The powers of an income tax officer / assessing officer



We all have a fear of income tax officers either sending us a notice of enquiry or visiting our home or office premises to make enquires and check our income and wealth. It all happens all of a sudden and on the spot so what are the powers of an income tax officer / assessing officer while making enquires and checking our income/wealth according to the Income Tax Act

We all grew up studying about Income Tax and that every individual who has a taxable income should file a true and correct return of his income for every financial year, by the specified date, which currently is July 2012 for the financial year 2011-12 for the period between April 1, 2011, to March 31, 2012. While at the current juncture everyone is planning to make investments which qualify for tax exemptions and decrease one’s tax liability to the minimum, it’s time we discuss briefly the powers of an Income Tax Officer, whom we love to hate. The officer has the power to call for information from any person either with regard to his own matters or in case of a third person, with whom the person has any dealings, which are covered under various sections of the Income Tax Act. Here, we shall discuss the most critical two sections.

Powers of assessing officer Under Section 131 

The Income Tax Authorities (income tax officer / assessing officer) shall have the same powers as are vested in a court of law under the code of civil procedure 1908 (5of 1908) when trying a suit in respect of following matters.

  • Discovery and inspection
  • Enforcing the attendance of any person, including any officer of a banking company and examining him on oath
  • Compiling the production of books of accounts and other documents
  • Issuing commissions

The safety valve here is that any tax authority shall not

  • Impound any books of accounts or other documents without recordings his reasons for doing so.
  • Retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of Chief Commissioner or Director General or Commissioner or Director

Powers of assessing officer / income tax officer Under Section 132 

Where the higher tax authorities as a consequence of information in their possession have reason to believe that

  • Any person to whom summons under any relevant section of IT Act was issued to produce or cause to be produced, any books of accounts or other documents has omitted or failed to produce or cause to be produced such books of accounts or other documents as required by such summons or notice
  • Any persons 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 account or other documents which will be useful for or relevant to any proceedings under IT Act (Here the tax department is assuming powers in a situation which may or may not happen and also, the department knows in advance of the noncooperation of assessee)
  • 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 things represent either wholly or partly income or property (which has not been or would not be disclosed) for the purposes of IT Act-referred to, as undisclosed income or property then the authorised officer of IT Dept has the following powers
  • (i) Enter and search any (building, places, vessel, vehicle or aircraft) where he has reason to suspect that such books of accounts, other documents, money, bullion, jewellery or other valuable article or things are kept.
  • (ii) Break open the lock of any door, box, locker, safe, almirah or other receptacles for exercising the powers conferred as above where the keys are not available.
  • (ii-a) 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 accounts, other documents, money, bullion, jewellery or other valuable article or thing.
  • (iii) Seize any such books of accounts, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search (provided that bullion, jewellery or other valuable article or thing, being stock in trade of the business, found as a result 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).
  • (iv) Placemarks of identification on any books of accounts or other documents or make or cause to be made extracts or copies therefrom
  • (v) Make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing.

The Tax authorities have vast jurisdictional powers in this regard and can further enhance the same by following the prescribed procedure. Similarly, the authorisations issued can be further extended to cover persons as well as places during the course of the search itself.

Further, the authorised officer can requisition the services of any police officer as well as an officer of the central government to assist him for all or any of above purposes, and it shall be the duty of every such officer to comply with such requisitions. The authorised officer may where it is not practicable to seize any such books of accounts other documents, money, bullion, jewellery or other valuable articles or things serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove or part with or otherwise deal with it except with previous permission of such officer, and such officer may take such steps as may be necessary for ensuring the compliance of his such order.

The authorised officer during the course of search and seizure may examine any such persons as described above, and any statement made by such person during such examination may thereafter be used in evidence in any proceedings under the Indian Income Tax Act. Sometimes the income tax law gives certain relaxations also like allowing making copies or taking extracts from seized books of accounts and other documents but in the presence of an authorised officer only at such place and time as the authorised officer may appoint in this behalf. The last relief is that the affected person may make an application to the CBDT stating reasons for such objections and requesting the return of the books of accounts or other documents and the Board may after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.

The author is a renowned tax and investment consultant.

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