In a bid to help contain tax evasion, the Budget has widened the scope of power of income tax officials with regard to survey, inquiry and provisional attachment of the assets.
Now, by inserting Section 133C, tax officials will be able to collect information from taxpayers for pending assessments without permission of the chief commissioner.
This is not all. Section 281B, which provides for provisional attachment of assets for up to two years, has been amended, providing for 60 more days “after the date of assessment or reassessment, whichever is later.”
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“This has been done because in some cases the officials were not able to complete the assessment within the two years time of provisional attachment. After the attachment period expired, they could not do the assessment. Now that situation has been corrected by the amendment,” an official told The Indian Express.
The tax department also plans to extend the period for which it can keep documents and books of accounts seized during a survey to 15 days from 10 days and place identification marks on the documents.
Tax experts said that with the development, “more discretionary power has been given to the officers with the view that the more administrative power will enable the department to unearth more black money.”
“It is a double-edged sword. In good hands it will work but without oversight it will breed corruption and harass honest taxpayers. With great power comes great responsibility. As a taxpayer I would be concerned as this may be used to harass innocent taxpayers,” Amitabh Singh, director, Saksham Ventures, said.
The income tax department also plans to enhance monetary fines against taxpayers who do not comply with its orders with rigorous imprisonment up to a year and a monetary fine.
Further, with regards to international taxation, transfer pricing officials (TPO) have been given more authority. The TPO can now directly levy penalty in case an assessee fails to furnish required documents.
However, there is some relief for the taxpayers. Now, before sending show-cause notice to any person associated with someone whose books of accounts are already being searched for tax evasion, the assessing officer (AO) conducting the search will have to first confirm with that person’s AO as to whether the income details found have any bearing on the income tax payment. These changes, proposed through amending Section 153C of the Income Tax Act, will be effective from October 2014.