PART-I SERACH & SEIZURE, SURVEY AND SUMMONS 1.

Can survey of a place other than the business place be done beyond the normal business hours u/s 133A? Please explain. Penalty for failure to comply with the provision of s 269SS (taking loan)Yes, but only after sunrise and before sunset, provided the person carrying on the business states that any of his books of account or other documents or any part of his cash or stock or other valuable articles or thing, related to his business or profession are or is kept in that place. 2. Can books of account be impounded u/s 133A? Please elaborate Ans. Yes. Books can be impounded u/s 133A after recording reasons for doing so. The impounded books of account can be retained for a period not exceeding 10 days (exclusive of holidays). Thereafter, retention can be done only with the prior approval of CCIT/DGIT, as the case may be. 3. Who can issue authorization under section 133A? Ans. The authorisation u/s133A can be issued by any of these authorities viz., Commissioner, Addl. Commissioner, a Joint Commissioner, a Director, a Addl/Joint Director, a Deputy/Assistant Director, an Assessing Officer or a Tax Recovery Officer. 4. Can survey be done when assessment is not pending? Please explain. Ans. Yes. Power of survey u/s 133A can be exercised at any stage irrespective of whether any proceeding is pending or not. The power can be exercised even in respect of proceeding which may be commenced after conduct of the survey operations. 5. Discuss the power of Assessing Officer U/s 131 of the IT Act? How the power enjoyed by the Assessing Officer in distinguished from that of on Assistant Director (Inv.)? Ans. The powers of an Assessing Officer u/s 131(1) are as under; i) discovery and inspection ii) enforcing the attendance of any person, including any officer of a banking company and examine him on oath ii) compelling the production of books of account and other documents iii) issuing commissions. The power of issuing of summons u/s 131(1) of the IT Act by an Assessing Officer can only be exercised only when a proceedings is pending before him in relation to an assessee. Contrary to this, an Assistant Director (Investigation)
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enjoys power to issue summons u/s 131(1A) of the IT Act, even if there is no proceeding is pending before him in relation to an assessee. 6. What are the limitations imposed on an assessing office or Assistant Director or Deputy Director vis--vis invoking powers to impound of retain books of account or other documents u/s 131 of the I.T Act? Ans. No books of account or any other documents cannot be impounded without recording the reasons for doing so and cannot retain in his custody any such books or a documents for a period exceeding 15 days (excluding holidays)without obtaining the approval of the CCIT/DGIT/CIT/DIT, as the case may be.

7. Discuss the circumstances in which the IT Authority may have reason to believe to issue warrant of Authorization. Following are the circumstances in which the Warrant of Authorization u/s 132 of the IT Act can be issued 132(1)(a)- A person to whom a summon u/s 131(1) or a notice u/s 142(1) has been served to produce books of accounts or other documents has failed or omitted to produce or cause to be produced the said books of accounts or other documents, or, 132(1)(b)- A person to whom a summon u/s 131(1) or a notice u/s 142(1) has been or might be issued is not likely to produce or caused to be produced any books of account or other document which will be useful for or relevant to any proceedings under the Act; or 132(1) (c)- A person is in possession of money, bullion, jewellery or other valuable article or thing and such property represents wholly or partly income or property which has not been disclosed or would not be disclosed.

8. Discuss the powers of an Authorized Officer u/s 132 of the IT Act. The powers of the Authorized Officer u/s 132 are as under; a) Power to enter & Search b) Power to break open c) Power to search any person d) Power of access to books of account/other documents e) Power to seize d) Power to place marks of identification f) Power to make a note or an inventory

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9. During a search proceedings, an assessee found to have collection of rare paintings of an eminent painter and investment in paintings is undisclosed. Please discuss the provision of power to seize u/s 132 of the I.T Act. Ans. Under given facts and circumstances, the Authorised Officer can invoke the power u/s second proviso to section 132(1) i.e., deemed seizure as it is practicable to remove it to a safer place owing due to its physical characteristics. 10. What are the items that can be seized u/s 132 (1) & 132 (3 ) of the I T Act? Ans. Seizure made u/s 132(1) of the IT Act is also known as deemed seizure. An Authorised Officer can seize any valuable articles or things by means serving an order on the person who is in immediate possession or control. Section 132(3) of the IT Act empower the Authorised Officer to impose Prohibitory Order on any such books of account, other documents, money, bullion, jewellery, other valuable article or thing directing the person who is oin immediate possession or control not to remove, part with or otherwise deal with it except the previous permission of such officer. This is provision, in a way entails for seizure for a limited period of 60 days only. 11. During a search proceedings, two person A & B were found inside the premises Person A was found in possession of certain documents and his statement was recorded. Meanwhile, the statement of person B was also recorded even though nothing was found from his possession or control. In light of the above facts & circumstances, please discuss the provisions of S 132(4) of the IT Act. Ans. In this case, the statement of person A can be used as an evidence in any proceeding under the IT Act as certain documents were found in his possession. However, the statement of the person B cannot be used as evidence in any proceeding under the IT Act as no documents/books are found from his possession or control. However, any be used if it is relevant to any proceeding under the IT Act. 12. A TEP against a builder received by a DDIT (Inv) alleging huge on money received in cash against sale of flats, which is not accounted for in the books of account. It is also alleged that one of the close confidant B keeps all the books documents related to unaccounted money On-Money received. The scheme of construction of flats is launched at Plot No. 007, Dharampeth, Nagpur. In light of the above facts and circumstance, please explain a) What are the premises that are required to be covered under Search & Survey?

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b)

What are the provisions of I.T act which could be invoked during the presearch enquiries? Which condition of the S. 132(1) is fulfilled to get the warrant of Authorization?

c)

Ans. a) Residential premises of the builder as well as the close confidant are required to covered under the search. Construction site may be covered under the Survey. b) Provisions of section 131(1A) of the Act could be invoked. c) Pre-condition specified u/s 132(1) (c) which states that a person is in possession of money, bullion, jewellery or other valuable article or thing and such property represents wholly or partly income or property which has not been disclosed or would not be disclosed, is satisfied.

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PENALTY & PROSECUTION 13. An Assessing officer issue and serve notice on 29.07.2010, 14.07.2010 & 03.09.2010 U/s 142(1) of the IT Act to furnish certain details to a taxpayer. There is no compliance to the said notice. Discuss the nature of Penalty imposable alongwith the relevant provision and the quantum of penalty leviable in the instant case. Ans. in the instant case total penalty of Rs 30,000/- (i.e, Rs.10,000/- for each default) can be imposed u/s 271 (1)(b) of the I.T Act 14. List out the penal provisions of the I.T Act which empowers only Joint/Additional Commissioner of Income-tax to levy penalty. Also, instances where prior approval of the JCIT is required to levy penalty by the ITO ACIT/DCIT? Ans. Section Nature of Violation 271BB Failure to subscribe to the eligible issue of capital 271C Penalty for failure to deduct tax at source 271CA Penalty for failure to collect tax at source 271D Penalty for failure to comply with the provision of s 269SS (acceptance of loan/deposit) 271E Penalty for failure to comply with the provision of s 269T (Repayment of loan or deposit)

15. Discuss the provision of S. 271 (1)(C) of the I.T. act alongwith the quantum of Penalty leviable with examples. Penalty u/s 271(1) is leviable in such cases where the Assessing Officer is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. The quantum of penalty ranges from the 100% to 300% of the amount sought to be evaded. 16. An assessee in whose case search u/s 132 of the IT Act was carried out on 18.01.2009 had admitted undisclosed income of Rs. 10 crore in his statement recorded u/s 132(4) of the IT act. The assessee disclosed the following: unaccounted purchase & sale of diamonds resulted in profit of Rs. 10 crores. Also paid tax together with interest. In light of the above fact discuss the applicability of penalty u/s 271AAA. Ans. in the instant case, mo penalty u/s271AAA of the I. T Act is leviable as the assessee admitted the undisclosed income and specified the n=manner in which

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such income was derived, substantiates the manner in which the undisclosed income was derived and paid tax on the undisclosed income. 17. Given below are the nature of penalty along-with the relevant section and quantum. Please match the following Section 1 2 I II 271B 271BA A B Nature of Default Failure of deduct tax at source Failure to answer questions, sign statement, reply to summons issued, etc Failure to keep , maintain or retain books, documents, etc. Failure to furnish report u/s 92E Failure to get accounts audited Failure to furnish return of Income a b Quantum of Penalty Rs. 25,000/Rs.10000/- for each such default or failure Rs. 100,000/-

III

271C

4 5 6

IV V VI

271F 271A 272A

D E F

d e f

Rs. 5000/RS.100,000/Equal to amount failed to deducted or pay

Ans: Sl. No 1 2 3 4 5 6 18. Section I II III IV V VI Nature of Default E D A F C B Quantum Penalty c e f d a b of

Given below are the circumstances in which the prosecution can be launched along-with the relevant section and quantum of punishment. Please match the following Section I S. 275 A A Nature of Offence Contravention of order i made second proviso to u/s 132(1) or 132(3) Failure to comply with ii provisions of 132 (i) (iib) Failure to furnish return of iii Quantum of Punishment Rigorous imprisonment & fine Rigorous imprisonment for 2 yrs & fine Imprisonment of five
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Sl.No 1

2 3

II

S.275 B

B C

III S.276

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CCC IV S. 277A V S. 278

D E

Income in Search cases Falsification of books of iv account or documents Abetment of false return v

months to 3 yrs & fine Imprisonment of five months to 3 yrs & fine Imprisonment of 6 months to 7 yrs & fine

Ans. same combination 19. Discuss the concept & meaning of means rea in connection with application of penal and prosecution provisions of the IT act, 1961. mens rea means a mental state, in which a person deliberately violates a law. Thus mens rea means intention to do the prohibited act A penalty provision in a taxing Act may not be equated to a criminal statute requiring impliedly the element of mens rea and unless there is something in the language of the Act indicating the need to establish mens rea, it is generally sufficient to prove that a default in complying with the provisions of the Act for which the penalty is provided has occurred. The class of acts which are not criminal in any real sense, but are acts which in the public interest are prohibited under a penalty, and instances of which are found under the Revenue statute or Taxing statutes, is one of the classes where the legislature normally enacts absolute prohibition. Such offences in respect of which mens rea is not required to be established, are usually of a comparatively minor character and sentences prescribed for them are not of a severe type. Thus penalty imposable under an Act for the breach of civil obligation, such as payment of taxes, does not attract the rule that mens rea must be established before a penalty could be imposed, and as such, a penalty can be imposed even without there being any proof of mens rea

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TAX AND INTEREST 20. Mr. Yadav is a Proprietor of TR Enterprise and paid following taxes for F.Y. 2010-11.

i)

ii) iii)

12.09.2010 Rs. 100000/13.12.2010 Rs. 200000/15.03.2011 Rs. 300000/Received Commission of Rs. 90,000/- against Rs. 100000/- from GK Enterprises Paid tax of Rs. 51,000/- on 15.06.2011, before filing his return of income.

From the above, please identify forms of tax paid by under the head advance tax, TDS and Self Assessment tax alongwith the relevant provision governing the payment of above taxes paid by the assessee.

Ans. tax of Rs,100000/-, 200000/- and 300000/- is paid in the form of advance tax. Rs. 10,000/- is related to TDS (i.e., difference between Rs. 100,000/- and 90,000/-) Rs. 51,000/- represents the Self Assessment Tax. 21. Mr. X is proprietor of K M Enterprises , whose turn-over is more than 75 lakh and filed his return of income for A.Y. 2010-11 (F.Y. 2009-10) on 31.12.2010) against the due date of 30.09.2010 with taxable income of Rs. 500000/- without paying any advance tax and any claim of TDS on the income received. The tax liability on the taxable income in Rs. 55620/- which included Rs. 8725/- paid as interest. The composition is the interest paid is Rs. 1668, Rs. 2053 & Rs. 5004/(Total Rs. 8725/-). Identify the appropriate interest liability determined and payable u/s 234A, 234B & 234C. Ans. 234 A Interest- Rs.1668/234B Interest- Rs. 5004/234C- Interest Rs. 2053/-

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APPEALS 22. Explain the instances in which the appeal before the Commissioner (Appeals) can be made? Ans. An aggrieved assessee can file his appeal before the CIT(A) on following occasions; a) Intimation received u/s 143(1) b) Order passed u/s 143(3)- Assessment Order c) Order passed u/s 144- Best Judgment Order d) Order u/s 147- Order passed upon re-opening of a case e) Order u/s 153A- Search f) Order u/s 154 ot 155 Rectification order g) Order u/s 201- Penalty for not deducting or to pay TDS h) Order imposing the penalty- 271(1)(b),271 (1), etc. There are various other orders which can be appealable before CIT (A). For the sake of brevity same are not given here.

23.

What is the time limit for filing appeal before various appellate authorities? Authority Time limit CIT(A) Within 30 days of service of notice of demand ITAT Within 60 days of communication of the order passed by CIT(A) HC Within 120 days of receipt of order of the ITAT SC Within 90 days from the date of order of HC

24.

Explain the jurisdiction of the various Appellate authorities under the Income-tax Act. Also explain the nature of appeal that can be filed before them? Appellate Authority CIT(A) ITAT HC SC Jurisdiction Nature of Appeal

Territorial or Administrative CIT Question of Facts as well as Charge-wise Law Territorial Question of Facts as well as Law Territorial i.e, State Question of Law All India Question of Law

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