Tax Inspector Raj could become reality
There are proposed changes in the procedural rules involving search and seizure operations by income tax (I-T) authorities. According to the Finance Bill 2017, the government proposes to amend the I-T Act to give more powers to the assessing officer in cases of search and seizures.
The tax officer is not required to give any reason to the taxpayer or the appellate authorities for which the search was undertaken.
This will just increase litigation and harassment of businessmen in India. Now it will be the call of a junior official to decide whether the shares bought and sold between two unlisted entities are overvalued or not. The inspector raj is back in India.
To make things worse for businesses, there is a proposal to extend the scope of search and seizures operations beyond business establishment to charitable institutions.
Earlier, the power to call for search and seizures was with a principal commissioner. What the Finance Bill, 2017 has done is to delegate this power to the assessing officer, who is three to four levels down the hierarchy. Also, if disputed assets worth ~50 lakh are found in a search, the tax authorities could now open up for assessments going back 10 years. This was earlier restricted to six previous years.
Another proposed amendment in the I-T Act allows the assessing officer to provisionally attach any property belonging to the assesse for six months, albeit with prior approval of senior officers. The tax authorities can now avail the services of a valuation officer to determine the fair market value of a property or shares
The amendments effectively provide the tax authorities with sweeping powers to provisionally attach, and thereby debar a taxpayer from disposing off any investment or immovable property that he owns.
Both tax experts and tax payers are wary of the additional powers to the assessing officer. “Sweeping powers have been given to the assessing officer. This needs to be balanced.
Tax lawyers point out that the powers of tax officers in search and seizure cases are generally highly discretionary.
Tax lawyers say there have been legal dispute over the issue whether the tax payer and the appellate authorities have the right to call for the reasons why a search was undertaken. Judicial rulings have held that any “reason to believe or reason to suspect” needs to be shared with the taxpayer and appellate authorities. However based on such disclosure of reasons, in many dispute cases taxpayers have contested that the search itself was void. “If a search is termed void, the outcome of the search also does not stand in the court of the law,” noted a legal expert.
The Finance Bill 2017 seeks to address the challenge that the taxpayers mount with regards to the “reason to believe or the reason to suspect” and mandates with retrospective effect that authorities cannot be made to disclose to any person, or any authority such reasons.
India Inc leaders said they would appeal to the government to take back these proposals which would damage the investment climate.
Tax experts note that these are fairly extensive powers and have the potential of being abused more
The tax officer is not required to give any reason to the taxpayer or the appellate authorities for which the search was undertaken.
This will just increase litigation and harassment of businessmen in India. Now it will be the call of a junior official to decide whether the shares bought and sold between two unlisted entities are overvalued or not. The inspector raj is back in India.
To make things worse for businesses, there is a proposal to extend the scope of search and seizures operations beyond business establishment to charitable institutions.
Earlier, the power to call for search and seizures was with a principal commissioner. What the Finance Bill, 2017 has done is to delegate this power to the assessing officer, who is three to four levels down the hierarchy. Also, if disputed assets worth ~50 lakh are found in a search, the tax authorities could now open up for assessments going back 10 years. This was earlier restricted to six previous years.
Another proposed amendment in the I-T Act allows the assessing officer to provisionally attach any property belonging to the assesse for six months, albeit with prior approval of senior officers. The tax authorities can now avail the services of a valuation officer to determine the fair market value of a property or shares
The amendments effectively provide the tax authorities with sweeping powers to provisionally attach, and thereby debar a taxpayer from disposing off any investment or immovable property that he owns.
Both tax experts and tax payers are wary of the additional powers to the assessing officer. “Sweeping powers have been given to the assessing officer. This needs to be balanced.
Tax lawyers point out that the powers of tax officers in search and seizure cases are generally highly discretionary.
Tax lawyers say there have been legal dispute over the issue whether the tax payer and the appellate authorities have the right to call for the reasons why a search was undertaken. Judicial rulings have held that any “reason to believe or reason to suspect” needs to be shared with the taxpayer and appellate authorities. However based on such disclosure of reasons, in many dispute cases taxpayers have contested that the search itself was void. “If a search is termed void, the outcome of the search also does not stand in the court of the law,” noted a legal expert.
The Finance Bill 2017 seeks to address the challenge that the taxpayers mount with regards to the “reason to believe or the reason to suspect” and mandates with retrospective effect that authorities cannot be made to disclose to any person, or any authority such reasons.
India Inc leaders said they would appeal to the government to take back these proposals which would damage the investment climate.
Tax experts note that these are fairly extensive powers and have the potential of being abused more
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blockquote, div.yahoo_quoted { margin-left: 0 !important; border-left:1px #715FFA solid !important; padding-left:1ex !important; background-color:white !important; } Like you said, it's a proposal you have perceived. Not a rule or law, so stop playing with words and spreading rumours Sent from Yahoo Mail for iPad On Sunday, February 5, 2017, 2:04 PM, Azam Yusuf wrote: more
Feb 07
Most of the raids conducted by the Income Tax Department are failed exercise.The final outcome of the raids are pathetic in terms of revenue collection and direct-indirect costs incurred by the Income tax department.The situation is out of control and have done no good to the Department. Simultaneously, the IT raids are nothing but a life long harassment for the taxpayer raided. Most of the people involved right from the raid party, till assessment/appeal of the case are virtual extortionists.They do all good for themselves,but not the Revenue Department usually. The very concept of I.T.Raids in itself is wrong.The raiding officer is always in the dock.The ultimate results are considered by the political bosses. Therefore, they allow to provide certain stringent laws in the statute book,but without going into the reality of actual implementation in the field and the harassment inflicted upon the general taxpayers by the every day increasing harsh tax provisions. I am of the view that the tax provisions much softer than present day going provisions, can do much better in tax compliance and tax collection. Government has to believe the tax payers and also dis-believe their revenue officers and field staff by putting equal responsibility of making people tax-compliant in a professional and judicious manner. The new provisions will further erode the tax payers faith in the system and increase the non-tax compliant society at large. more
Feb 06
Inspector RAJ is not correct. PM Mr. Modi is also against it as once I have heard him saying about this. I think it should not have anything to do with day to day affairs of the Business or businessmen. This section may apply to those who are under investigations and not responding and fulfilling the requirements of the concerned department. PM's intentions and Government's intentions, I think, is not to harass the businessmen and they probably wants transparency in dealings. more
Feb 06
There are two sides to this discussion and both have their pros and cons. On the one side, the percentage of taxpayers needs to be increased significantly to enable higher growth in the country; a large number of countries have more than 50% of the people under the tax net. On the other side, the honest taxpayer (less than 2% of the population in our country) is genuinely concerned about unwarranted harassment by the IT department. A solution for the finance minister could have been to not give sweeping search powers to very junior officers in case of existing tax payers who can be searched only after due diligence and with the approval of very senior IT officials. more
Feb 06
The Legal Experts and Tax Exerts, and above all unscrupulous businessman are bound to find it harsh. Poor IT collection even offer booming economy and overall prosperity of business community, have necessitated such harsh laws. Yes, some corrupt ITOs may misuse it to amass wealth at the risk of getting caught by STATE. Some Bank Officers have recently found this in a hard way. These harsh laws will probably install fear in the mind and heart of some businessman at least and our tax collection will rise. Unless there is general rise in the level of honest working by we Indians, such laws must be appreciated by all. more
Feb 06
