Do’s and don’ts of a Survey under the Income Tax Act, 1961
The term “Survey” has not been defined in the Income Tax Act. However as per Concise Oxford Dictionary, “Survey” means having a view over anything, inspecting or investigating something, etc. According to Chambers Dictionary, the meaning of “survey” is to view extensively, to examine all particulars of something through an organization of men engaged particularly for that purpose.
In short the expression “survey” in connection with the Income Tax Act means collection of information for the purposes of the Act.
Objects of Survey:
Survey is a weapon in the hands of the Income Tax Department to collect information of different kinds that are necessary for making assessments.
Survey is conducted with the object of increasing the revenue collected by catching hold of new assessees, to collect information regarding tax evasions by assessees, check generation of black money and to verify whether accounts are maintained regularly and properly.
Types of survey:
Survey is generally of three types –
1. Specific Survey under the provisions of section 133A(1) – It refers to the survey of the business premises of a taxpayer;
2. Survey of Expenditure on Marriages, other occasions etc. under the provisions of section 133A(5) – In involves collecting information regarding the nature and amount of expenses incurred by a taxpayer ;
3. Door to door survey under the provisions of section 133B – It refers to the survey of each place where business activities are carried on and to gather information in Form 45D.
Rights of an assessee during a survey:
The following rights are available to an assessee during a survey:
a) To verify the identity of the officials conducting the survey;
b) To verify the authorization including the name and address of the premises and the name of the officials;
c) To obtain a copy of statement recorded by the officials in connection with the survey;
d) To consult and take the advice of a legal practitioner.
Duties of the people around at the time of a survey:
The persons present in the premises where a survey is conducted must provide the following facilities to the Income Tax Authorities:
1. At the time of a Survey under section 133A:
• To provide facility to inspect the books of account and documents;
• To provide facility to check or verify cash and other valuables;
• To furnish the required information of any proceeding under the Act; and
• To furnish necessary clarifications.
2. At the time of a Survey under section 133B:
• To provide signed Form 45D filed in duplicate;
• To furnish clarifications to the authority conducting survey in connection with the information furnished in Form No. 45D.
Powers of the income tax officials during a survey:
Surveys are used to check the statements of the existing tax payers in their returns and to detect new tax payers.
• Under Section 133A (1) the authorized inspectors can exercise the following powers given to them:
a) To check the books of account and other documents found in the premises and to put identification marks on them;
b) To take extracts from such books of accounts as well as other documents found in the survey;
c) To check cash and other valuables that are found in the survey;
c) To make an inventory of cash and other valuables found in the survey;
d) To obtain information in connection with any proceeding under the Act;
• Under section 133A (5) an authorized inspector can exercise the following powers given to them:
a) To require the individual who has incurred the expenses, to furnish information which may be used in a proceeding under the Income Tax Act;
b) To record the statement of a tax payer or any other person.
• Under Section 133B an authorized inspector can exercise the following powers given to them:
To enter the premises within jurisdiction wherein a business is being carried on and to ask the proprietor or any of his employee who may be connected with the business to provide information in Form No. 45D prescribed for such purpose. However the authority should confine itself to obtaining information in the prescribed form. He may also ask the person present in the premises to explain any entry in the form and may also ask for clarification if there is any contradiction in such information.
Authorities empowered to make a survey:
The Authorities who can make survey are the Commissioner and his subordinate officers including the Assessing Officer and Inspectors of the department.
Restrictions on the authorized persons of the Income Tax Department:
1. The authorized persons of the Income Tax Department can only enter a building where a business or profession is being carried on;
2. They can only enter a building normally during the business hours though it may continue even after usual business hours under special circumstances;
3. They cannot impound or retain cash and other valuables of the assessee;
4. They cannot seal the premises during a survey.