SURVEY U/S 133 A OF THE INCOME TAX ACT, 1961 ASHWANI KUMAR F.C.A.
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Transcript of SURVEY U/S 133 A OF THE INCOME TAX ACT, 1961 ASHWANI KUMAR F.C.A.
SURVEYU/S 133 A OF THE INCOME TAX ACT, 1961
ASHWANI KUMAR
F.C.A.
MEANING
TO COLLECT INFORMATION AND DATA FOR THE PURPOSE OF THE ACT ON THE SPOT, AT THE PLACE OF BUSINESS OR PROFESSION OF THE ASSESSEE.
PURPOSE & OBJECT OF SURVEY
Make a surprise visit to the place of business/profession Personally Inspect books of account and/or other
documents Verify stocks, cash and other valuable articles Impound relevant books of accounts and/or documents. Collect information about evasion of Taxes. Bring new assessees on record. Verify whether books of accounts are being maintained
contemporaneously.
TYPES OF SURVEYInternal SurveySurvey in connection with functions,
ceremonies, events etc.External General Survey (Door to Door
Survey) of business premisesExternal (Specific) Survey of business
premisesSurvey to check compliance with TDS
provisions.Recovery Survey
Commissioner of Income TaxCommissioner of Income Tax Joint Commissioner of Income TaxJoint Commissioner of Income Tax Director of Income TaxDirector of Income Tax Joint Director of Income TaxJoint Director of Income Tax Assistant Director of Income TaxAssistant Director of Income Tax Deputy Director of Income TaxDeputy Director of Income Tax Assessing OfficerAssessing Officer Tax Recovery OfficerTax Recovery Officer Inspector of Income Tax (subject to proper Inspector of Income Tax (subject to proper
authority but only with limited powers )authority but only with limited powers )
AUTHORITIES COMPETENT TO CONDUCT SURVEY
POWERS OF THE AUTHORITIES DURING SURVEY
Enter place of business during business but only after Enter place of business during business but only after sunrise and before sunsetsunrise and before sunset
Enter place other than business premises if assessee states Enter place other than business premises if assessee states that cash, stock, etc., are lying therethat cash, stock, etc., are lying there
Place marks of identification on books of account Place marks of identification on books of account Take extracts from books of accounts and documents Take extracts from books of accounts and documents Impound books of accounts after recording reasonsImpound books of accounts after recording reasons Make an inventory of cash, stocks and other valuablesMake an inventory of cash, stocks and other valuables Record statement of any personRecord statement of any person Collect information regarding nature and quantum of Collect information regarding nature and quantum of
expenditure on personal functions and eventsexpenditure on personal functions and events Discovery and production of evidence etc. when there is non-Discovery and production of evidence etc. when there is non-
cooperation on the part of the Assessee cooperation on the part of the Assessee
TDS SURVEY
Authority having jurisdiction as to the Authority having jurisdiction as to the Tax deduction at source matters, has Tax deduction at source matters, has the power to conduct surveythe power to conduct survey
Cash, bank accounts,stocks and other Cash, bank accounts,stocks and other valuables cannot be verified/seized valuables cannot be verified/seized during TDS surveyduring TDS survey
SURVEY IN CONNECTION WITH FUNCTIONS U/S 133A(5)
To collect information about the nature and scale of expenditure incurred in any ceremony or other events
Information can be collected from various sources including third parties and external agencies.
Action can be taken only after the function is over and not during the function
Video recording of the function is not permissible
SPECIFIC SURVEY ON BUSINESS PREMISES
Can be carried out at any place where Can be carried out at any place where business or profession is carried on i.e., business or profession is carried on i.e., Head Office, Branches, Godowns etc.Head Office, Branches, Godowns etc.
Authorized Officer can enter only if Authorized Officer can enter only if premises are open and only during premises are open and only during business hoursbusiness hours
IMPLICATIONS OF FINDINGS OF SURVEY
Stock found Stock found ExcessExcess ShortShort
Cash foundCash found ExcessExcess ShortShort
Discovery of Undisclosed Turnover Discovery of Undisclosed Turnover 90 ITR 271 (SC) Commissioner of Sales Tax Vs. Esufali90 ITR 271 (SC) Commissioner of Sales Tax Vs. Esufali
POWER TO IMPOUND BOOKS OF ACCOUNTS
I.T. authorities empowered to impound and retain I.T. authorities empowered to impound and retain books of accounts/other documents inspected books of accounts/other documents inspected during surveyduring survey
Power to be exercised after recording reasons for Power to be exercised after recording reasons for doing sodoing so
Approval of the Chief Commissioner of Income Approval of the Chief Commissioner of Income Tax/ Director General of Income Tax required for Tax/ Director General of Income Tax required for retaining books/documents for more than ten retaining books/documents for more than ten working days working days
Assessee can ask for copies of impounded Assessee can ask for copies of impounded records at the time of survey or even subsequentlyrecords at the time of survey or even subsequently
CAN A COMPUTER BE IMPOUNDED ?
Computer outside definition of Books or Computer outside definition of Books or Books of Accounts u/s 2(12A)Books of Accounts u/s 2(12A)
Surveying authority can only insist for copy Surveying authority can only insist for copy data on Computer disc, floppy or print out.data on Computer disc, floppy or print out.
ProvisionsProvisions of Information Technology Act, of Information Technology Act, 20002000 Section 43 provides for penalty for accessing, Section 43 provides for penalty for accessing,
tampering etc, of a computer without proper tampering etc, of a computer without proper authorityauthority
Section 81 provides that theSection 81 provides that the said Act has said Act has overriding effect over all other Acts overriding effect over all other Acts
SEIZURE
Sub section (4) of section 133A does not empower the authority to seize any article and/or asset found during survey
RECORDING OF STATEMENTS Statement of the person surveyed should be Statement of the person surveyed should be
recorded under oath and in a language recorded under oath and in a language which the person understandswhich the person understands
Instructions of CBDT for extracting Instructions of CBDT for extracting confessions to be followed confessions to be followed
Confession as to the Undisclosed Income Confession as to the Undisclosed Income should be voluntary and based on reliable should be voluntary and based on reliable evidenceevidence
Assistance of Tax Consultants during the Assistance of Tax Consultants during the surveysurvey
STATEMENT ELICITED DURING SURVEY STATEMENT ELICITED DURING SURVEY
OPERATION HAS NO EVIDENTIARY VALUE....OPERATION HAS NO EVIDENTIARY VALUE....
CIT vs. S. KHADER KHAN SON 352 ITR 480 (SC)CIT vs. S. KHADER KHAN SON 352 ITR 480 (SC)
PAUL MATHEWS & SONS vs. CIT 263 ITR 101 (KER)PAUL MATHEWS & SONS vs. CIT 263 ITR 101 (KER)
ASHOK MANILAL THAKKAR Vs. ACIT 279 ITR (AT) 143 (AHD)ASHOK MANILAL THAKKAR Vs. ACIT 279 ITR (AT) 143 (AHD)
RETRACTION OF THE STATEMENT
Retraction is permissible subject to certain conditions Retraction is permissible subject to certain conditions and should be made as early as possible without delayand should be made as early as possible without delay
Sec. 94 of the Evidence Act provides that a presumption Sec. 94 of the Evidence Act provides that a presumption can be rebutted by proving that admission or confession can be rebutted by proving that admission or confession was caused by inducement, threat or promise.was caused by inducement, threat or promise.
Burden to prove that the admission made is untrue lies Burden to prove that the admission made is untrue lies on the party who made the admission on the party who made the admission Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Pullangode Rubber Produce Co. Ltd. vs. State of Kerala
91ITR 18 (SC) 91ITR 18 (SC) Sarwan Singh Rattan Singh vs. State of Punjab AIR 1957 SC Sarwan Singh Rattan Singh vs. State of Punjab AIR 1957 SC
637 637 Krishan Lal Shiv Chand Rai vs. CIT 88 ITR 293 (Pb. & Har)Krishan Lal Shiv Chand Rai vs. CIT 88 ITR 293 (Pb. & Har) Karam Chand vs. ACIT 73 ITD 434 (Chandigarh)Karam Chand vs. ACIT 73 ITD 434 (Chandigarh)
PENALTIES & PROSECUTION
Penalty leviable u/s 272A for failure to answer Penalty leviable u/s 272A for failure to answer questions, sign statements and furnish questions, sign statements and furnish information, returns or statementsinformation, returns or statements
Excess Stock found in survey could not lead to Excess Stock found in survey could not lead to presumption u/s 276C calling for prosecution presumption u/s 276C calling for prosecution 203 ITR 866 (Pb. & Har.) ITO vs. Mohinder Pal203 ITR 866 (Pb. & Har.) ITO vs. Mohinder Pal
Penalty leviable u/s 272AA for failure to Comply Penalty leviable u/s 272AA for failure to Comply with S. 133Bwith S. 133B
Penalty for Concealment of Income leviable in Penalty for Concealment of Income leviable in Assessment Proceedings for existing AssesseesAssessment Proceedings for existing Assessees
ALLIED REVENUE LAWS
There are internal administrative instructions There are internal administrative instructions
that the income tax authorities should inform that the income tax authorities should inform
the other enforcement agencies whenever the other enforcement agencies whenever
evidence of law breaking is discovered during evidence of law breaking is discovered during
the course of a surveythe course of a survey
DO’S FOR THE TAX AUTHORITIES
To disclose the purpose and to commence survey of the To disclose the purpose and to commence survey of the business premises, without disturbing the ongoing business premises, without disturbing the ongoing business and without dislocating the normal businessbusiness and without dislocating the normal business
To provide copy of inventories of cash, stock and other To provide copy of inventories of cash, stock and other valuable articles or things, books of account and valuable articles or things, books of account and documents found in the course of the surveydocuments found in the course of the survey
To keep, maintain and preserve all the inventories copies To keep, maintain and preserve all the inventories copies of the documents and books of accountof the documents and books of account
To prepare a report containing details of survey and To prepare a report containing details of survey and findings on the material found in the course of the surveyfindings on the material found in the course of the survey
DON’TS FOR TAX AUTHORITIES
To remove, take in possession or seize cash, stock in trade and other valuable articles found in the course of the survey
To pressurize the tax payer to surrender any specific amount
To issue any summon u/s 131(3) of the Act without recording reasons therefor
OBLIGATIONS OF AN ASSESSEE
To assist in preparing inventory of various items
To give statements truthfully and completely, accurately,correctly and unambiguously
To sign the inventories and statements after carefully reading, vouching its correctness and obtaining its copies
AFTER SURVEY
Remedies available to the assessee
Assessment procedure
Settlement Commission
GENERAL ISSUES
Relevancy of material found in the course of the survey for making assessment
Presumptions about tax returns filed after survey
Effect of an illegal survey Assessments completed u/s 143(3) for
earlier years can be re - opened No need for pendency of proceedings for
conducting survey Survey can also be conducted on a person
who is not an existing tax-payer
ISSUES FOR DISCUSSION
Whether the authorities have powers to break any door, lock or window to gain entry
Can the business premises be sealed during survey - Shyam Jewellers vs. CIT 196 ITR P. 243 (All)
Can survey be converted into search ?
A Survey u/s 133A can be converted into a search u/s 132 if the conditions of that section are satisfied – Vinod Goel & Others vs. UOI and others 252 ITR 29 [P&H]
Implications of Sec. 269SS, Sec. 40A(3) Implication of deductions under Chapter VI A
THANK YOU