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Tax Dept need not reveal reason for raid even to Appellate Tribunal, proposes Budget 2017
February, 04th 2017

Budget 2017 was delivered at a time when one is still reeling under the impact of demonetisation. In fact, the actual process of unearthing unaccounted wealth has already started.

The Central Board of Direct Taxes (CBDT) recently identified and sent communication to 18 lakh individuals asking them to explain cash deposits made in their bank accounts. It will also be sending notices to holders of those accounts where a potential tax evasion has been detected.

The role of the Income-tax Department (ITD) will be important in making the defaulters accountable and pay up for any tax evasion. Budget 2017 has put forth at least four proposals to help the ITD take necessary action.

Power to call for information
Budget 2017 proposes that the power in respect of inquiry or proceeding may also be exercised by the Joint Director, the Deputy Director and the Assistant Director. And for this, they need not seek prior approval of higher authorities.

The existing provisions of Section 133 empower certain I-T authorities to call for information for the purpose of any inquiry or proceeding under the I-T Act. But in a case where no proceeding is pending, these powers shall not be exercised by any I-T authority below the rank of the Principal Director or Director or the Principal Commissioner or Commissioner without the prior approval of such authorities. Budget 2017, however, proposes to grant powers to Joint Director, the Deputy Director and the Assistant Director too.

Reason to believe to conduct a search, etc., not to be disclosed
Under Section 132, the IT authority, based on the information in his possession, and if there is 'reason to believe' or 'reason to suspect' of circumstances, may authorise another authority to carry out search and seizure operation. Also, under Section 132A, he may authorise some other officer or another IT authority to deliver books of account, documents or assets of the assessee to the I-T authority so authorised.

However, as per Budget 2017, certain judicial pronouncements have created ambiguity in respect of the disclosure of 'reason to believe' or 'reason to suspect' recorded by the I-T authority to conduct search under Section 132 or to make requisition under Section 132A.

Budget 2017, therefore, proposes to insert an explanation to Section 132 and Section 132A to declare that the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal.

Helping hand to I-T Department from CBDT
It is well acknowledged fact that the I-T department will be short of manpower when it comes to collecting post demonetisation data. The IT authority may issue notice under Section 133C calling for information and documents for the purpose of verification of information in its possession.

But sending notices itself can take a long time. And therefore, the CBDT is helping in centralised issuance of notices and calling for information and documents for the purpose of verification of information in its possession, processing of such documents and making the outcome thereof available to the Assessing Officer for necessary action, if any.

Extension of power to survey charitable trusts
Budget 2017 proposes to empower an I-T authority to enter any place at which an activity for charitable purpose is carried on. Currently, the provisions of Section 133A empower an I-T authority to enter any place of business or profession, but exclude activity for charitable purposes.

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