Surveys for Checking Ostentatious Expenditure

This type of survey is undertaken for the specific purpose of making enquiries about ostentatious expenditure on occasions such as marriages, festivals, social gatherings, inaugurations, and events like launching of a new product, service, etc.

 

Occasions like marriages provide an excellent opportunity to display wealth and enhance social status. Such functions are getting increasingly opulent. The ceremonies and functions go on for a number of days. These are often held in five star hotels, farm houses, banquet halls, etc. Guests are invited from far and wide, and are made to stay in five star hotels, guest houses, etc. The choicest of food is served at the marriage functions. Exotic fruits are imported from other countries.

Use of helicopters and elephants is also sometimes resorted to. Using elaborate props for the reception of the bride and the bridegroom is the order of the day. The expenditure on clothes and jewellery is anybody’s guess. Expensive gifts are also showered on the guests. The honeymoon is often to a foreign destination. In such a social set up where the rich and powerful are vying with each other to splurge, black money finds an easy outlet. This is the time for the tax- man to come to the scene to quantify the expenditure and enquire about its source. There is a provision that stipulates a survey to be carried out in such a situation. There is a safeguard in the provision for ensuring that the social sanctity of the occasion is not compromised. The income tax authorities are, therefore, permitted to make open enquiries about the expenditure incurred only after the function is over.


The functions, ceremonies and events which are generally covered by this type of survey are marriages, inaugural functions of businesses, new year eve parties, film premiers, functions for launching of new products, parties for celebrating festivals, etc. In this type of survey, income tax authorities are empowered to record statements of the persons concerned or other persons with regard to the expenditure incurred. For example, if it is a marriage function, the statements of the parents of the bride and the bridegroom may be recorded. Information may simultaneously be collected from the concerned hotels, party plots, banquet halls, guest houses, pandal wallas, caterers, decorators, photographers, sweet shops, musical parties, DJs, invitation card printers, jewellers, boutiques, etc. The information collected may be matched with what is stated by the bride and bridegroom’s family to arrive at a fair estimate of the quantum of expenditure. The source of funds for expenditure may also be enquired into. Lists of cash gifts may also be obtained so that the amount of cash gifts actually received comes on record.


The results of the survey are later utilized in framing assessments of the concerned persons. This type of survey helps in collecting contemporaneous evidence of expenditure incurred and in ensuring that tax is duly paid on the income relating to the expenditure. Such surveys are also expected to have a salutary effect on curbing wasteful expenditure.
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
“Penalties” Under Income Tax Act. 1956
How is a Search Operation Conducted by Income Tax Department ?
Surveys for Checking Ostentatious Expenditure
Surveys for Enforcing Compliance with Provisions of TDS
“Summon” U/s 131 of Income Tax Act.
Investigation by Income Tax Department:
Appellate Authorities of Income Tax Department
Power to Call for Information U/s Sec. 133(6) of Income Tax Act.
Specific Surveys U/s 133A(1) of Income Tax Act.
Types Of Income Subject To TDS [Deduction Of Tax At Source]
Pre-Requisite For Claiming Income Tax Refund
Benefits of Filing Income Tax Returnsn
Section-139(9): Defective Tax Return
 
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