The person who has seized the books or documents may allow the assesseee to make the copies of such documents etc. [ 139 (9) ].

7. Any person who has no jurisdiction over the person the cash, money, bullion, jewellery or other valuable article or books of accounts and documents seized by him, he shall hand over such items to the officer having jurisdiction within a period of 60 days from the day he was authorised last to conduct search [ Section 132(9A) ].

8. If a person legally entitled to the books of account or other documents seized objects for any reason to the approval by the Chief Commissioner under sub-section (8) , he may make an application in the Board stating therein the reasons for such objection and requesting for appropriated relief in the matter [ 132(11) ].

9. If any person objects for, any reason, to an order made under sub-section (5) he may, within thirty days of the date of such order, make an application to such Chief Commissioner or Commissioner stating therein the reasons for such objection and requesting for appropriated relief in the matter [ 132(11) ].

10. In case any application was pending with any other authority, it stands automatically transferred to the Commissioner with effect from 1-10-1984. The Commissioner may proceed with such application from the stage at which it was left. [ 132(11) ] [ Inserted by Taxation Laws (Amendment) Act, 1984 ].

11. On receipt of the application under sub-section (10) the Board, or on receipt of application under sub-section (11) the Commissioner may, after giving the applicant an opportunity of being heard, pass such order as it thinks fit.

12. The provisions of the Code of Criminal Procedure, 1973 relating to searches and seizure shall apply, so far as may be, to searches and seizure.

13. The Board may make rules in relation to any search or seizure under this section, in particular and without prejudice to the generality of the foregoing power. Such rules may provide for the procedure to be followed by the authorised officer :

(1) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress hereto is not available :

(2) for ensuring safe custody of any books of account or other documents or assets seized.

.Explanation 1: In computing the period for the purposes of sub-section (5) ,any period during which any proceeding under this section is stayed by an order or injuction of any court shall be excluded.

.Explanation 2: In this section, the word " proceeding " means any proceeding in respect of any year, whether under the Indian Income-tax Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year.

.Reqisitioning of books of account [ Section 132(A) ].

1. Where the Director General or the Director or the Chief Commissioner or the Commissioner, in consequence of information in his possession, has reason to believe that :

(a) any books of account or other documents will be useful under sub-section (1) of section 131 of this Act : or under sub-section (1) of section 142 of this Act and a notice was issued to produce, or cause to be produced, any books of account or other documents, has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice and the said books of account or other documents have been taken into custody by any officer or authority under any other law for the time being in force, or

(b) any books of account or other documents will be useful for, or relevant to, any proceedings under the Indian Income-tax Act, and any person to whom a summon or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, such books of account or other documents on the return of such books of account or other documents by any officer or authority by whom or by which such books of account or other documents have been taken into custody under any other law for the time being in force, or

(c) any assets represent either wholly or partly income or property which has not been, or would not have been disclosed for the purposes of the Indian Income-tax Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the Director General or the Director or the Chief Commissioner or the Commissioner may authorise any Joint Director, Joint Commissioner, Deputy Director, Deputy Commissioner, Assistant Director, Assistant Commissioner or Income-tax Officer [ hereafter in this section and in sub-section (2) of Section 218 D referred to as the requisitioning officer ] to require the officer or authority referred to in clause (a) or clause (b) or clause (c) ,as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer.

2. On a requisition being made under sub-section (1), the officer or authority shall deliver the books of account, or other documents or assets to the requisitioning officer either forthwith when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody.

3. Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-section [ (4A) to (14) both inclusive ] of Section 132 and Section 133 B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) if Section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (c).

.Application of seized assets [ Section 132(B) ]

(1) Any asset seized under this section shall be first applied to pay the existing liability under Income-tax Act, or Wealth tax Act or Gift Tax Act.

(2) Next it shall be adjusted against the tax liability determined :

(a) on the completion of assessment under section 153A of the Act :

(b) on assessment of the assessment year relevant to the previous year in which search is initiated or requisition is made :

(d) Assets seized u/s 132 or requisitioned u/s 132 may be adjusted against the amount of liability arising on an application made before the Settlement Commission u/s 245 (c) (1).

(3) In case assessee has explained the source of any asset, the authority may recover the amount of tax liability as mentioned above and remaining portion if any may be released but with the prior approval of CCIT or CIT. Such asset may be released to the assessee within 120 days from last authorisation made for search and seizure.

(4) In case seized assets consist of money or partly of money and partly of other assets, the authority may apply such money to the tax liabilities mentioned above and assessee shall be discharged of such liability upto the extent of such money.

(5) The other assets shall be under distraint ( cannot be sold ) and the Assessing Officer shall sell the assets but after prior approval of CCIT or CIT and apply such money to the existing liabilities and liability under block assessment.

(6) The authorities can realise the tax by any other mode also.

(7) The remaining assets shall be handed over to the assessee from whose custody they were seized.

(8) They Govt. shall pay an interest @ one half per cent for every month or part of a month. if there is any surplus of assets over the liability so adjusted. The interest shall be calculated from the date on which 120 days expire from the day last authorisation was made till the day of completion of assessment under section 153A.

.Power to call for information [ Section 133 ]

The Assessing Officer, the Deputy Commissioner (Appeals), the Deputy Commissioner or the Commissioner may for the purposes of this Act call for following information :

(1) Require any firm to furnish names and addresses of all the partners and their respective shares,

(2) Require any HUF to furnish names and addresses of the manager and members of the family,

(3) Require any person who he has reason to believe to be a trustee, guardian or agent to furnish names and addresses of the persons for whom such person is acting as trustee or guardian or agent,

(4) Require any person to give a statement of the names and addresses of all those persons to whom any amount exceeding Rs 1,000 or any other amount so prescribed is paid as royalty, rent, interest, commission or brokerage or any annuity ( not taxable under the head Salary) alongwith all particulars of amount so paid.

(5) Require any dealer or agent or any person concerned in management of stock or commodity exchange to furnish the names and addresses of all those persons to whom any payment has been made or from whom any payment has been received for sale, purchase or exchange of any asset alongwith particulars of any payment made,

(6) Require any person including a banking company or any officer to furnish information in relation to such points or matters or to furnish statement of accounts and affairs verified in prescribed manner.

Powers under this clause may also be exercised by the Director General, Chief Commissioner, the Director or the Commissioner. In case no proceedings are pending powers under this section shall not be exercised by any officer below the rank of Director or Commissioner without the prior approval of the Director or the Commissioner.

.Power of survey [ Section 133A ]

Any Assessing Officer or his duly authorised inspector, Deputy Commissioner or Assistant Director has the power to enter

(1) any place within the area of his jurisdiction : or

(2) any place which is occupied by a person on whom he can exercise his jurisdiction and where such person is carrying on his business or profession : or

(3) any place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within such place is situated or who exercises jurisdiction in respect of any person occupying such place.

It may require the proprietor or any other person attending to such business or profession to afford him necessary facilities :

(1) to inspect books or accounts or other documents :

(2) to verify and make an inventory of cash, stocks :

(3) to record the statements ( which can help him to conduct the relevant proceedings under this Act) of any person.

(4) The Income-tax authority may, during the course of survey, retain any books of account inspected by him after recording the reasons for doing so.

(5) Such books can be retained for a period of 10 (ten) days from the day these are retained without any prior approval by the Director General or Director or Chief CIT or CIT.

In case the income-tax authority is not provided with such facility, such authority can proceed under section 131(1) and 131(2) against the proprietor or any other person attending to such business.

.Provisions relating to power to collect certain information [ Section 133B ]

The Finance Act, 1986 inserted a new Section 133 B in the Income-tax Act. Under the proposed provisions, the Income-tax authority will be empowered to enter any building or place within its jurisdiction or any building or place which is occupied by any person in respect of whom such authority exercises jurisdiction for the purposes of collection of any information which may be useful for or relevant to the purposes of the Act. Such authority shall require any person who is the occupant of the building or place to furnish such information as may be prescribed by rules made under this Act.

This new provision provides for entry of the Income-tax authority into a building or place where business or profession is carried on only during the time when it is open for the conduct of business or profession and in respect of any other place after sunrise and before sunset. Such authority shall have no power to remove or cause to be removed from the building or place, wherein it has entered any books of accounts or other documents or any cash, stock or other valuable articles or things.

" Income-tax Authority " means a Joint Commissioner ,an Assistant Director, an Assessing Officer, an Inspector of Income-tax who has been authorised by the Assessing Officer in relation to the area or part thereof.

Entry of an Income-tax authority to the residential premises of an assessee should enable him to collect further information useful for, or relevant to, the purposes of the Act.

.Power to call for information for the purpose of verification of Information in possession [ Sec.133C ] [ w. e. f 1-10-2014 ]

For the purposes of verification of information in its possession relating to any person, the prescribed authority may issue a notice to such person, requiring him, on or before a date to be specified therein, to furnish information or documents verified in the prescribed manner which may be useful for, or relevant to any enquiry or proceeding under this Act.

Power to inspect registers of Companies [ Sec 134 ]

The Assessing Officer, the Deputy Commissioner ( Appeals), the Joint Commissioner or the Commissioner ( Appeals) or any other person authorised by these persons in writing may inspect and if necessary take copies or cause copies to be taken of any register of the members, debenture-holders or mortgages of any company or of any entry in such register.

Power to make inquiries [ Sec. 135 ]

The Director General, or Director, the Chief Commissioner or Commissioner and Joint Commissioner shall be competent to make any inquiry under this Act and for this purpose shall have all the powers that an Assessing Officer has under this Act in relation to the making of inquiries

Proceedings before income-tax authorities to be judicial proceedings [ Sec. 136 ]

Any proceeding under this Act before an Income Tax Authority shall be deemed to be a judicial proceedings and every income-tax authority shall be deemed to be a civil court for the purposes of section 195 but not for the purposes of Chapter 26 of the Code of Criminal Procedure, 1973.

Disclosure of information regarding assessees to certain authorities [ Section 138 ]

(1) The Board or any other authority by Board, may furnish or cause to be furnished any information which the income tax authorities have obtained while performing their duties to any officer, authority or body performing any function under any law relating to imposition of tax, duty or cess or in foreign exchange dealings or any other authority so notified.

(2) Such information will be furnished if the Chief Commissioner or the Commissioner is satisfied that it is in public interest to do so.

(3) The Central Government may, by order in Official Gazette, direct that no information or document shall be furnished to any such person except such authorities so notified.

.New Income Tax Authorities [ Amendment in Section 116]

The following new Income tax authorities have been provided :

(1) Principal Chief Commissioner of Income-tax.

(2) Principal Director General if Income-Tax.

(3) Principal Commissioner of Income-tax.

(4) Principal Director of Income-tax.

. . scary.. ,....scary.

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