The Income Tax (I.T) Department of India recently conducted surveys at the premises of the British Broadcasting Corporation (BBC) in Delhi and Mumbai. The operation was carried out under the authority of specific sections of the Income Tax Act, 1961. The purpose, its legal background, difference between search and survey, and implications are discussed below.
The Law Powering IT Surveys
The I.T Department carries out surveys at different offices under Section 133A of the Income Tax Act, 1961. This legislation gives authorised officers the power to enter any business, profession, or charitable activity within their jurisdiction for the purpose of information collection. Specifically, this authority is used to uncover any concealed information.
This section was introduced into the Act as an amendment in 1964. It empowers officers to verify books of accounts, other documents, cash, stock, or other valuable articles or things. Moreover, authorities can impound and retain any books of account or other related documents if deemed necessary, provided they record reasons for doing so. In addition, the provisions for impounding or seizing goods came into force with the Finance Act, 2002.
Difference Between Search and Survey Under Income Tax Act
Though commonly used interchangeably, the terms “search” and “survey” bear different meanings and lead to different consequences under the Income Tax Act. Search, which is defined under Section 132 of the Act, is a broader proceeding and tends to have more serious repercussions than a survey.
Search can be executed anywhere within the jurisdiction of the authorised officer, while a survey under Section 133A (1) is limited to specified territories. A survey can only be conducted within locations assigned to the officer, or any place occupied by an individual under his jurisdiction where business activities are ongoing.
Timing also marks a difference between these two actions. Surveys are only performed during normal working hours on business days. On the contrary, a search can take place after sunrise on any day and continue until all procedures have been satisfactorily completed.
The scope of these investigations also varies. A survey typically involves inspecting books of accounts and verifying available cash and inventory. A search, however, is a comprehensive examination of the entire premises with an aim to uncover undisclosed assets. This may even necessitate assistance from the police force.
Lastly, the consequences that follow differ significantly. A full-blown search often results in severe outcomes and the penalties involved are much higher than those imposed after a survey. Therefore, understanding these distinctions is crucial for enterprises and stakeholders.