India's tax system is governed by the Income Tax Act of 1961 which is a crucial piece of legislation. Section 133(6), among its many other provisions is crucial for making sure that tax laws are followed. Any individual or organisation, including banks, may be asked for information by tax authorities under this section. The primary goal is to help tax officers in the course of inquiries or assessments related to tax matters. In this article, we will break down the key aspects of Section 133(6) of Income Tax Act and understand its significance.
What is Section 133(6) of Income Tax Act?
Section 133(6) of the Income Tax Act grants the Income Tax Department the authority to demand information from any individual, firm, company or institution. This includes asking banking companies or even employees of these companies for information. The information is being asked for in specific ways that have to do with tax enquiries or investigations. Account statements, financial information and other documents that help make sure tax returns are correct can be sent in response to the request.
This section is especially helpful when the Income Tax Department suspects discrepancies in the reported income or when it needs to gather more data for assessing the correct tax liability of a taxpayer.
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Who Can Be Asked to Provide Information?
Any person, including banking organisations, is covered by the broad scope of the section. This section makes sure that the tax authorities can get all the information they need to properly calculate taxes when they need it. If the tax authorities want to know about a taxpayer's money matters they can ask for information from
Individuals: Any person who is being assessed for tax can be asked to provide information.
Corporates or Firms: Business entities or companies are also subject to these requests.
Banks and Financial Institutions: Banks can be asked to furnish details about accounts, transactions and other financial activities.
Other Officers: Officers from these institutions or businesses can also be required to provide information.
Types of Information That Can Be Requested
Under Section 133(6), the tax authorities can request various types of information. The request for information must be specific to the point of inquiry. This means that the tax authorities cannot ask for irrelevant information. It must be related to the assessment or investigation process.
Statements of Accounts: These include balance sheets, profit and loss statements and other financial reports.
Details of Transactions: The authorities can ask for specific transaction details to understand the financial activities of the taxpayer.
Documents Related to Tax Filings: If there is a discrepancy or suspicion regarding a tax return the tax officer may ask for supporting documents to verify the claim.
Authorities Empowered to Issue Requests
The power to issue requests under Section 133(6) is not limited to just one type of officer. Additionally, after amendments, the Director-General, Chief Commissioner, and other senior tax officers are also authorized to use these powers when needed. Several authorities can ask for information, including:
Assessing Officer (AO): This is the officer who is responsible for conducting tax assessments. The AO can issue notices to taxpayers or related entities for information.
Deputy Commissioner (Appeals): If a taxpayer is appealing against an assessment, the Deputy Commissioner can request further details to support the appeal.
Joint Commissioner: These officials have a broader jurisdiction and can also issue such notices for information gathering.
Commissioner (Appeals): This higher official can use the powers of Section 133(6) in appeals related to tax assessments.
Conditions on Using This Power
While Section 133(6) gives broad powers to tax authorities, there are some conditions that ensures that the powers are used responsibly and for genuine tax-related purposes
Approval Requirement: If no tax proceeding is currently in place, the power to request information cannot be exercised by officials below the rank of a Director or Commissioner without prior approval. This ensures that the power is not used arbitrarily.
Scope of Inquiry: The request for information must be relevant to the inquiry or proceeding. It cannot be used for fishing expeditions where there is no clear connection to a tax investigation or assessment.
Amendments to Section 133(6) of Income Tax Act
The Income Tax Act, 1961, has undergone several amendments over the years. One of the key amendments to Section 133(6) occurred in 1988. The term "Income-tax Officer" was replaced by "Assessing Officer." Similarly, the term "Appellate Assistant Commissioner" was replaced by "Deputy Commissioner (Appeals)." These changes were made to streamline the language of the Act and ensure that the powers were being exercised by the correct officials.
Another significant amendment was made in 1995. This amendment stated that in cases where no proceeding is pending, lower-ranking officers like the Deputy Commissioner cannot use the powers of Section 133(6) without prior approval from a higher authority. This prevents misuse of these powers.
Importance of Section 133(6) of Income Tax Act
The sixth paragraph of Section 133 is very important for the tax system to work right. It makes sure that the Income Tax Department has access to all the data it needs to check tax returns for accuracy and look into any possible tax evasion. The section helps make sure that taxpayers' financial dealings are open and accountable.
It would be hard for the government to find out where money comes from, check tax returns or look into problems without this provision. It aids in ensuring that tax payers pay their fair share of taxes.
Summary
The Income Tax Act's Section 133(6) is a useful tool for tax authorities to get the data they need for tax assessments and enquiries. By letting tax officers ask different groups of people, like banks, businesses and individuals, for information this section helps make sure that the tax system is correct and fair. Tax evasion is less likely to occur when there is transparency. It gives the government a lot of power but it also has protections against abuse. The amendments to this section over the years have only strengthened its effectiveness and relevance in the modern tax system. This section is an important aspect of ensuring that the tax laws are followed correctly and that everyone contributes fairly to the country's development.
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Section 133(6) of Income Tax Act: FAQs
Q1. What is Section 133(6) of Income Tax Act?
Section 133(6) gives power to tax officials to seek information from people, companies, and banks for purposes of taxation assessments and investigations.
Q2. Who can be asked to supply information under Section 133(6)?
Any individual, be it individuals, banks, firms, or enterprises, can be asked to furnish information regarding tax issues.
Q3. What kind of information can be requested?
Tax authorities may make a demand of statements of accounts, details of transactions, and documents pertaining to tax returns in order to confirm tax returns.
Q4. Who can issue notices under Section 133(6) of Income Tax Act?
The Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, Commissioner (Appeals), and senior tax officers can issue notices.
Q5. Are there any conditions on exercising the powers under Section 133(6)?
Yes lower-ranked officers can only exercise these powers subject to previous approval if no tax proceeding is pending.
Q6. Why is Section 133(6) of Income Tax Act significant?
It assists the Income Tax Department in ensuring the correctness of tax returns, checking compliance and deterring tax evasion.
