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'Survey' of Business or Charitable Trust [Section 133A]

  1. Specific survey of business premises or any place, at which the activity of charitable purpose is carried on [Section 133A(1) to (4)]

  2. Survey in connection with any function, etc. [Section 133A(5)]:

  3. Consequences if facilities not provided [Section 133A(6)]:

These survey can be of two types:

  1. Specific survey of business premises or any place, at which the activity of charitable purpose is carried on (see amendment below) [Section 133A(1) to (4)].
  2. Survey in connection with functions, etc. [Section 133A(5)]

Besides the above, another type of survey called door to door survey is also done under section 133B to collect certain information.

(A) Specific survey of business premises or any place, at which the activity of charitable purpose is carried on [Section 133A(1) to (4)]

1. Person Authorised to Survey:

The survey of the business premises or any place, at which the activity of charitable purpose is carried on (see amendment below) can be conducted by any incometax authority.

Income tax authority [Explanation (a) to section 133A]:

"Income-tax authority" means a Commissioner, a Joint Commissioner, a Director, a Joint Director, an Assistant Director or a Deputy Director or an Assessing Officer, or a Tax Recovery Officer, and for the purposes of clause (i) of subsection (1), clause (i) of sub-section (3) and sub-section (5), includes an Inspector of Income-tax.

Action cannot be taken under section 133A(1) without prior approval of Joint Commissioner/Joint Director [Proviso to section 133A]:

No action under section 133A(1) shall be taken by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner, as the case may be.

Restriction on power of Inspector:

The Inspector conducting survey even if so authorized by any such other authority specified under this section cannot exercise all the rights and powers conferred on higher authorities. His power is limited to the inspection of books of account or other documents as may be available at the place visited by him. He is entitled to place identification marks on the books of account or other documents inspected by him and is also entitled to make extracts there from. He, however, has no power to verify cash, stock or other valuables or articles. He neither has a right to issue summons to elicit any further information nor a right to record a statement. It is hence necessary to verify the identity card and the status of the official who has visited the premises. [Kamal & Co. v ACIT (1999) 104 Taxman (Mag) 79]

Material collected during illegal survey by inspector who was not authorized to verify the inventory, can be used by Assessing Officer for making additions. [CIT v Kamal & Co (2009) 308 ITR 129 (Raj)]

It may be clarified that if an inspector visits the premises as an assistant to or a subordinate of a higher authority who has accompanied him, he can certainly perform the verification of stock, cash and valuable articles or things as an assistant of the higher authority.

2. Power to enter any business premises or any place, at which the activity of charitable purpose is carried on for survey [Section 133A(1)]:

Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter—

  1. any place within the limits of the area assigned to him, or

  2. any place occupied by any person in respect of whom he exercises jurisdiction, or

  3. any place in respect of which he is authorised for the purposes of this section by such incometax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place, at which a business or profession or any place

at which the activity of charitable purpose is carried on, whether such place be the principal place or not of such business or profession or charitable activity.

3 Requiring the proprietor, trustee, employee, etc. to afford facility for inspection and checking and furnishing information:

The income-tax authority who has entered the premises, where the business or profession or an activity for charitable purpose is carried on, may require any proprietor, trustee, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession or such activity for charitable purpose—

  1. to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place,

  2. to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and

  3. to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act.

4. Time of entering the business premises, etc. for survey [Section 133A(2)]:

An income-tax authority may enter:

  1. any place of business or profession referred to in section 133A(1) only during the hours at which such place is open for the conduct of business or profession and,

  2. any other place, only after sunrise and before sunset.

The object of survey is not the same as that of search or seizure under section 132 of the Act. This section empowers the income-tax authority to enter only a place at which a business or profession is carried on by the assessee, he cannot enter the residential premises of the assessee or the premises of the lawyer or chartered accountant of the assessee. [Board Circular No. 7-D (LXIII 7) of 1967, dated 3.5.1967]
5. Survey for verifying the compliance of the provisions of TDS/TCS [Section 133A(2A)]

Without prejudice to the provisions of section 133A(1), an income-tax authority may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B (relating to TDS) or Chapter XVII-BB (relating to TCS), as the case may be, enter any office, or a place where business or profession is carried on, within the limits of the area assigned to him, or any such place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated where books of account or documents are kept.

The income-tax authority may for this purpose enter an office, or a place where business or profession is carried on after sunrise and before sunset. Further, such income-tax authority may require the deductor or the collector or any other person who may at the time and place of survey be attending to such work,—

  1. to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and

  2. to furnish such information as he may require in relation to such matter.

Note: The income tax authority conducting survey under this section shall not have any power to check or verify the cash, stock or other valuable article or thing which are found in that premises.

6. Other powers of income-tax authority conducting survey [Section 133A(3)]:

An income-tax authority acting under this section may,—

  1. if he so deems necessary, place marks of identification on the books of account or other documents inspected by him and make or cause to be made extracts or copies therefrom,

  2. impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him:

However, such income-tax authority shall not—

  1. impound any books of account or other documents except after recording his reasons for so doing; or

  2. retain in his custody any such books of account or other documents for a period exceeding 15 days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General therefor, as the case may be,

  3. make an inventory of any cash, stock or other valuable article or thing checked or verified by him,

  4. record the statement of any person which may be useful for, or relevant to, any proceeding under this Act.

Further, a proviso was inserted in section 133A(3) to provide that while acting under section 133A(2A) (relating to survey of compliance of TDS/TCS discussed above), the Income Tax Authority shall not:

  1. impound and retain in his custody any books of account or documents inspected by him or

  2. make an inventory of any cash, stock or other valuables article or thing.

Taxpayers are not required to make a statement admitting or denying any concealment of income during the course of a survey. In this connection one may take note of the following instructions of the CBDT in F. No. 286/2/2003-IT(Inv):

7. No power to remove cash and other valuable things [Section 133A(4)]:

An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing.

(B) Survey in connection with any function, etc. [Section 133A(5)]:

Where, having regard to the nature and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so to do, he may, at any time after such function, ceremony or event, require the assessee by whom such expenditure has been incurred or any person who, in the opinion of the income-tax authority, is likely to possess information as respects the expenditure incurred, to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act and may have the statements of the assessee or any other person recorded and any statement so recorded may thereafter be used in evidence in any proceeding under this Act.

(C) Consequences if facilities not provided [Section 133A(6)]:

If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under section 131(1) for enforcing compliance with the requirement made.

Further, the visiting officer may approach the higher authority with a view to obtaining a proper warrant of authorisation to convert the survey action into a search and seizure action and the higher authority will be justified in issuing warrant of authorisation for a full scale raid action on the basis of first hand details and information given by the survey party.
 

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