PRESENTATION ON SURVEY,SEARCH,PENALTY & PROSECUTION UNDER INCOME TAX ACT

SURVEY UNDER SECTION 133A OF INCOME TAX ACT This section empowers the Income Tax Authorities to do the following in relation to a business or profession: Inspect books of accounts and other documents Verify cash Verify stock Impound books of accounts and other documents Record statement and collect such information as may be required for any proceedings under the Income tax Act.  

TDS SURVEY UNDER SECTION 133A OF INCOME TAX ACT As no specific power to conduct survey was available to TDS authorities, therefore, vide Finance Act’2014 government inserted sub-section (2A) in section 133A to enable the TDS authorities to conduct survey in respect of TDS verification w.e.f.1.10.2014. However, TDS authorities were empowered to do the following: Inspect books of accounts and other documents. Record statement and collect such information as may be required for any proceedings under the Income tax Act.  

SURVEY OF CHARITABLE TRUSTS UNDER SECTION 133A OF INCOME TAX ACT Ambit of survey operations under section 133A of Income Tax Act was further widened to cover Charitable Trusts vide Finance Act’2017. Now survey can be conducted by an Income Tax Authority at the premises where an activity for charitable purpose is carried out. Income Tax Authorities are empowered to do the following: Inspect books of accounts and other documents Verify cash Verify stock Impound books of accounts and other documents Record statement and collect such information as may be required for any proceedings under the Income tax Act.

RECORDING OF STATEMENT UNDER SECTION 131 DURING SURVEY As per the provisions of section 133A, an Income Tax Authority can record statement under section 133A (iii) of Income Tax Act. However, under section 133A(6) of Income Tax Act, a statement under section 131 of Income Tax Act can also be recorded by the Income Tax Authority. But statement under section 131 can be recorded under certain conditions mentioned in sub-section (6). In the absence of those conditions no statement under section 131 can be recorded. In this regard, it is pertinent to mention that statement recorder under section 133A(iii) is not on oath while statement recorded under section 131 is on oath and hence evidentiary value of on oath statement is better than one recorded without administering oath.

SEARCH PROCEEDINGS UNDER INCOME TAX ACT Through Finance Act’2017 certain far reaching amendments have been carried out in the provisions of search under section 132 of Income Tax Act’1961. These are as under: Reasons to believe recorded under section 132(1) will not be disclosed to any person or any authority or the Appellate Tribunal.(w.r.e.f.1.04.1962) Reasons to suspect recorded under section 132(1A) will not be disclosed to any person or any authority or the Appellate Tribunal.(w.r.e.f.1.10.1975)

PROVISIONAL ATTACHMENT OF PROPERTY Authorised Officer within a period of sixty days from the date on which the last of the authorisations for search was executed, can provisionally attach any property of the assessee with previous approval of PDGIT/PDIT/DIT under section 132(9B) of Income Tax Act and the provisions of Second Schedule shall mutatis mutandis, apply. Such provisional attachment will cease to have effect after the expiry of six months from the date of order of provisional attachment of any property, as per the provisions of section 132(9C) of Income Tax Act.

REFERENCE TO VALUATION OFFICER As per the provisions of 132(9D) of Income Tax Act, Authorised Officer within a period of sixty days from the date on which the last of the authorisations for search was executed, can make reference to a Valuation Officer for estimating the FMV of the property.

PENALTIES UNDER INCOME TAX ACT Recent amendments in the Income Tax Act have brought into existence a few more penalties. These are summarised as under: Penalty under section 271AAC- Penalty amounting to ten percent of tax payable on income referred to in section 68,69,69A,69B,69C, & 69D of Income Tax Act. Further, this penalty will not be levied in case such income has been included by the assessee in return of income and tax @60% has been paid thereon on or before the end of the relevant previous year. No penalty under section 270A will be levied. Penalty under section 271F- This penalty relating to non furnishing return of income before the end of relevant assessment year has been deleted from the statue. It is now replaced by a fee under section 234F. Assessee has to pay Rs.5000/- if return of income is filed on or before 31st December and Rs.10000/- in any other case i.e. filed beyond 31st December. However, if total income of assessee does not exceed Rs.5 Lakh then this penalty will be Rs.1000/- only.   Penalty under section 271FA-Quantum of penalty under this section has been increased from Rs.100/- per day to Rs.500/- per day of delay in filing statement of specified transactions under section 285BA. However, if notice under section 285BA(5) is issued then this penalty amount will increase from Rs.500/- per day to Rs.1000/- per day as per amendment made by Finance Act’2018.

PROSECUTION PROCEEDINGS UNDER INCOME TAX ACT Prosecution being launched by the Income Tax Department falls in following four categories: Prosecution under section 276B for failure in payment of TDS deducted. Prosecution under section 276C(1)for evasion of tax. Prosecution under section 276C(2) for attempt to evade the payment of tax. Prosecution under section 276CC for failure to file return of income.

PROSECUTION FOR FAILURE TO PAY TDS Prosecution under section 276B of Income Tax Act for failure to pay the TDS deducted under chapter XVII-B/section 115-O/section 194-B of Income Tax Act. Punishment RI from 3 months to 7 years and with fine.

PROSECUTION FOR EVASION OF TAX Prosecution under section 276C(1) of Income Tax Act for wifull attempt to evade tax, penalty or interest. Punishment being RI varying from 3 months to 2 years if tax sought to be evaded not exceed Rs.25 Lakhs. If tax sought to be evaded exceed Rs.25 Lakhs, then varying from 6 months to 7 years and with fine.

PROSECUTION FOR FAILURE TO PAY TAX Prosecution under section 276C(2) of Income Tax Act for wilfull attempt to evade the payment of tax. Punishment being RI varying from 3 months to 2 years and with fine.

PROSECUTION FOR FAILURE TO FILE RETURN OF INCOME Prosecution under section 276CC of Income Tax Act for failure to file ROI as per the provisions of section 139(1)/148/153A of Income Tax Act. Punishment being RI varying from 3 months to 2 years if tax which would have been evaded does not exceed Rs.25 Lakhs. If tax which would have been evaded exceed Rs.25 Lakhs, then varying from 6 months to 7 years and with fine. However, if tax payable on regular assessment reduced by TDS and Advance tax paid is less than Rs.3000/- then there is no prosecution under this section. But through Finance Act’2018 this exemption in respect of a company assessee has been removed and hence w.e.f.1.04.2018 all the company assessee are liable for prosecution for every default.