FINANCE BILL, 2017 Search, Requisition and Post Search Assessment

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The Tax Publishers FINANCE BILL, 2017 Search, Requisition and Post Search Assessment Dr. Nisha Bhandari The learned author highlights with proper explanation, the effect of the amendments proposed by Finance Bill, 2017, in relation to search and seizure proceedings, consequences and post search assessment. 1. No need to disclose reason to believe while conducting search or making requisition A perusal of Section 132(1) shows that the competent authority is empowered to conduct search only if he has information in its possession and on the basis of such information, it must have reasons to believe that the conditions as stipulated in sub-clauses (a), (b) and (c) of Section 132(1) exist. Power of requisition under Section 132A can also be exercised by the requisitioning officer on basis of information in its possession and on the basis of such information, it must have reasons to believe that the conditions as stipulated in sub-clauses (a), (b) and (c) of Section 132A(1) exist. In order to maintain the confidentiality of the source of the information and the identity of the informer the Finance Bill, 2017 has proposed to insert an Explanation to sub-section (1) and to sub-section (1A) of Section 132 and to sub-section (1) of Section 132A to declare that the reason to believe as recorded by the income-tax authority authorising a search operation or a requisition of books of accounts or assets shall not be disclosed to any person or any authority or the Appellate Tribunal. For being clarificatory in nature these Explanations have been inserted with retrospective effect, i.e., from the date of enactment of the said provisions viz. to sub-section (1) of Section 132 from 1-4-1962 and to sub-section (1A) of Section 132 and to sub-section (1) of Section 132A from 1-10-1975. Though there are some decisions wherein it has already been held that search cannot be held invalid on the ground that reasons to believe not disclosed to assessee. The proposed amendment provide statutory recognition to such decisions so as to avoid any further litigation on the issue. These decisions are SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

FINANCE BILL, 2017

Search, Requisition and Post Search Assessment

Dr. Nisha Bhandari

The learned author highlights with proper explanation, the effect of the amendments proposed by Finance Bill, 2017, in relation to search and seizure proceedings, consequences and post search assessment.

1. No need to disclose reason to believe while conducting search or making requisition

A perusal of Section 132(1) shows that the competent authority is empowered to conduct search only if he has information in its possession and on the basis of such information, it must have reasons to believe that the conditions as stipulated in sub-clauses (a), (b) and (c) of Section 132(1) exist.

Power of requisition under Section 132A can also be exercised by the requisitioning officer on basis of information in its possession and on the basis of such information, it must have reasons to believe that the conditions as stipulated in sub-clauses (a), (b) and (c) of Section 132A(1) exist.

In order to maintain the confidentiality of the source of the information and the identity of the informer the Finance Bill, 2017 has proposed to insert an Explanation to sub-section (1) and to sub-section (1A) of Section 132 and to sub-section (1) of Section 132A to declare that the reason to believe as recorded by the income-tax authority authorising a search operation or a requisition of books of accounts or assets shall not be disclosed to any person or any authority or the Appellate Tribunal.

For being clarificatory in nature these Explanations have been inserted with retrospective effect, i.e., from the date of enactment of the said provisions viz. to sub-section (1) of Section 132 from 1-4-1962 and to sub-section (1A) of Section 132 and to sub-section (1) of Section 132A from 1-10-1975.

Though there are some decisions wherein it has already been held that search cannot be held invalid on the ground that reasons to believe not disclosed to assessee. The proposed amendment provide statutory recognition to such decisions so as to avoid any further litigation on the issue. These decisions are