The purpose and object of survey proceedings
just like search and seizure proceedings is to detect all evasion of tax.
A surprise check on the affairs of a tax-payer is a legitimate weapon of
the State to detect and to prevent tax evasion. The main purpose and object
of these special provisions is to unearth the hidden or undisclosed income
or property and to bring it to tax. In case of search proceedings, unlike
survey proceedings it is not just to get information of undisclosed income,
but also to seize the money, bullion etc. representing the undisclosed income
and to retain them for the purpose of proper realisation of taxes, penalties
etc. Compared to search proceedings survey proceedings have a limited objective
of getting information relevant to assessable income of a person.Though
the object and purpose to certain extent of identifying the evasion of tax
is common for both search and survey proceedings, from all standards, survey
proceedings are much milder and minor proceedings compared to the drastic
provisions of search and seizure. It may not be necessary or desirable in
every case to take the drastic action of invading the privacy of the citizen
and to search his residential premises in exercise of powers under section
132. It may also not be desirable in every case to seize the documents or
the assets, which a citizen may be willing to produce or disclose. Organising
a major search and seizure involves high cost and elaborate preparation
etc. As such, as against taking a drastic step of search and seizure to
detect evasion of tax, one more usual remedy with the same purpose, is to
provide the Officer with an authorisation to conduct survey action. In many
cases, search and seizure operations may not be a suitable answer to all
kinds of cases of tax evasion. For example, a person liable to pay taxes,
may not be filing his return of income or wealth at all. This may not be
so much with the intention to conceal any income or wealth but due to negligence,
or for want of proper knowledge and advice. Therefore, unlike search, survey
may have also the object of detecting new cases. Another important object
of survey is to verify as to whether or not the books of account are maintained
by the tax-payers in the ordinary course of business and whether or not,
all the transactions are regularly recorded. With a view to achieving these
objects, which are not normally the objects of search the power of survey
is given to the Lower Authority of the Income-tax. However, as it has also
certain serious consequences the power to survey can be exercised only on
authorisation.To augment the activity of survey throughout the country,
administrative machinery has also been strengthened. The department has
created separate survey units. Separate posts of Directors, Deputy Directors
and Assistant Directors exclusively in charge of survey have been created.
A large contingent of officers, inspectors and staff has been placed under
their charge with full time responsibility of conducting the survey operations.
Section 133A which was inserted by the Finance Act, 1964 with effect from
1-4-1964 for the first time brought in statutory powers authorising survey
actions. The power and procedure for survey action under the said provisions
was recast and many new facets were brought into the provisions by Taxation
Laws 1975 w.e.f. 1-10-1975.
- The Amending Act enlarged the power and scope of the survey available
to the income-tax authorities and made following changes:
- The powers of survey were made available to more officers including
the Inspecting Assistant Commissioner, the Assistant Director of
Inspection etc. Originally the powers were limited to the inspection
of books of account and other documents available at the place of
business or profession of the assessee, placing of marks of identification
thereon and taking of extracts therefrom.
- The new provisions empowered the officer to check or verify the
cash, stocks or other valuables found in the business premises.
It also empowered them to require the proprietor, employee etc.
to furnish information which may be useful or relevant to the proceedings
under the Income-tax Act.
- The amended provisions also empower the Income-tax Officer to
collect information and record statements of the persons concerned
at any time after any function, ceremony or event even before the
stage of assessment proceedings for the assessment year for which
information may be relevant, if they were of the opinion that having
regard to the nature, scale or extent or expenditure incurred, it
was necessary to do so. The object of this provision was to help
in collecting evidence about ostentatious expenditure immediately
after the event, to be used at the time of assessment.
It may be noted that in certain aspects of search and survey proceedings
differ. They differ in certain vital aspects. Search can be at the residence
or any place belonging to the assessee. As against that survey action can
be taken only in respect of the business premises or at a premises where
books of account of the assessee are kept. As such, a residential premises
cannot be searched. Again survey action has to start during the office hours.
As against that, search action has no such limitation of time. The powers
of survey authorities as compared to search are limited which are contained
in S. 133A; i.e., to inspect the books of account and other documents, to
place marks of identification on the books of account and other documents
and to make extracts or copies therefrom of the copy of the account and
to collect information from the assessee or any other person for expenditure
incurred in connection with any function, ceremony or event and record the
statement of the assessee or any other person. An Inspector cannot exercise
his powers to check and verify cash, stock etc. to obtain information or
record statements, except as falling under S. 133A. This power can be exercised
only by higher authorities which are higher than the Inspector. The powers
of these higher authorities would include the following:
- To inspect books of account and other documents.
- To check or verify the cash, stock or other valuable article or things.
- To call upon the proprietor, employee or other person to furnish
information to any matter which maybe useful for or relevant to any
proceedings under the Income-tax Act.
- To place marks of identification on the books of account or other
documents inspected by them.
- To make inventory of any cash, stock or other valuable article or
thing checked or verified by him.
- To record the statement of any person which may be useful for or
relevant to any proceedings under this Act.
It may also be noted that unlike in search action, books of account etc.
cannot be seized or removed in the course of survey action. It must also
be noted that unlike in case of search, premises cannot be sealed, in survey
action. Unlike search action, one cannot break open the lock and enter the
premises in survey.In survey action, the proprietor or employee or any other
person attending to the business is under statutory obligation to attend
any proceedings of survey during the course of survey. The Income-tax authority
may require any proprietor, employer or any other person who is carrying
on the business or profession to be present at the time or place of the
survey and to afford the necessary facilities to inspect such books of account
or other documents as they may require and which may be available at such
place and to afford the necessary facilities to check and verify the stock,
cash or other valuable article or thing and to furnish such information
as he may require on any matter which may be useful or relevant to any proceedings
under the Act.If a person has failed to afford the facility and to furnish
the information under the said provisions of S. 133A(b) of the Act, the
authority is empowered to invoke the provisions of S. 131(1) to enforce
the compliance with the requirement. Such power can be enforced only if
the assessee fails to comply with the requirements and not for any other
purpose.Normally, the question arises as to whether in case the Income-tax
Authority comes into possession of information in the course of the survey
and forms a belief that there is concealed income, whether the survey action
can be converted into search action?Such conversion is possible provided
the conditions required for initiating search proceedings conducted u/s
132 are satisfied.As against the provisions of S. 133A which deal with a
specific survey of a specific premises with the object of collecting information
pertaining to a specific assessee, section 133B of the Act provides for
a general area-wise survey solely for the collection of information and
for that purpose the Income-tax authorities may for that purpose collect
any information which is useful for the relevant year and for the purposes
of this Act, enter into any building or place within the limit of the area
assigned to such authority or any building or place occupied by any person
in respect of whom he exercises jurisdiction at which a business or profession
is carried on, whether such place be the principal place or not of such
business or profession, and require any proprietor, employee or any other
person who may be at that time and place be attending in any manner to,
or helping in, the carrying on of such business or profession to furnish
the type of which can be collected in case of just a general survey which
has been standardised and will be furnished in Form 45D prescribed under
Rule 112E. This form is relevant only in case of persons who are carrying
on business or profession and the place where such business/profession is
carried on.As we have seen the object of empowering the Income-tax Authority
with such power of survey is as seen above, primarily to check tax evasion
and for this purpose to collect evidence on the spot at the place of the
business to ascertain whether the assessee has concealed income. The object
is really well meant. However, it may be seen that unlike search, no specific
limitation and checks and directions are provided for conducting survey
action. Because of absence of these guidelines and direction there is every
possibility of misuse of these powers for other purposes. |
