SURVEYU/S 133 A OF THE INCOME TAX ACT, 1961

ASHWANI KUMAR

F.C.A.

MEANING

TO COLLECT INFORMATION AND DATA FOR THE PURPOSE OF THE ACT ON THE SPOT, AT THE PLACE OF BUSINESS OR PROFESSION OF THE ASSESSEE.

PURPOSE & OBJECT OF SURVEY

Make a surprise visit to the place of business/profession Personally Inspect books of account and/or other

documents Verify stocks, cash and other valuable articles Impound relevant books of accounts and/or documents. Collect information about evasion of Taxes. Bring new assessees on record. Verify whether books of accounts are being maintained

contemporaneously.

TYPES OF SURVEYInternal SurveySurvey in connection with functions,

ceremonies, events etc.External General Survey (Door to Door

Survey) of business premisesExternal (Specific) Survey of business

premisesSurvey to check compliance with TDS

provisions.Recovery Survey

Commissioner of Income TaxCommissioner of Income Tax Joint Commissioner of Income TaxJoint Commissioner of Income Tax Director of Income TaxDirector of Income Tax Joint Director of Income TaxJoint Director of Income Tax Assistant Director of Income TaxAssistant Director of Income Tax Deputy Director of Income TaxDeputy Director of Income Tax Assessing OfficerAssessing Officer Tax Recovery OfficerTax Recovery Officer Inspector of Income Tax (subject to proper Inspector of Income Tax (subject to proper

authority but only with limited powers )authority but only with limited powers )

AUTHORITIES COMPETENT TO CONDUCT SURVEY

POWERS OF THE AUTHORITIES DURING SURVEY

Enter place of business during business but only after Enter place of business during business but only after sunrise and before sunsetsunrise and before sunset

Enter place other than business premises if assessee states Enter place other than business premises if assessee states that cash, stock, etc., are lying therethat cash, stock, etc., are lying there

Place marks of identification on books of account Place marks of identification on books of account Take extracts from books of accounts and documents Take extracts from books of accounts and documents Impound books of accounts after recording reasonsImpound books of accounts after recording reasons Make an inventory of cash, stocks and other valuablesMake an inventory of cash, stocks and other valuables Record statement of any personRecord statement of any person Collect information regarding nature and quantum of Collect information regarding nature and quantum of

expenditure on personal functions and eventsexpenditure on personal functions and events Discovery and production of evidence etc. when there is non-Discovery and production of evidence etc. when there is non-

cooperation on the part of the Assessee cooperation on the part of the Assessee

TDS SURVEY

Authority having jurisdiction as to the Authority having jurisdiction as to the Tax deduction at source matters, has Tax deduction at source matters, has the power to conduct surveythe power to conduct survey

Cash, bank accounts,stocks and other Cash, bank accounts,stocks and other valuables cannot be verified/seized valuables cannot be verified/seized during TDS surveyduring TDS survey

SURVEY IN CONNECTION WITH FUNCTIONS U/S 133A(5)

To collect information about the nature and scale of expenditure incurred in any ceremony or other events

Information can be collected from various sources including third parties and external agencies.

Action can be taken only after the function is over and not during the function

Video recording of the function is not permissible

SPECIFIC SURVEY ON BUSINESS PREMISES

Can be carried out at any place where Can be carried out at any place where business or profession is carried on i.e., business or profession is carried on i.e., Head Office, Branches, Godowns etc.Head Office, Branches, Godowns etc.

Authorized Officer can enter only if Authorized Officer can enter only if premises are open and only during premises are open and only during business hoursbusiness hours

IMPLICATIONS OF FINDINGS OF SURVEY

Stock found Stock found ExcessExcess ShortShort

Cash foundCash found ExcessExcess ShortShort

Discovery of Undisclosed Turnover Discovery of Undisclosed Turnover 90 ITR 271 (SC) Commissioner of Sales Tax Vs. Esufali90 ITR 271 (SC) Commissioner of Sales Tax Vs. Esufali

POWER TO IMPOUND BOOKS OF ACCOUNTS

I.T. authorities empowered to impound and retain I.T. authorities empowered to impound and retain books of accounts/other documents inspected books of accounts/other documents inspected during surveyduring survey

Power to be exercised after recording reasons for Power to be exercised after recording reasons for doing sodoing so

Approval of the Chief Commissioner of Income Approval of the Chief Commissioner of Income Tax/ Director General of Income Tax required for Tax/ Director General of Income Tax required for retaining books/documents for more than ten retaining books/documents for more than ten working days working days

Assessee can ask for copies of impounded Assessee can ask for copies of impounded records at the time of survey or even subsequentlyrecords at the time of survey or even subsequently

CAN A COMPUTER BE IMPOUNDED ?

Computer outside definition of Books or Computer outside definition of Books or Books of Accounts u/s 2(12A)Books of Accounts u/s 2(12A)

Surveying authority can only insist for copy Surveying authority can only insist for copy data on Computer disc, floppy or print out.data on Computer disc, floppy or print out.

ProvisionsProvisions of Information Technology Act, of Information Technology Act, 20002000 Section 43 provides for penalty for accessing, Section 43 provides for penalty for accessing,

tampering etc, of a computer without proper tampering etc, of a computer without proper authorityauthority

Section 81 provides that theSection 81 provides that the said Act has said Act has overriding effect over all other Acts overriding effect over all other Acts

SEIZURE

Sub section (4) of section 133A does not empower the authority to seize any article and/or asset found during survey

RECORDING OF STATEMENTS Statement of the person surveyed should be Statement of the person surveyed should be

recorded under oath and in a language recorded under oath and in a language which the person understandswhich the person understands

Instructions of CBDT for extracting Instructions of CBDT for extracting confessions to be followed confessions to be followed

Confession as to the Undisclosed Income Confession as to the Undisclosed Income should be voluntary and based on reliable should be voluntary and based on reliable evidenceevidence

Assistance of Tax Consultants during the Assistance of Tax Consultants during the surveysurvey

STATEMENT ELICITED DURING SURVEY STATEMENT ELICITED DURING SURVEY

OPERATION HAS NO EVIDENTIARY VALUE....OPERATION HAS NO EVIDENTIARY VALUE....

CIT vs. S. KHADER KHAN SON 352 ITR 480 (SC)CIT vs. S. KHADER KHAN SON 352 ITR 480 (SC)

PAUL MATHEWS & SONS vs. CIT 263 ITR 101 (KER)PAUL MATHEWS & SONS vs. CIT 263 ITR 101 (KER)

ASHOK MANILAL THAKKAR Vs. ACIT 279 ITR (AT) 143 (AHD)ASHOK MANILAL THAKKAR Vs. ACIT 279 ITR (AT) 143 (AHD)

RETRACTION OF THE STATEMENT

Retraction is permissible subject to certain conditions Retraction is permissible subject to certain conditions and should be made as early as possible without delayand should be made as early as possible without delay

Sec. 94 of the Evidence Act provides that a presumption Sec. 94 of the Evidence Act provides that a presumption can be rebutted by proving that admission or confession can be rebutted by proving that admission or confession was caused by inducement, threat or promise.was caused by inducement, threat or promise.

Burden to prove that the admission made is untrue lies Burden to prove that the admission made is untrue lies on the party who made the admission on the party who made the admission Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Pullangode Rubber Produce Co. Ltd. vs. State of Kerala

91ITR 18 (SC) 91ITR 18 (SC) Sarwan Singh Rattan Singh vs. State of Punjab AIR 1957 SC Sarwan Singh Rattan Singh vs. State of Punjab AIR 1957 SC

637 637 Krishan Lal Shiv Chand Rai vs. CIT 88 ITR 293 (Pb. & Har)Krishan Lal Shiv Chand Rai vs. CIT 88 ITR 293 (Pb. & Har) Karam Chand vs. ACIT 73 ITD 434 (Chandigarh)Karam Chand vs. ACIT 73 ITD 434 (Chandigarh)

PENALTIES & PROSECUTION

Penalty leviable u/s 272A for failure to answer Penalty leviable u/s 272A for failure to answer questions, sign statements and furnish questions, sign statements and furnish information, returns or statementsinformation, returns or statements

Excess Stock found in survey could not lead to Excess Stock found in survey could not lead to presumption u/s 276C calling for prosecution presumption u/s 276C calling for prosecution 203 ITR 866 (Pb. & Har.) ITO vs. Mohinder Pal203 ITR 866 (Pb. & Har.) ITO vs. Mohinder Pal

Penalty leviable u/s 272AA for failure to Comply Penalty leviable u/s 272AA for failure to Comply with S. 133Bwith S. 133B

Penalty for Concealment of Income leviable in Penalty for Concealment of Income leviable in Assessment Proceedings for existing AssesseesAssessment Proceedings for existing Assessees

ALLIED REVENUE LAWS

There are internal administrative instructions There are internal administrative instructions

that the income tax authorities should inform that the income tax authorities should inform

the other enforcement agencies whenever the other enforcement agencies whenever

evidence of law breaking is discovered during evidence of law breaking is discovered during

the course of a surveythe course of a survey

DO’S FOR THE TAX AUTHORITIES

To disclose the purpose and to commence survey of the To disclose the purpose and to commence survey of the business premises, without disturbing the ongoing business premises, without disturbing the ongoing business and without dislocating the normal businessbusiness and without dislocating the normal business

To provide copy of inventories of cash, stock and other To provide copy of inventories of cash, stock and other valuable articles or things, books of account and valuable articles or things, books of account and documents found in the course of the surveydocuments found in the course of the survey

To keep, maintain and preserve all the inventories copies To keep, maintain and preserve all the inventories copies of the documents and books of accountof the documents and books of account

To prepare a report containing details of survey and To prepare a report containing details of survey and findings on the material found in the course of the surveyfindings on the material found in the course of the survey

DON’TS FOR TAX AUTHORITIES

To remove, take in possession or seize cash, stock in trade and other valuable articles found in the course of the survey

To pressurize the tax payer to surrender any specific amount

To issue any summon u/s 131(3) of the Act without recording reasons therefor

OBLIGATIONS OF AN ASSESSEE

To assist in preparing inventory of various items

To give statements truthfully and completely, accurately,correctly and unambiguously

To sign the inventories and statements after carefully reading, vouching its correctness and obtaining its copies

AFTER SURVEY

Remedies available to the assessee

Assessment procedure

Settlement Commission

GENERAL ISSUES

Relevancy of material found in the course of the survey for making assessment

Presumptions about tax returns filed after survey

Effect of an illegal survey Assessments completed u/s 143(3) for

earlier years can be re - opened No need for pendency of proceedings for

conducting survey Survey can also be conducted on a person

who is not an existing tax-payer

ISSUES FOR DISCUSSION

Whether the authorities have powers to break any door, lock or window to gain entry

Can the business premises be sealed during survey - Shyam Jewellers vs. CIT 196 ITR P. 243 (All)

Can survey be converted into search ?

A Survey u/s 133A can be converted into a search u/s 132 if the conditions of that section are satisfied – Vinod Goel & Others vs. UOI and others 252 ITR 29 [P&H]

Implications of Sec. 269SS, Sec. 40A(3) Implication of deductions under Chapter VI A

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