Survey

1
Survey
Presented by Sanjay K. Agarwal
2
Topics for discussions

• Authorized Officers/Authorizing Authority
• Jurisdiction of the Survey Authority
• Obligations of tax payer during survey
• Places where survey can be conducted
• Restriction of entry into the place of business
  or profession/other places
• Powers of Survey Team
• Recording of Statements some checks
• Other Misc. Provisions

3
WHO CAN CONDUCT SURVEY Authorised
Officer/Authorising Authority (Expln.to sec.133A)

• I Authorized/Authorizing
• Director /Commissioner
• Additional Director/ Additional Commissioner
• Joint Director/ joint commissioner
• Deputy Director/ Deputy commissioner
• Asst.Director/Asst. commissioner
• Tax Recovery Officer
• Assessing officer/ ITO
• II Authorized
• Inspector of Income Tax (For certain specific
  cases only)
• - U/s 133A(1)(i) to afford facilities
• - U/s 133A(3)(1) Marks identification mark
• - U/s 133A(5) Scale of expenditure

4
Requirement of authorisation from the superior
Income Tax Authority -Proviso to 133A(6)
No survey can be conducted by an ADIT, DDIT, an
AO, a TRO and I T O without obtaining an approval
of the JDIT or JCIT. It follows from the above
proviso that no approval is required in case the
CIT or DIT or JCIT is himself conducting the
survey
5
Jurisdiction of the Survey Authority

• any place within the limits of the area assigned
  to him, or
• any place occupied by any person in respect of
  whom he exercises jurisdiction
• any place in respect of which he is authorized
  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

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OBLIGATIONS OF TAX PAYER DURING SURVEY
Section133A(1)
(i) To afford facility for inspection of books
of other documents as required by survey
team. (ii) To provide facility to check or
verify, cash, stock or other valuable found
therein. (iii) To furnish such information as
may be useful for the proceedings.
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WHERE CAN SURVEY BE CONDUCTED Expln. to sec
133A(1)

• At any place where a business or profession is
  being carried out whether the same is the
  principal place or not.
• Residential premises can also be covered if some
  business/professional work/document is being done
  there. (CA office circular no. 7- D dt 3/5/1967)

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Restriction of entry into the place of business
or profession/other places Sec 133A(2)

• The places of business or profession wherein the
  survey is being conducted, the income tax
  authority can enter at such places only during
  the hours at which such place is open for the
  conduct of business or profession
• In respect of other place wherein the books of
  accounts, other documents, cash etc. has been
  stated to be kept the survey party can enter only
  after sunrise and before sunset.

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POWERS OF SURVEY TEAM
Sec.133A(3)
(i) Place marks of identification on books of
accounts (ii) Make inventory of cash, stock,
valuables etc. (iii) Record statement No oath
U/s 132(4) 263ITR101(Ker) (iv) Impound and
retain books of accounts after recording
reasons and after permission from CCIT or
DGIT.(only w.e.f. 01-06-2003)
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Recording of Statements Some checks U/s
133A(3)(iii)

• Assessee to take abundant precautions while his
  statement is being recorded.
• As per latest circular of CBDT No. 286/2/03- IT
  (Inv) dt. 10/3/03- Confessional statement to be
  elicited.
• No provision under the Law to seek copy of
  statement from revenue.
• Other Provisions of CPC applicable, incase, the
  officers invoke section 131.

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No power to remove cash, stock, other valuables
Sec. 133A(4) .
Section 133A(4) specially prohibits the
removal of cash, stock other valuable article or
thing (w.e.f. 01/06/2002 ).
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Lavish and ostensible spending can also be
coveredSec.133A(5).

• An opinion is to be formed by an Income Tax
  Authority having regard to the nature and scale
  of expenditure being incurred by an assessee in
  respect of any function ceremony etc.
• The income Tax Authority can call for the
  information from the assessee or from any other
  person who according to him is likely to be in
  possession of the information with respect to the
  expenditure incurred

13
Lavish and ostensible spending can also be
covered Sec. 133A(5) . Contd...

• The Income Tax Authority cannot call for such
  information before or at the time of such
  function, ceremony or event and as such the power
  prescribed under this sub-section can be
  exercised only after the said function, ceremony
  or event is over.
• For the purpose of this sub-section, the Income
  Tax Authority has been empowered to record the
  statement of the assessee or such other person.
  It is to be specifically noted that the statement
  thus recorded may be used as evidence in any
  proceedings under the Act.

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Lavish and ostensible spending can also be
covered Sec. 133A(5) . Contd...
The legislative intention behind the
introduction of the above provisions on the
statute was to curb the use of blatant tax evaded
money in ostentatious wedding ceremonies and
other social functions (press released dated
03/06/89
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For non-cooperation section 131 can be
invokedSec.133A(6).
The Income Tax Authority shall have all powers
contemplated U/s 131(1) only in case the assessee
does not affords him the facility to inspect
books of accounts, check or verify cash, stock
etc. or to furnish any information or to have his
statement recorded. (It is noteworthy to mention
here that the provisions contained U/s 131(1)
were not being properly utilized many a times so
as to impound the books of accounts on the
pretext of non-cooperation. However, since the
power has now been conferred in section 133A
itself, it is hoped that the powers of section
131(1) should be sparingly used).
16
Case law Vinod Goel Others vs Union of India
and others 252ITR029(PH)

• (i) The survey ordered at the premises of the
  petitioners U/s 133A of the Act and conversion of
  the said operation on the basis of the authority
  given by the Additional Director are legal.

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Direct Tax Information
18
Powers regarding Discovery, Production of
Evidence, etc.(Sec 131)

• Assessing Officer acts in a Quasi Judicial
  Capacity Sec 131(1) gives power of court of law
  to the Income Tax Authority , though they are not
  strictly judicial authorities
• Case Dinshaw Vs. CIT (1943) 11 ITR 172 (Bom.)
• The Assessing Officer must follow the basic
  principles of confirming to the judicial
  procedure.

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Income Tax Authority

• Assessing Officer
• The Deputy Commissioner (Appeals)
• The Joint Commissioner
• Commissioner (Appeals)
• Chief CIT Or CIT

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Power delegated to Income Tax Authority

• Income tax authority shall have powers vested in
  a court under the CODE OF CIVIL PROCEDURE,1908 in
  respect of the following matter
• Discovery Inspection
• Enforcing the attendance of any person including
  an officer of a Banking Co. Examining him on
  oath.
• Compelling the Production of books of Accounts
  and other document and
• Issuing commission

21
Notes on Sec 131(1)

• If the Assessing Officer considers that evidence
  of a witness is material, it is for him to
  enforce attendance
• Case Nathu Ram Prem Chand Vs. CIT (1963)49 ITR
  561(All)
• However , u/s 131(1) a witness has no right to be
  represented by a counsel
• Case V.Datchinamurty Vs. Astt. Director of
  Inspection (1984)149 ITR 341 (Mad.)

22
Assessing Officer Sec 2(7A)

• Assessing officer means
• the Assistant Commissioner or
• Deputy Commissioner or
• Assistant Director or
• Deputy Director or
• the Income Tax Officer who is vested with the
  relevant jurisdiction by virtue of directions or
  orders issued u/s 120(1)/(2) or any other
  provision of this Act , and
• the Joint Commissioner or Joint Director who is
  directed under clause (b) of sub- sec (4) of that
  sec. to exercise or perform all or any of the
  powers and functions conferred on , or assigned
  to , an Assessing Officer under this Act.

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Proceeding must be pending

• The powers of the Income Tax Authorities
  concerned u/s 131(1) are coextensive with that of
  a Civil Court trying a suit and such powers can
  be exercised only if a proceeding is pending
  before such authority
• However sec 131 does not expressly lay down that
  some proceedings must be pending before the same
  income tax authority who exercises the power u/s
  131
• Case Peerless General Finance Investment Co.
  Ltd. Vs. Assessing Officer(2001) 117 Taxman 253
  (All.)

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Production of Books of Accounts

• The Assessing Officer can requisite documents on
  the basis of information received from another
  Department
• Case Jute Mills Co. Ltd. Vs. Dwijendralal
  Brahmachari (1973) 90ITR 467(Cal.)
• Moreover,the records and documents can be called
  for a period beyond three years and limitations
  imposed by proviso to Sec 142 will not whittle
  down such a requisition.
• Case Amal Kumar Ghatak vs. ITO (1971)79 ITR 452
  (Cal.)

25
Issue of Commissions

• The AO can under the law take recourse to issue
  commission for recording statements,especially
  when a large number of persons are involved
• Case V. Datchinmurthy vs. Astt. Director of
  Inspection (1984)149 ITR 341 (Mad.)
• The Assessing Officer should issue commission for
  recording statements of Parda Nashi Ladies

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When power can be exercised in respect of
concluded proceedings-131(1A)

• The Income Tax Authorities i.e. DGIT,DIT ,JDIT ,
  Asst. DIT , Deputy DIT, or Authorised officer u/s
  132 having reason to suspect that any income
  has been concealed (or is likely to be concealed
  by any person or class of person ) within his
  jurisdiction,
• then for the purpose of making any inquiry or
  investigation in relation to the said income
  (i.e.concealed income) or likely concealed income
  ,
• the Authority (who has noticed the concealment
  of income) will be competent to exercised the
  powers conferred u/s 131(1)
• Summons can be issued only prior to taking action
  under clauses (i) to (v)of sec. 132(1)
• Not withstanding that no proceedings with respect
  to such persons or class of persons are pending
  before him or any other Income Tax Authority
• However sec 131(1A) is free from such fetter
  which is an overriding provision
• Case CIT vs. Mool Chand Salecha (2002)124 Taxman
  898(Raj.)

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Impounding of Books Sec-131(3)

• Authorities authorized to carry out search and
  Seizure are
• Director General or
• Director or
• Joint Director or
• Assistant Director or
• Deputy Director or
• Assessing Officer or
• Deputy Commissioner (appeals ) or
• Joint Commissioner or
• Commissioner (appeals)
• Chief Commissioner or an officer authorized u\s
  132(1)
• Authorities authorized to impound and retain in
  its custody and books of accounts or other
  documents produced before it in any proceedings
  under the act

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Notes on Sec 131(3)

• An AO or an Assistant Director or Deputy director
  can neither impound any books before recording in
  writing the reasons for impounding books of
  account ( it should be communicated to the
  assessee too) nor they can retain books of
  account or an other documents beyond 15 days
  .(excluding holidays) without obtaining the
  approval of Chief Comm. Or Director General or
  Commissioner or Director
• Case Plyast (Delhi ) P.Ltd. vs. ITO (1986) 159
  ITR 750 (Del.)
• It is not necessary to communicate the reasons
  for impounding books to the assessee
• Retention of books of account beyond the period
  sanctioned by the commissioner is unauthorised
• Case TaraChand Hoti Lal Babauram Vs. ITO
  (1973)89 ITR 298 (All.)

29
Power to Call for Information

• Section 133

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Who has the power to call for the information?

• The Assessing Officer
• The Deputy Commissioner (Appeals)
• The Joint Commissioner
• The Commissioner (Appeals)

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Form required to submit the information

• The information required u/s133, sub-sections (1)
  to (5) is prescribed in the form of return to be
  submitted by taxpayers in Form No. 1, 2, 2A 3
  as per rule 12 of Income Tax Rules.

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Restriction on Officers Information for purposes
of the Act.

• A) any of the officers listed above can call for
  information only for the purpose of this Act ,
  i.e., only for the purpose of-
• Assessment or determination of income or tax in
  the case of AO
• Hearing and finalization of appeal proceedings
  pending before the DC(A) or Comm.(A).None of
  these officers can call for any information it
  there are no appeal proceedings pending before
  them or after they have completed and finalized
  their orders in appeal proceedings.
• A Joint Comm. is entitled to call for any
  information only for the purpose of performing
  his duties under the act. This may be during the
  course of any reference made to him for approval
  of any penalty proceedings or even during the
  course of levy of any penalty by him under his
  statutory powers or for approval of any
  assessment u/s 158BC

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Restriction on Officers Information for purposes
of the Act.

• B) No proceedings pending before AO validity of
  power u/s 133(6)- where no proceeding is pending
  , the power in respect of an inquiry cannot be
  exercised by any authority below the rank of
  Director/Comm. Without prior approval of
  Director/Comm.
• Case for reference
• Rechevy Service Cooperative Bank Ltd. Vs.
  CIT(2005) 129 Taxman 335 (Ker.)
• DBS Financial Services (P) Ltd. Vs Smt. M. George
  (1994)207 ITR 1077(Bom.)

34
Information required to call for u/s133

• Any Firm- to furnish a return of the names and
  address of the partners of the firm and their
  respective share . Sec 133(1)
• Any HUF- to furnish a return of the names and
  address of the manager and members of the family
  . Sec 133( 2)
• Any person on whom the authority has reason to
  believe to be a trustee, guardian or agent-to
  furnish a return of the names of the persons for
  or of whom he is a trustee, guardian or agent and
  their address. Sec 133(3)
• Any Assessee- to furnish a statement of names and
  address of all persons to whom he has paid in any
  PY rent , int. , comm., royalty, brokerage or
  annuity taxable under the head salary amounting
  to a sum more than Rs.1000/- together with the
  particulars of all such payment. Sec 133(4)

Contd
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Contd..

• Any dealer , broker or agent or any person
  concerned in the management of a stock or
  commodity exchange- to furnish a statement of the
  names and address of all persons to whom he or
  the exchange has paid any sum in connection with
  the transfer of assets or on whose behalf or from
  whom he or the exchange has received any sum ,
  together with the particulars of such payment and
  receipts . Sec 133(5)
• Any person including a banking co. or a
  cooperative bank or any officer thereof- to
  furnish information or statement of accounts
  giving information on various matters which will
  be useful for or relevant to any inquiry or
  proceedings under the act.(It may be noted that
  this power can also be exercised by the director
  general, the chief commissioner, the director and
  the commissioner . Sec 133(6)
• In respect of inquiry, where no proceeding is
  pending , power shall not be exercised by any
  income tax authority below the rank of director
  or commissioner without the prior approval of the
  director or, as the case may be , the
  commissioner.

36
Penalty for Non-Compliance u/s 133(4)

• Information required by the AO must be disclosed
  by the assessee on demand
• The act does not seem to provide that if an
  information u.s. 133(4) is not furnished , the
  claim for deduction can be disallowed on that
  ground.
• Case for reference CIT vs. Goodlass Nerolac
  Paints Ltd. (1991) 188 ITR 1 (BOM.)
• The consequence for Non compliance of sec133(4)
  is the liability to pay penalty u/s 272A(2)(c)

37
Notes on Sec 133

• Calling for valuation report from valuation
  officers- AO would not be competent to call for
  the report on valuation of cost of construction
  from the valuation officer in view of prov. Of
  Sec. 131,133(6) , 142(2).
• Case for reference Smt. Amiya Bala Paul vs.CIT
  (2003)262ITR407 (SC)
• Person cannot be any person or authority
  belonging to the department- The information
  which is contemplated by sec 133 is only with
  reference to either the assessee or any person
  concerned with the assessee and not with
  reference to any authority or person belonging to
  the revenue.
• Case for reference Daulat Ram vs. ITO (1990)181
  ITR 119 (AP)

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Power to collect certain information

• Sec 133B

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Sec.133B Power to collect certain information

• Notwithstanding anything contained in any other
  provision of this act, an income tax authority
  may , for the purpose of collecting any
  information which may be useful for, or relevant
  to the purposes of this act, enter-
• Any building or place within the limits of the
  area assigned to such authority or
• Any building or place occupied by any person in
  respect of whom he exercises jurisdiction ,
• At which a business or profession is carried on,
  whether such place be the principal place or not
  of such business or profession,
• and require any proprietor, 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 to
  furnish such information as may be prescribed
  i.e. Form No.45D Rule 112E

40
Purpose Scope of sec 133B

• Sec 133B calls for information which is generally
  available in the assessment record and therefore
  the main purpose of sec133B appears to be to
  approach persons who are not filing their returns
  of income and who would be assessable considering
  the nature of business, gross receipts and income
  earned.
• To enable the assessing officers to give general
  authorization to Inspectors for a specific area
  and also for specifying the exact information to
  be collected .

41
Form required to submit the information

• The income tax authority may require any
  proprietor, employee or any other person who is
  attending in any manner to furnish information in
  form no. 45D
• There is no time limit prescribed u/s 45D or rule
  112E
• The details to be filled in include-
• Basic information about nature of business ,
  status, names of proprietor, partners, directors
  with their residential address, etc.
• PAN and details of ROI filed for the latest year
  including income shown therein
• Employees, books of account kept or maintained ,
  bank accounts, gross sales/ receipts, value of
  stock as on 31st Mar. and approx. up to the date
  of visit
• Cars and other vehicles owned by business or
  profession
• And income from all sources for the immediately
  preceding year

42
Consequence for false information supplied

• The person making a false verification
• may be prosecuted u/s277 after getting sanction
  from commissioner U/S 279
• And on conviction
• may land himself to rigorous imprisonment for a
  term which shall not be less than three months
  but which may extend to three years
• And with a fine equivalent to the amount of tax
  evaded on the basis of false verification

43
Notes on sec 133B

• The income tax authority can enter the aforesaid
  building only if it is used for the purpose of
  carrying on a business or profession .It is ,
  however, immaterial whether such place is the
  principal place of such place of such business or
  profession or not.
• The income tax authority may enter any place of
  business or profession only during the hours at
  which such place is open for conduct of business
  or profession
• The income tax authority shall on no account
  remove or cause to be removed from the building
  or place wherein he has entered any books of
  account or other documents or any cash, stock or
  other valuable article

44
Income Tax Authority

• Joint Commissioner
• Assistant Director or Deputy Director
• Assessing Officer
• An Inspector of Income Tax
• who has been authorize by the AO
• To exercise the powers
• In relation to the area in respect of which the
  AO exercises jurisdiction

45
Power to Inspect Registers of Companies-Sec 134

• The power to inspect the premises of companies is
  vested in the following officers
• Assessing officer
• DC(A) or Joint Commissioner
• Commissioner (Appeals)
• Any person subordinate to any one of the above
  officers who has been authorized in writing by
  them.
• The power to inspect includes power to take
  copies or cause copies to be taken of any
  register of-
• Members or shareholders of the company
• Debenture holders or
• Mortgages of nay company , i.e. , where charges
  have been registered about any mortgage
• Such information would be required for assessment
  or in appeal proceedings
• This power u/s 134 is not being invoked in many
  cases today

46
Penalty u/s 272A(2)

• If a company refuses to comply with the
  requirements of Sec 134 then penalty u/s272A is
  levied
• Penalty for non compliance is Rs.100 for everyday
  during which the failure continues
• Penalty is levied only after opportunity of being
  heard is given
• Authority levying penalty cannot be below the
  rank of Joint Commissioner or Joint Director
• The assessee must arrange to submit an
  explanation for the delay in compliance
  especially in as much as the penalty is leviable
  according to the number of days on which there is
  non- compliance i.e.each day of delay has to be
  explained.

47
Power of Chief Commissioner or Commissioner etc.-
Sec 135

• The commissioners, Directors, and the Joint
  Commissioners have been given sufficient powers
  to conduct or arrange for getting inquiries made
  with respect to any person in their jurisdiction.
  
• These powers are similar to the powers vested in
  the AO but are limited to making inquiries or
  asking for relevant information and not to enter
  in any business premises which are governed by
  Sec.133A and Sec. 133B

48
Obligations to furnish Annual Information
Return-Sec 285BA

• Sec 285A (Amended by Finance (No. 2 )Act)
  provides that an assessee or certain agencies
  responsible for registering or maintaining books
  of accounts or other documents containing a
  record of any specified financial transaction
  under any law for the time being in force , shall
  furnish an AIR in respect of such specified
  transaction registered or recorded on or after
  the 1st day of Apr. , 2004
• Specified financial transaction Any transaction
  of purchase , sale or exchange of goods or
  property or right or interest in a property or
  transaction for rendering any service or
  transaction under a works contract or transaction
  by way of an investment made or expenditure
  incurred or a transaction for taking or accepting
  any loan or deposit as may be prescribed .
• The said sec further provides that the value or
  the aggregate value of such transaction during a
  Financial Year so prescribed shall not be less
  than Rs.50000-

49
Sec 285BA .contd.

• Return to whom The return shall be furnished to
  the CIT (Central Information Branch). Where , the
  board has authorized an agency to receive such
  return on behalf of the CIT (Central Information
  Branch), return shall be furnished to that
  agency. Board has authorized NSDL as the agency
• Form No. The return comprising Part A and Part B
  of Form No. 61A shall be furnished on computer
  readable media being a floppy or CD-ROM or DVD ,
  along with Part A thereof on paper
• Time limit The return shall be furnished on or
  before Aug.31, immediately following the
  financial year in which the transaction is
  registered or recorded
• Defective Return Where the prescribed income tax
  authority considers that the annual information
  return is defective , he may intimate the defect
  to the person who has furnished such return and
  give him an opportunity of rectifying the defect
  within a period of one month from the date of
  such intimation (or within such extended
  period).otherwise it shall be treated as an
  invalid return and the prov. of this Act shall
  apply as if such person had failed to furnish
  such return
• Notice Notice for submission of return, within a
  period not exceeding 60 days from the date of
  service of such notice, is required to be served
  upon such person who is required to furnish the
  return

50
Following persons in respect of following
transactions are required to file AIR- Rule 114E
(Amended in the Notification No.182/2005
Contd..
51
Contd.
52

• With a view to ensuring that the annual
  information return conforms to the required
  specifications, the person(s) responsible for
  filing the return shall ensure the following
  (Cir. No. F.No. 414/76/2005-IT(Inv.) I)
• Form No. 61A, Part A is duly filled in and
  verified and enclosed in paper format with the
  form No. 61A, Part B in computer media.
• The data structure of the AIR conforms to the
  data structure prescribed by the
  AdministratorAnnual Information Return
  authorized by the Board.
• The computer media containing the AIR is
  readable, clean, virus free and not corrupt.
• Permanent Account Number (PAN) of the person
  responsible for filing the AIR (except in cases
  of Government departments) is mentioned in Form
  No. 61A (Part A and Part B).
• The Tax Deduction Account Number (TAN) of the
  office of the principal officer of the person
  responsible for filing the AIR .In case TAN is
  not allotted, the return should be accompanied by
  a copy of acknowledgement of the application made
  for allotment of TAN or duly filled in Form No.
  49B with the requisite fees (only for Government
  filers).
• The PAN, name, address, date of transaction, mode
  of transaction and amount of the transacting
  party or each of the joint parties in respect of
  every transaction are correctly and properly
  filled in at item No. 9 of Form No. 61A (Part B).
  Where PAN is not required to be obtained under
  the law, it shall be mentioned in the form as to
  whether the transacting party is a Government
  department or consular office or Form 60 or Form
  61, as the case may be, has been received.
• In case the AIR on the computer readable media is
  found to be corrupted or does not fulfill the
  above guidelines, the filer is expected to make
  appropriate correction and resubmit the return.

53
THANK YOU
Sanjay Agarwal Mail_at_- Agarwal.s_at_bol.net.in