Assessment of Search, Seizure and Survey of Business or Charitable Trust

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1. Assessment of Search and Seizure – Section 132 under Income Tax Act.

(A) Authority who can issue order for Search and Seizure:

Search and seizure can be authorised by—

  1. the Principal Director General of Income Tax/Director General of Income Tax, or
  2. the Principal Director of Income Tax/Director of Income Tax, or
  3. the Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax, or
  4. the Principal Commissioner of Income Tax/Commissioner of Income Tax, or
  5. the Additional Director or Additional Commissioner, or
  6. the Joint Director or Joint Commissioner of Income-tax.

However, no authorization shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, unless he has been empowered by the Board to do so.

The Officer so authorised is referred as Authorised Officer. The authorisation is done by issuing a search warrant in Form 45.

Assessment of Search, Seizure and Survey
Assessment of Search, Seizure and Survey

(B) Basis for Search and Seizure [Section 132(1)(a), (b), (c)]:

Authorisation for search and seizure can take place if the above authority, in consequence of information in his possession, has Reason to Believe that:

  1. any person to whom: (i) summons under section 131(1) or (ii) notice under section 142(1), was issued to produce or cause to be produced any books of account, or other documents has wilfully omitted or failed to produce or caused to produce such books of account or other documents as required by such summons or notice;
  2. any person to whom summons or notice, as aforesaid, has been or might be issued, will not or would not produce any books of account or other documents which will be useful or relevant to any proceeding undertaken under the Income-tax Act;
  3. any person is in possession of any money, bullion or jewellery, or other valuable article or things and these assets represent either wholly or partly the income or property which has not been or would not be disclosed by the person concerned for the purposes of this Act.

(C) Search can be authorised by a Principal CCIT/CCIT or Principal CIT/CIT other than jurisdictional Principal CCIT/CCIT or Principal CIT/CIT:

  1. The Principal Chief Commissioner/ Chief Commissioner or Principal Commissioner/ Commissioner of Income-tax has the power to authorise a search of any building, place, vessel, vehicle or aircraft of a person which is under his jurisdiction and also in cases where such building, place, vessel, vehicle or aircraft is in his area of jurisdiction but he has no jurisdiction over the persons concerned, if he has reason to believe that any delay in obtaining authorisation from the Principal CCIT/CCIT or Principal Commissioner/ Commissioner having jurisdiction over the person would be prejudicial to the interests of revenue. Such authorization shall be given in Form 45A. [First proviso to section 132(1)]
  2. Where a search for any books of account or other documents or assets has been authorised by any authority who is competent to do so, and some other Chief Commissioner/Commissioner in consequence of information in his possession has reason to suspect that such books of account or other documents and asset, etc. of the assessee are kept in any building, place, vessel, vehicle or aircraft not specified in the search warrant issued by such authority, he may authorise the Authorised Officer to search such other building, place, vessel, vehicle or aircraft. [Section 132(1A)] Such authorization shall be given in Form 45B.

(D) Power of Officer to whom authority is given for Search and Seizure:

The Officer authorised i.e. the Authorised Officer for search and seizure, shall have the powers to:—

  1. enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;
  2. break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) above where the keys thereof are not available;
  3. search any person who (a) has got out of, or (b) is about to get into, or (c) 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;
  4. require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic records, to afford the necessary facility to the authorised officer to inspect all such books of account or other documents;
  5. seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search. However, the authorised officer shall have no power to seize any bullion, jewellery or other valuable article or thing being stock-in-trade of the business found as a result of search. He shall make a note or inventory of such stock-in-trade of the business.
  6. place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom;
  7. make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing.

(E) Additional power and duties of Authorised Officer in case of Assessment of Search and Seizure

(1) Deemed Seizure [Section 132(1)]:

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 thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such Authorised Officer and such action of the Authorised Officer shall be deemed to be seizure of such valuable article or thing. However, in the case of such deemed seizure also, the authorised officer shall have no power to seize any valuable article or thing, being stock in trade of the business.

(2) Restraint order [Section 132(3]:

Where it is not possible or practicable to seize any (a) books of account, or other documents, or (b) money, bullion jewellery or other valuable articles or things for reasons other than those mentioned in (1) above, the authorised officer may serve an order on the owner or a person who is in immediate possession or control thereof that he shall not remove or part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for compliance of this sub-section. However, in this case serving of such order shall not be deemed to be seizure of such books of account, etc. Such order is commonly known as an attachment order.

The above order under sub-section (3) shall not be in force for a period exceeding 60 days from the date of the order.

(3) Power to requisition service of a Police Officer or Officer of the Central Government [Section 132(2)]:

The authorised officer may requisition the services of any Police Officer or any of the officer of the Central Government or of both to assist him for all or any of purposes specified above and it will be duty of every such officer to comply with such requisition.

(4) Examination of any person on 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, 1961. The statement can be recorded during the course of search and seizure or when it is over. Further, an explanation has been added to provide that the examination of any person may be not merely be 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 Income-tax Act, 1961.

The authorised officer may record statement wherein he may question on all matters which he may deem to be relevant for the purpose of the assessment, unearthing of concealed assets, source of income, investments made during different years, source of investments, marriages performed, expenses incurred on marriages and other ceremonial occasions, sources of expenditure incurred, household expenses and similar other aspects.

(5) Search party has no power to interrogate and record the statement by depriving the assessee of sleep:

Where the assessee filed a complaint before the Bihar Human Rights Commission stating that interrogation and recording of statement under section 132(4) was conducted for more than 30 hours and till the odd hours of the night without any break or interval and thus violated his human rights, the Commission upheld the plea and directed the concerned officials to show-cause why the assessee should not be compensated from their salary. The Department filed a Writ Petition to challenge the order held by the Court.

(6) Presumption of ownership of books of account and asset and its truthfulness [Section 132(4A)]:

Where any books of account, other documents, money, bullion, jewellery and other valuable article is found in possession or control of any person in the course of search, it may be presumed—

  1. the books of account or other documents and assets found in the possession of any person in the course of a search belong to such person;
  2. the contents of such books of account and other documents are true; and
  3. the signature and every other part of such books of account and other documents which purports to be in the handwriting of any particular person are in hand-writing of that person or which may reasonably be assumed to have signed or written the books of account or other documents are in that person’s handwriting. In case of documents stamped, executed or attested that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

What section 132(4A) contemplates is the presumption regarding ownership. If control or possession has been established, the Assessing Officer can proceed to presume its ownership. The fact that an article or a document is found at a particular place is taken as proof of control or possession and consequently the ownership.

(7) Retention of books of account and other documents [Section 132(8)]:

The book of account or other documents seized under this section shall not be retained by the authorised officer (if he is himself a Assessing Officer) for a period exceeding 30 days from the date of the order of assessment under section 153A or under section 158BC(c) (relating to assessment of search cases/block assessment) unless the reasons for retaining the same are recorded by him in writing and the approval of the Chief Commissioner, Commissioner, Director General or Director for such retention is obtained.

However, that the Chief Commissioner, Commissioner, Director General or 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 Income-tax Act, in respect of the years for which the books of account or other documents are relevant are completed

If a person, legally entitled to the books of account or other documents seized, objects for any reason to the approval of extension given by Chief Commissioner, etc. as above, he may make an application to the Board for return of such books of account and documents and the Board may, after giving the applicant an opportunity of being heard, pass such order as it thinks fit. [Section 132(10)]

(8) Copies of extract of books of account and documents [Section 132(9)]:

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

(9) Handing over of seized books and assets to Assessing Officer [Section 132(9A)]:

The Authorised Officer, if he is not the Assessing Officer, is required to hand over the books of account or other documents or any money, etc., seized by him to the Assessing Officer having jurisdiction over the person searched within a period of 60 days from the date on which the last of the authorisation for search was executed; and thereafter, the powers and functions of the Authorised Officer under section 132(8) and (9) would be exercised by the Assessing Officer.

(10) Power of provisional attachment by authorised officer [Section 132(9B), (9C)]

In order to protect the interest of revenue and safeguard recovery in search cases, the Act has inserted the following sub-sections (9B) and (9C) in section 132:

“(9B) Where, during the course of the search or seizure or within a period of 60 days from the date on which the last of the authorisations for search was executed, the authorised officer, for the reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee, and for the said purpose the provisions of the Second Schedule shall, mutatis mutandis, apply.

(9C) Every provisional attachment made under section 132(9B) shall cease to have effect after the expiry of a period of 6 months from the date of the order referred to in section 132(9B).”

(11) Power to make reference to Valuation Officer by the authorized officer [Section 132(9D]

In order to enable correct estimation and quantification of undisclosed income held in the form of investment or property by the assessee by the investigation wing of the Department, the Act has inserted the following sub-section (9D) under section 132:

“(9D) The authorised officer may, during the course of the search or seizure or within a period of 60 days from the date on which the last of the authorisations for search was executed, make a reference to a Valuation Officer referred to in section 142A, who shall estimate the fair market value of the property in the manner provided under that section and submit a report of the estimate to the said officer within a period of 60 days from the date of receipt of such reference.”

2. Application of Seized or Requisitioned Assets [Section 132B]

The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely: —

(i) Seized assets may be applied towards existing and future liability [Section 132B(1)(i)]:

The amount of any existing liability under this Act, the Wealth-tax Act, 1957 the Expenditure-tax Act, 1987 the Gift-tax Act, 1958 and the Interest-tax Act, 1974, and the amount of the liability determined on completion of the assessment under section 153A or under Chapter XIVB for the block period (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under section 245C(1), may be recovered out of such assets. The above amendment has been made to provide that the asset seized under section 132 or requisitioned under section 132A may also be adjusted against the amount of liability arising on an application made before the Settlement Commission under section 245C(1).

(ii) Release of seized asset after meeting existing liabilities in certain cases [Proviso to section 132B(1)(i)]:

Where the person concerned makes an application to the Assessing Officer within 30 days from the end of the month in which asset was siezed, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the Chief Commissioner or Commissioner, to the person from whose custody the assets were seized.

Further, such asset or any portion thereof as is referred to above shall be released within a period of 120 days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed.

(iii) Money seized may be applied for discharging the liabilities [Section 132B(1)(ii)]:

If the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause (i) (existing and feature liability) and the assessee shall be discharged of such liability to the extent of the money so applied.

The “existing liability” does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII Explanation 2 to Section 132B of the Act shall have a prospective application and so, appeals may not be filed by the Department on this issue for the cases prior to 01.06.2013 and those already filed may be withdrawn/ not pressed upon [Circular No. 20/2017 dated 12-6-2017].

(iv) Assets other than money may also be applied to discharge liabilities [Section 132B(1)(iii)]:

The assets other than money may also be applied for the discharge of any such liability referred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the Chief Commissioner or Commissioner under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule.

(v) Return of excess assets seized [Section 132B (3)]:

Any assets or proceeds thereof which remain after the liabilities (existing and future) referred to in clause (i) of sub-section (1) are discharged, shall be forthwith made over or paid to the persons from whose custody the assets were seized.
Interest to be paid at the rate of 1 /2% p.m. or part of the month on seized money [Section 132B(4)]:

Interest at the rate of 1/2 % for every month or part of a month shall be allowed on the aggregate amount of—

  1. the money seized under section 132 or requisition under section 132A as reduced by the amount of money if any released under the above proviso and
  2. the proceeds of assets sold towards the discharge of existing liability referred to section 132B(1)(i)

which exceeds the aggregate of the amount required to meet the liabilities (both existing and liability determined under section 153A, including penalty and interest) referred to in section 132B(1)(i).

In other words, the interest will be computed on the following amount—

Amount of money seized under section 132 or requisitioned under section 132A
Add: Proceeds of assets sold towards the discharge of existing liabilities referred to in section 132(1)(i)
Less: Money released under the first proviso to section 132B(1)(i)
Less: Aggregate of the amount required to meet the liability (both existing and liability under section 153A including penalty and interest) referred to in section 132B(1)(i)
Amount on which interest payable

This interest shall be payable from the expiry of the period of 120 days from the execution of the last of the authorizations for search till the date of completion of assessment under section 153A or block assessment.

3. Procedure for Assessment of Search Cases [Sections 153A, 153B and 153C]

(A) Notice for Filing Return [Section 153A(1)(a)]:

Where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years and of the relevant assessment year or years1 (also see amendment below) immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A.

Such return of income shall have to be furnished in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Further, in the case of such return, all the provision of the Act shall, as far as may be, apply accordingly as if such return were a return required to be furnished undersection 139.

In certain circumstances notice can be issued upto 10 assessment years preceding the assessment year relevant to the previous year in which the search is conducted [Fourth proviso under section 153A]

Notice under section 153A can be issued for an relevant assessment year or years (i.e. beyond the 6th. assessment year already provided upto the 10th. assessment year) if—

  1. the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to Rs. 50,00,000 or more in 1 year or in aggregate in the relevant 4 assessment years (falling beyond the 6th. year);
  2. such income escaping assessment is represented in the form of “asset”;
  3. the income escaping assessment or part thereof relates to such year or years.

These provisions shall apply where search under section 132 is initiated or requisition under section 132A is made on or after the 1.4.2017.

(B) Assessment in case of Search or Requisition of Assets [Section 153A(1)(b)]:

Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31.5.2003, the Assessing Officer shall assess or reassess the total income of six assessment years and of the relevant assessment year or years2 immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made.

(C) Separate Assessment of 6 Assessment Years and for the relevant Assessment Year or Years [First proviso to Section 153A]:

As per proviso 1 to section 153A, the Assessing Officer shall assess or reassess the total income of each of such six assessment years and for the relevant assessment year or years.

Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. [Second proviso to section 153A]

The words mentioned here are assessment or reassessment pending on that date shall abate and as such the appeal or revision or rectification if pending on the date of initiation of search under section 132 or requisition under section 132A shall not abate.

(D) Time Limit for Completion of Assessment of Search and Seizure of Assets [Section 153B]

(i) Time limit of completion of assessment of 6 assessment years and for the relevant assessment year or years [Section 153B(1)(a)]:

The Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years and for the relevant assessment year or years under section 153A within a period of 21 months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Where the search was executed and during the course of proceedings for the assessment or reassessment, a reference under section 92CA(1) is made the period for making an order of assessment or reassessment in respect of each assessment year shall be extended by 12 months. [Second proviso to section 153B(1)]

For search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order under section 153A shall be reduced from existing 21 months to 18 months (30 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Further, for search and seizure cases conducted in the financial year 2019-20 and onwards, the said time limit shall be further reduced to 12 months (24 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(ii) Time limit of completion of assessment year relevant to the previous year in which search is conducted, or requisition is made [Section 153B(1)(b) and second proviso]:

This section also provides that the time-limit for completion of assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be a period of 21 months [33 months, in case a reference is made under section 92CA(1) to TPO] from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed.

Although the return of income of the previous year in which search was conducted shall be filed as per the normal provisions but the assessment of assessment year relevant to such previous year shall have to be completed within 21 months (33 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year (not the assessment year) in which the search was conducted.

However, for search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be reduced from existing 21 months to 18 months (30 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Further, for search and seizure cases conducted in the financial year 2019-20 and onwards, the said time limit shall be further reduced to 12 months (24 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(iii) Time limit for completion of assessment of other person referred to in section 153C [First and second provisos to section 153B (1)]:

In case of such other person, the time limit for making assessment or reassessment of total income of the assessment years referred to in clause (a) i.e. block period of six assessment years and for the relevant assessment year or years and clause (b) i.e. assessment year of search of the said sub-section, shall be the either:

  1. 21 months (33 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of authorisations for search under section 132 or for requisition under section 132A was executed; or
  2. 9 months (21 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person,

whichever is later.

However, for search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order for other person referred to in section 153C shall be reduced from existing 21 months to 18 months (30 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Further, for search and seizure cases conducted in the financial year 2019-20 and onwards, the said time limit shall be further reduced to 12 months (24 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(E) Assessment of income of a person other than the person in whose case search has been initiated. [Section 153C]

(I) Assessment of Past 6/10 Years, as the case may be:

As per section 153C(1), notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that—

  1. any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
  2. any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to,

a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person”.

The Assessing Officer having jurisdiction over such other person shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in section 153A(1).

In other words, firstly, the satisfaction will be recorded by the Assessing Officer who is handing over the books of accounts or documents or assets to the Assessing Officer having jurisdiction over such other person.

Secondly, the Assessing Officer to whom the books of account or documents or assets seized or requisitioned have been handed over, before proceeding under section 153A, will have to record the satisfaction that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in section 153A(1).

Further, proceedings under section 153A(1) read with section 153C can be taken by him only for those assessment year or years to which undisclosed income belong instead of past 6/10 assessment years, as the case may be.

For purpose of section 153C, the date of initiation of the search under section 132 or on the date of making of requisition under section 132A shall be taken as date of receiving the books of account [First proviso to section 153C]:

Second proviso to section 153A(1) provides that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in the said section pending on the date of initiation of the search under section 132 or on the date of making of requisition under section 132A, as the case may be, shall abate.

The above second proviso for the purpose of other person has been amended by inserting a proviso to section 153C(1) so as to provide that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to section 153A(1) shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having the jurisdiction over such other person.

In case of other person, the assessment of assessment year relevant to previous year in which search was conducted shall also be done under section 153A read with section 153C.

Notice under 153C may not be issued for six assessment years and for the relevant assessment year or years in notified cases [Second proviso to section 153C]

The Central Government may by rules made by it and published in the Official Gazette specify the class or classes of cases in which the Assessing Officer shall not issue notice for initiation of proceedings for preceding 6 assessment years and for the relevant assessment year or years except in cases where any assessment or reassessment is abated.

(II) Assessment of previous year of search or requisition:

Assessment in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, in case of other person [Section 153C(2)]:

Where books of account or documents or assets seized or requisitioned referred to in section 153C(1) has been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of the assessment year—

  1. no return of income has been furnished by such person and no notice under section 142(1) has been issued to him, or
  2. a return of income has been furnished by such person but no notice under section 143(2) has been served and limitation of serving the notice under section 143(2) has expired, or
  3. assessment or reassessment, if any, has been made, before the date of receiving of books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person,

such Assessing Officer shall issue the notice and assess or re-assess total income of such other person for such assessment year in the manner provided in section 153A(1).

The above amendment has been made only in respect of assessment year relevant to the previous year in which search is conducted. In this case, the assessment/re-assessment of such assessment year shall be made in the manner provided under section 153A and not under section 143/144/147 provided both the following conditions are satisfied:

  1. The books of accounts, documents, assets, etc. are received by the jurisdictional officer after due date of filing the return of income of the relevant assessment year, and
  2. Any of the conditions mentioned in clause (a) or (b) or (c) is satisfied.

4. Survey’ of Business or Charitable Trust [Section 133A]

These surveys can be of two types:

  1. Specific survey of business premises or any place, at which the activity of charitable purpose is carried on (see amendment below) [Section 133A(1) to (4)].
  2. Survey in connection with functions, etc. [Section 133A(5)]

Besides the above, another type of survey called door to door survey is also done under section 133B to collect certain information.

(A) Specific survey of business premises or any place, at which the activity of charitable purpose is carried on [Section 133A(1) to (4)]

1. Person Authorised to Survey:

The survey of the business premises or any place, at which the activity of charitable purpose is carried on (see amendment below) can be conducted by any income tax authority.

Income tax authority [Explanation (a) to section 133A]:

“Income-tax authority” means a Commissioner, a Joint Commissioner, a Director, a Joint Director, an Assistant Director or a Deputy Director or an Assessing Officer, or a Tax Recovery Officer, and for the purposes of clause (i) of subsection (1), clause (i) of sub-section (3) and sub-section (5), includes an Inspector of Income-tax.

Action cannot be taken under section 133A(1) without prior approval of Joint Commissioner/Joint Director [Proviso to section 133A]:

No action under section 133A(1) shall be taken 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, as the case may be.

Restriction on power of Inspector:

The Inspector conducting survey even if so authorized by any such other authority specified under this section cannot exercise all the rights and powers conferred on higher authorities. His power is limited to the inspection of books of account or other documents as may be available at the place visited by him. He is entitled to place identification marks on the books of account or other documents inspected by him and is also entitled to make extracts there from. He, however, has no power to verify cash, stock or other valuables or articles. He neither has a right to issue summons to elicit any further information nor a right to record a statement. It is hence necessary to verify the identity card and the status of the official who has visited the premises. [Kamal & Co. v ACIT (1999) 104 Taxman (Mag) 79]

Material collected during illegal survey by inspector who was not authorized to verify the inventory, can be used by Assessing Officer for making additions. [CIT v Kamal & Co (2009) 308 ITR 129 (Raj)]

It may be clarified that if an inspector visits the premises as an assistant to or a subordinate of a higher authority who has accompanied him, he can certainly perform the verification of stock, cash and valuable articles or things as an assistant of the higher authority.

2. Power to enter any business premises or any place, at which the activity of charitable purpose is carried on for survey [Section 133A (1)]:

Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter—

  1. any place within the limits of the area assigned to him, or
  2. any place occupied by any person in respect of whom he exercises jurisdiction, 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 which such place is situated or who exercises jurisdiction in respect of any person occupying such place, at which a business or profession or any place

at which the activity of charitable purpose is carried on, whether such place be the principal place or not of such business or profession or charitable activity.

3 Requiring the proprietor, trustee, employee, etc. to afford facility for inspection and checking and furnishing information:

The income-tax authority who has entered the premises, where the business or profession or an activity for charitable purpose is carried on, may require any proprietor, trustee, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession or such activity for charitable purpose—

  1. to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place,
  2. to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and
  3. to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act.

4. Time of entering the business premises, etc. for survey [Section 133A(2)]:

An income-tax authority may enter:

  1. any place of business or profession referred to in section 133A(1) only during the hours at which such place is open for the conduct of business or profession and,
  2. any other place, only after sunrise and before sunset.

The object of survey is not the same as that of search or seizure under section 132 of the Act. This section empowers the income-tax authority to enter only a place at which a business or profession is carried on by the assessee, he cannot enter the residential premises of the assessee or the premises of the lawyer or chartered accountant of the assessee. [Board Circular No. 7-D (LXIII 7) of 1967, dated 3.5.1967]

5. Survey for verifying the compliance of the provisions of TDS/TCS [Section 133A(2A)]

Without prejudice to the provisions of section 133A(1), an income-tax authority may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B (relating to TDS) or Chapter XVII-BB (relating to TCS), as the case may be, enter any office, or a place where business or profession is carried on, within the limits of the area assigned to him, or any such 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 which such place is situated where books of account or documents are kept.

The income-tax authority may for this purpose enter an office, or a place where business or profession is carried on after sunrise and before sunset. Further, such income-tax authority may require the deductor or the collector or any other person who may at the time and place of survey be attending to such work,—

  1. to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and
  2. to furnish such information as he may require in relation to such matter.

Note: The income tax authority conducting survey under this section shall not have any power to check or verify the cash, stock or other valuable article or thing which are found in that premises.

6. Other powers of income-tax authority conducting survey [Section 133A(3)]:

An income-tax authority acting under this section may,—

  1. if he so deems necessary, place marks of identification on the books of account or other documents inspected by him and make or cause to be made extracts or copies therefrom,
  2. impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him:

However, such income-tax authority shall not—

  1. impound any books of account or other documents except after recording his reasons for so doing; or
  2. retain in his custody any such books of account or other documents for a period exceeding 15 days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General therefor, as the case may be,
  3. make an inventory of any cash, stock or other valuable article or thing checked or verified by him,
  4. record the statement of any person which may be useful for, or relevant to, any proceeding under this Act.

Further, a proviso was inserted in section 133A(3) to provide that while acting under section 133A(2A) (relating to survey of compliance of TDS/TCS discussed above), the Income Tax Authority shall not:

  1. impound and retain in his custody any books of account or documents inspected by him or
  2. make an inventory of any cash, stock or other valuables article or thing.

Taxpayers are not required to make a statement admitting or denying any concealment of income during the course of a survey.

7. No power to remove cash and other valuable things [Section 133A(4)]:

An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing.

(B) Survey in connection with any function, etc. [Section 133A(5)]:

Where, having regard to the nature and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so to do, he may, at any time after such function, ceremony or event, require the assessee by whom such expenditure has been incurred 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 he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act and 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 this Act.

(C) Consequences if facilities not provided [Section 133A(6)]:

If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under section 131(1) for enforcing compliance with the requirement made.

Further, the visiting officer may approach the higher authority with a view to obtaining a proper warrant of authorisation to convert the survey action into a search and seizure action and the higher authority will be justified in issuing warrant of authorisation for a full scale raid action on the basis of first hand details and information given by the survey party.

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