PROCEDURAL PROVISIONS RELATING TO TDS AND FILING OF TDS STATEMENTS UNDER INCOME TAX ACT 1961

T.D.S means the Tax deducted at source. Whenever a person liable to deduct tax of another person under Income Tax Act, deducts tax, the credit of such tax is given to the deductee when his liability to pay income tax is calculated. Such credit is given on the basis of the information given by the deductor to the Income Tax Department by way of filing his T.D.S statements, wherein the full detail about the tax deducted, the PAN No of deductee etc are given, so that the right credit of T.D.S can be given to the deductee.

Rule 37BA(1) provides that credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chepter XVII, shall be given to the person to whom payment has been made or credit has been given (i.e.Deductee), on the basis of information relating to deduction of tax furnished by the deductor to the income tax authority or the person authorized by such authority.

The above underlined words as used in rule 37BA(1) shows that the credit for T.D.S will be given by the Income Tax Department to the deductee on the basis of the information received from Deductor regarding Tax Deducted by him. Hence the correct filing of statement of T.D.S by the Deductor becomes very important.

Some procedural aspects relating to T.D.S and T.D.S statements filing are discussed herebelow:

Time period for depositing Tax deducted: The Tax deducted at source needs to be deposited within the time frame as follows:

Section	Person	Time limit of deposit
(1)Sum deducted u/s 193, 194A, 194C, 194D, 194E, 194G, 194H, 194-I, 194J, 195, 196A to 196D	(A)   Tax Deducted by or on behalf of the Government       (B)   Tax deducted by or behalf of any other person   (i)if the amount is credited to the  account of the payee as on the date upto which the account of such  persons are made         (ii) in any other case	Same Day of Deduction Within 2 months of the expiration of the month in which that date falls(by 30th April w.e.f 01-04-2010, where the amount is paid or credited in the month of March vide notification No 41/2010 date 31-05-2010) Within one week for the last day of the  month in which the          deduction is made
(2)Sum deducted u/s 192, 194, 194B, 194BB, 194EE, 194F and 194K, 194LA	(A)   Tax deducted by or on behalf of Government (B)   Tax deducted by or on behalf of other person	Same Day of Deduction Within one week for the last day of the month in which the deduction is made
(3) Sum paid under section 192(1A) by the employer on the non monetary perquisites provided to the employee	(A)Tax deducted by or on behalf of Government       (B)Tax deducted by or on behalf of other person	Same Day of Deduction Within one week for the last day of each month on which the                                       Income is due u/s 192(1B).

Special cases where payment can be deposited quarterly: : in special cases, the Assessing

Officer may, with the prior approval of the Joint Commissioner, permit quarterly

payment of the tax deducted under section 192 or section 194A or section 194D or

section 194H as follows:

Sl.No.                  Quarter of the Financial Year ended on    Date for quarterly payment

1.                                                     30th June                                    7th July

2.                                                     30th September                           7th October

3.                                                     31st December                            7th January

4.                                                     31st March                                 30th April

Where to deposit Tax: The person deducting tax shall pay the amount of tax so deducted to the credit of Central Government by remitting it into any branch of:

(i)                  The Reserve bank of India

(ii)                The State bank of India

(iii)               Any authorized bank

It shall be accompanied by TDS Challan. However, where the deduction is made by or on behalf of Government, the amount shall be deposited without production of a challan.

The following person will pay tax electronically on or after 01-04-2008:

(i)                  a company and

(ii)                a person (other than a company), to whom the provisions of section 44AB are applicable.  

Interest for late deposit of TDS: If any person liable to deduct tax under Income Tax Act  fails to deduct the whole or any part of the tax or after deducting fails to pay the tax, he or it shall be liable to pay simple interest @1% for every month or part of the month on the amount of tax from the date on which the tax was deductible to the date on which such tax is actually paid.

W.e.f 1/07/2010 the interest is payable @1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and @1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Levy of interest is mandatory: Levy of interest u/s 201(1A) is mandatory. The interest u/s 201(1A) is not in the nature of penalty but a simple interest. If any person after deducting tax fails to remit it he is made liable u/s 201(1A) to pay interest. The liability arises immediately upon each default and is mandatory. There is no question of waiver of such payment on the ground that the default was not intentional- Bennet Coleman & co. Ltd. vs ITO [1986] 157 ITR 812 (Bom.)

TDS statements: Any person deducting any sum or any employer opting to pay tax on non-monetary benefits given to employee, shall, after paying the tax deducted to the credit of Central Government within the time prescribed, prepare quarterly statement for the period ending 30^th June, 30^th September, 31^st December and the 31^st March in each financial year.

Such Statements will be required to be delivered to the Director General of IncomeTax(Systems) / M/s National Securities Depository Ltd.(NSDL) on or before the 15^th July, 15^th October, 15^th January in respect of the first three quarters of the financial year and on or before the 15^th June[w.e.f 01-04-2010 its 15th May as per notification No 41/2010; SO No. 1261(E) dated 31.05.2010].  following  the last quarter of the financial year, for the last quarter.

The forms for the TDS statements are as follows:

(1)   Form No 24Q in respect of TDS on payment of salary or Tax deposited by an employer opting to pay tax on non-monetary benefits given to employee.

(2)   Form No 26Q in respect of TDS on other payments.

Earlier the annual return of TDS was also required to be filed. But w.e.f 01-04-2006 filing of annual return has been done away with.  The quarterly statement for the last quarter shall be treated as the annual return of TDS( refer to Para 4.10 of Circular No. 1/2010 dated 11^th Jan. 2010)


Form of TDS statements for Banks, cooperative societies etc: Any Banking company to which the Banking regulation Act,1949 applies or cooperative society engaged in carrying on the business of Banking responsible for paying to a resident any income by way of Interest(other than interest on securities) not exceeding Rs.10000where the payer is a bank or cooperative society and Rs 5000 in any other case, shall furnish quarterly statements in form 26QAA and 26QA in electronic form.

Mode of Furnishing TDS statements: The TDS statements has been allowed to be filed in two modes, one is in paper form and other is on computer media.
Certain following persons are compulsorily required to deliver or cause to be delivered quarterly statements on computer media(3.5.” 1.44 MB floppy diskette or CD-Rom of 650 MB capacity)

(a)    Where. The deductor is an office of Government; or

(b)   Where, the deductor is a company; or

(c)    Where the deductor is a person required to get his accounts audited u/s 44AB in the immediately preceding financial year; or

(d)   Where, the number of deductees records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than twenty.

All  deductors other than those above mentioned are not compulsorily required to file the TDS statements on computer media and they has the option either to file statements on computer media or on paper format.

The persons responsible for deducting tax at source and preparing TDS statement shall quote his TAN and PAN in the quarterly statement and also quote the PAN of all the deductees in the quarterly statement and furnish particulars of the tax paid to the Central Government.

Pan need not to be furnished of those persons to whom the second proviso to sub-section 5B of section 139A applies i.e the persons who furnish 15G or 15H forms for non deducting of their tax. However w.e.f 01/04/2010 15G or 15H form shall not be valid unless the person furnishes his PAN in such forms.

Where no tax is deductible in any quarter, then no quarterly statement is to be filed even though the assessee may have obtained TAN.

Where to file TDS statements:  Persons filing TDS statement on paper shall file 24Q or 26Q in paper format and file it with the Tin facilitation centre of NSDL whereby the paper format of TDS statement is digitized and is submitted with the Income Tax Department.

Persons who are filing their quarterly statements on computer media shall file form 24Qand/or26Q on computer media and furnish this form to the e-TDS intermediatory at any of the TIN facilitation centre. These quarterly statements are required to be prepared as per the data structure provided by the e-filing administrator designated by the Board for the purpose of Efiling of returns of TDS scheme 2003.

Persons filing TDS statement shall also enclose with the statement a declaration in form No. 27A in the paper format. If any compression software has been used for preparing the quarterly statement on computer media, then such compression software shall also be furnished on the same computer media.

Such person shall also affix a label indiacting name, PAN., TAN and address of the person responsible for deduction of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used.

Processing of TDS statements: W.e.f 01-04-2010 A statement of TDS furnished by any deductor shall be processed as follows:

-the sums deductible shall be computed after making the adjustments for any airthmatical error in the statement or an incorrect claim, apparent from any information in the statement

-the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement

Based on the above an intimation will be issued to the deductor granting the deductor a refund or advising him of the amount of tax and interest payable, if any. The time limit for the issue of intimation will be one year from the end of financial year in which the TDS statement is filed.


Penalty for failure to furnish quarterly statement of TDS:If any person fails to deliver or cause to be delivered a copy of TDS quarterly statement within the time prescribed, he shall pay, by way of penalty, a sum of Rs 100 for every day during which failure continues. But the penalty shall be not exceed the amount of tax deductible[section 272A(2)(k)]. Such penalty shall be imposewd by the Joint Director or Joint Commissioner[section 272A93)]. No order imposing penalty shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter[section 272A(4)]

Author: Amit Bajaj Advocate

Email: amitbajajadvocate@hotmail.com

M +919815243335

PRESUMPTIVE INCOME SCHEMES FOR SMALL ASSESSEES UNDER INCOME TAX ACT 1961

There are many presumptive income schemes for small businessmen engaged in civil construction, transport business, retailers etc. A person covered under these schemes can declare his income under these sections on presumptive basis and can get himself free from the botheration of maintaining regular books of accounts u/s 44AA.

However these provisions are optional and an assessee covered under these schemes can also declare income outside such schemes by declaring lower profits as compare to what is required under these presumptive schemes. But in such case he will have not only to maintain compulsory books of accounts u/s 44AA but also will have to get his books of accounts audited u/s 44AB.

Presumptive income schemes for small assesses u/s 44AF, 44AD and 44AE, for the benefit of the small businessmen assesses are discussed as follows:

Presumptive income scheme for Retailers(Section 44AF): From Assessment year 1998-99 to assessment year 2010-11, section 44AF provides that income of an assessee engaged in a business of retail trade of goods or merchandise having turnover upto Rs 40 Lacs shall be deemed to be 5% of the total turnover from such retail trade or higher income as declared by the assessee.

Thus a retailer of goods can declare his income @5% or more of his total turnover and he will be free from the liability of maintaining any regular books of accounts under section 44AA.

No deduction u/s 30 to 38 will be provided from such profit declared u/s 44AF and all such deductions are deemed to have been fully allowed already. However in case of partnership firm remuneration and interest on capital paid to partners shall be admissible as deduction from such income declared u/s 44AF subject to the conditions and limits prescribed u/s 40(b).

Presumptive income scheme for wholesellers, retailers and other businesses(section 44AD New): W.e.f assessement year 2011-12 section 44AD provides for presumptive taxation scheme of assesses engaged in any business except the business of plying hiring or leasing goods carriages referred to in section 44AE, at a sum equal to 8%, of the total turnover or gross receipts or as the case may be, a sum higher than the aforesaid sum claimed to be earned by the assessee.

This scheme applies to resident assessee who is an individual, HUF and Partnership fiem(but not a limited liability partnership firm), whose total turnover doesnot exceed Rs 40 Lacs(Its 60 lacs w.e.f 01-04-2011). The scheme also doesnot apply to an assessee, who has claimed deuction u/s 10A, 10AA, 10B,10BA or deduction under any provisions of section 80HH to 80RRB.

No deduction u/s 30 to 38 will be provided from such profit declared u/s 44AD and all such deductions are deemed to have been fully allowed already. However in case of partnership firm remuneration and interest on capital paid to partners shall be admissible as deduction from such income declared u/s 44AD subject to the conditions and limits prescribed u/s 40(b).

Assessee declaring income in this section will not be required to maintain any books of accounts u/s 44AA. Consequently of this new 44AD section wherein all business except business u/s 44AE are covered, section 44AF will not be applicable anymore w.e.f A.Y 2011-12.

Section 44AD till A.Y 2010-11: Till A.Y 2010-11 section 44AD is applicable only to the contractors engaged in civil work or a contractor for supply of labour for civil work, who can declare a sum of 8% of the gross receipts paid or payable to such contractor, or a sum higher than 8% as may be declared by such assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and Gains from business or profession.

The provisions of section 44AD as applicable to civil conractors till A.Y 2010-11 will not apply if the gross receipts of such assessee exceeds Rs 40 Lacs.

Presumptive income scheme u/s 44AE: Section 44AE provides presumptive income schemes for persons carrying on the business of plying, hiring or leasing goods carriages. The income of such businesses are estimated as under:

(a)    For each heavy vehicle, w.e.f. assessment year 2011-12, a sum of Rs 5000 per month or part of a month, (for A.Y. upto 2010-11 it is Rs 3500 per month), for the period for which it is owned by the assessee. The goods vehicle whose unladen weight exceeds 12000 Kgs. shall be treated as heavy goods vehicle.

(b)   In case of each other vehicle, w.e.f A.Y 2011-12, a sum of Rs 4500 per month or part of a month,(for A.Y. upto 2010-11 it is Rs 3150 per month) for the period for which it is owned by the assessee.

  However, if the assessee files a return disclosing a higher income with respect to any vehicle, then such higher income shall be taken to be his income with respect to that vehicle.

It should be noted that the provisions of section 44AE apply to assesses who own not more than 10 goods carriages at any time during the previous year and carrying on the business of plying, hiring or leasing those goods carriages.

One may also declare income lower than income mentioned above but he will have to comply with the provisions of section 44AA and 44AB.

No deduction of insurance charges, depericiation or similar other expenditure shall be allowed in computing income u/s 44AE.However in case of partnership firm remuneration and interest on capital paid to partners shall be admissible as deduction from such income declared u/s 44AE subject to the conditions and limits prescribed u/s 40(b).

WDV of the assets used in the business whose income is taxable on presumptive basis: The written down value of any asset used for the purpose of business whose income is taxable in any of the presumptive schemes shall be calculated as if the assessee has claimed and has been actually allowed the deduction for depericiation as per the rates prescribed under the Income Tax Rules for each of the relevant assessment years, for which the income is estimated under presumptive income schemes sections under Income Tax Act 1961.

Important Decisions: 

Unabsorbed Depericiation cannot be set off against the Income computed u/s 44AD, 44AE or 44AF. Where the income is computed on presumptive basis u/s 44AD, 44AE or 44AF, the provisions of section 28 to 43C do not apply. Unabsorbed Depericiation is allowed to be set off u/s 32(2) and not u/s 70 or 72. Hence unabsorbed depericiation cannot be set off against the presumptive income computed u/s 44AD, 44AE or 44AF- DCIT v. Sunil M. Kankariya[2008] 298 ITR (AT) 205(ITAT-Pune).

An assessee engaged in retail trade disclosed net profit less than that prescribed u/s 44AF, got his accounts audited and was assessed. Additions u/s 40A(3) was made. Later assessee agreed to be assessed u/s 44AF. Can disallowance be deleted? Similar facts came in the case of Gopal Singh K. Rajpurohit v. ACIT 94 TTJ (Ahd.) 865 wherein it has been held that the additions should be deleted as assessee has agreed to be assessed u/s 44AF

As per the books of accounts of the assessee, turnover was less than 40 lakhs. But during search operations, additional sales was found and assessee included the same in block assessment. Can the A.O impose penalty u/s 271B for not getting the accounts audited?

Similar Facts came in the case of Brij Lal Goyal v. ACIT [2004] 88 ITD 413 (Del.), wherein it was held that the additional sales found as a result of search, was not recorded in the books of accounts regularly kept in the cource of business by the appellant. Merely because the appellant accepted the additional sales for the purpose of assessment of the relevant year on the basis of entries in the seized documents, the same would not constitute accounts of the appellant maintained in the regular cource of business and on that basis alone liability cannot be fastened on the assessee by holding him to have committed the default.

However it should be noted that if the suppression of sales is proved, penalty proceedings u/s 271B and also other sections can be initiated.

Author Amit Bajaj Advocate

Email: amitbajajadvocate@hotmail.com

M +919815243335

Use of section 144A of Income Tax Act 1961

Assesements under Income Tax Act 1961 are made U/S 143, 144, 147, 153. The criterias for selection of cases for scrutiny has been increased. While making the assessement the assessing officer has to appericiate all the facts properly. If there is any misiterprtation of facts it may result in injustice to the assesee. Some times when there is confusion regarding interpretation of facts as appearing in a particular case or confusion regarding any law point the assessing officer tends to consult their senior officials like Additional Commissioners or else. The instructions the senior officials give to the assessing officer orally in such case, the assessing officer is guided by such directions while making assessement or sometimes the assessee also tend to explain their case to the Additional commissioner or joint commissioner especialy when the asssessing officer is guided by the directions of the Additional or Joint commissioner while making the assessement.

In such cases sometimes the assessee may get the result in his favour if he properly explains the seniar officials his case. But such directions given by senior officials to the assessing officer orally have no legal standing and if assessee does not explain his view to the senior officials, there is always a chance that the senior officials might give instructions to the assessing officer which may be prejudicial to the interest of the assessee since the assessee's view point is not examined. Moreover the senior officials are not accountable for the instructions given orally in such cases.

I Feel that the Tax Professioonals in such cases where the assessing officer is guided by the oral instructions of the Additional or Joint commissioners while making assessements, section 144A of income tax act should be resorted to. Where in the written application should be moved to the Additional or Joint commissioner for giving written directions to the assessing officer regarding the disputed interpretations of facts or law. At the same time an application can also be moved to the assessing officer requesting him to wait untill the application u/s 144A is disposed off and the directions are issued to the assessing officer in that regard.

S. 144-A of the Income-tax Act, 1961 reads as follows :

“A Joint Commissioner may, on his own motion or on a reference being made to him by the (Assessing) Officer or on the application of an assessee, call for and examine the record of any proceeding in which an assessment is pending and, if he considers that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the (Assessing) Officer to enable him to complete the assessment and such directions shall be binding on the (Assessing) Officer.

Provided that no directions, which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard.

Explanation : For the purposes of this Section, no direction as to the lines on which an investigation connected with the assessment should be made, shall be deemed to be direction prejudicial to the assessee.”

Thus it is clear that the Additional commisioner is bound to dispose off the application moved u/s 144A and the directions given to the asessing officer will be binding on him. Such a way adopted can also help reducing litigation between department and assessee since the verdict in the assessement will be based upon the directions of the senior officials. But presently section 144A is not utilized frequently by the tax professionals. The system of oral instructions in assessements from senior officials should be avoided and only written instructions should be given preference and this can be done by resorting to section 144 A and it will also help in doing proper justice to the assesses.

Notices for assessement or reassessement U/S 148

The power of assessement or reassessement of any income chargable to tax that have escaped assessement has been provided under secton 147 r w s 148 of Income Tax Act of 1961.If the assessing officer has the reason to believe that any income chargabale to tax has escaped assessement then the assessing officer may subject to the provisions of section 147 to 153 assesse or reassess such income.

What is reason to believe: Before issuing any notice U/S 148 the assessing officer must have reason to believe that any income chargable to tax has escaped assessement. Reason to believe can not be a reason to suspect merely. There must be a direct nexus between the material coming to the notice of the assessing officer and the formation of the belief that there has been escapement of income of the assessee from assessment in a particular year. The material for formation of belief must be relevent and not vague. The assessing officer must record reasons in writting before issuing notice u/s 148. Mere a reason recorded that "there is a huge concealment of income' or 'For further investigation' without any specific instance of entries or material relevent to the assessee will not constitute a valid reason as it is vague and general in nature.

To constitute a valid reason to believe there must be some new material coming into light with the assessing officer, merely a change of opinion cannot constitute a reason to believe. If the assessee has disclosed basic and all the true facts during the cource of assessement and the assessement is completed. Later on notice u/s 148 can not be issued merely beacause there is another inference possible from the same documents and the facts placed before the assessing officer during the cource of assessement as it will amount to change of opinion. There must be some new material coming into light for action u/s 147/148. But if the assessee has surpressed some relevent facts which leads to concealment of income and later those facts come before the assessing officer the notice u/s 147/48 can be issued validly.




Who can issue notice U/s 148: Section 151(1) provides that in a case where an assessment under sub-section (3) of section 143 or 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice] :

Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice.

In a case other than a case falling under sub-section (1) of section 151, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.

Time Limit for Issuing of notice u/s 148: Section 149 provides that notice u/s 148 can be issued within 4 years from the end of relevent assessement year if the income escaped doesnot exceed one lac Rs. If the income escaped is Rs. one lac or more the notice u/s 148 can be issued within 6 years from the end of relevent assessement year subject to the provisions of section 151.

Further first proviso to section 147 provides that if the assessement has been completed u/s 143(3) no action can be taken u/s 147 after the expiry of 4 years from the end of relevent assessement year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.

What to do when notice u/s 148 is received: when a notice u/s 148 is received the assessee is asked to file a return of the relevent assessement year. After filling the return the assessee should ask for the copy of reasons recorded for issue of notice u/s 148 and can file objection to the issuance of notice. The assessee should ask specificaly assessing officer to pass a speaking order by disposing off the objections giving reference of the Judjement of Honurable Supreme Court in GKN Driveshafts(India) Ltd vs ITO (2003) 259 ITR 19 (SC). The objections should be filled giving reasons for challenging the legality of the notice u/s 148. All this procedure has been laid down by the Honurable Supreme court in GKN Driveshafts(India) Ltd case. This procedure has been provided by the Honurable Supreme court to enable the assessee to file writ petition before the respective High court challenging the legality of the notice u/s 148 before the assessement is completed.

Evan if the assessement order has been passed and the matter is in appeal the assessee can still file writ petiotion in the high court challenging the legality of notice u/s 148 and the consequent assessement if the above said proicedure as laid down by the Supreme court in GKN Driveshafts(India) Ltd case is not followed. But for that assessee offcource will have to show that he asked for the copy of reasons for issue of notice u/s 148 and filled objections to that and asked the assessing officer to pass a seperate reasoned order disposing off the objections filled and deciding on the legality of the notice issued u/s148.

SURVEY UNDER SECTION 133 A OF INCOME TAX ACT 1961

Survey in a wider sense means to scrutinize or to inspect. The power of survey under the Income tax Act has been provided U/S 133A and 133B. The provisions contained in section 133A are independent and to the exclusion of the other provisons of the act since the wording of the section starts with ‘Notwithstanding anything contained in any other provisions of the act ‘

The power of survey can be exercised by the following U/S 133A:

1. A Commissioner

2. A Joint Commissioner

3. A Director

4. A Joint Director

5. An Assistant Joint Director

6. A Deputy Director

7. An Assessing officer

8. A Tax Recovery officer

9. An Inspector of Income Tax

An Income Tax authority is empowered under section 133A to:

enter any place within the limits assigned to him or

the place occupied by any person in respect of which he exercises jurisdiction or

the place in respect of which he is authorized by such an income tax authority, who is assigned the area in which such place is situated or who exercises the jurisdiction in respect of any person occupying such place.

Survey u/s 133A can be conducted only at the business premises of the person concerned. No survey can be conducted at the residential premises unless the residential premises are shown to as the business premises by the assessee concerned. Moreover if the assessee has stated that any stock or books of accounts or cash related to business is kept at his residential premises survey proceedings can also be extended to such residential place. Its not necessary that the survey is only conducted at the principal place of business, it can be conducted simultaneously to all branches of business premises concerned.

Since the power of Survey is limited to the business premises only therefore the survey can be conducted only during business hours i.e after sunrise and before sunset. However the survey proceedings started before sunset can be continued till after sunset. Survey proceedings can not be initiated on holidays festive days when the business premises are closed.

The question arises wheather the premises of a Tax advocate or Chartered accountant can be inspected for the purpose of survey proceedings of the assessee. It is submitted that the Tax professionals stands in a fiduciary relationship with their clients. In view of explanation to section 133A(1) if the assessee states that his books of accounts or any part of cash, stock or valuable articles are kept at any other place then the income tax authority can survey that place but that too only for limited purpose for obtaining information related to the assessee.. Thus if the assessee states that his books of accounts are kept at the tax professional premises then the premises of the tax professional can also be inspected but only for the limited purpose for obtaining information regarding the assessee concerned.

The Income Tax authority can verify stock, cash, other valuable articles, books of accounts and documents lying in the business premises of the assessee. The income Tax authority can also place marks of identification on books of accounts or other documents and can take copies therefrom. However no seizure of cash stock or valuable articles can be made during the cource of survey. But the income tax authority can impound books of accounts after recording the reasons for the same. The impounded books of accounts can be kept only for 10 days after which he has to get approval of the chief commissioner.The statements of the persons working in the business premises can also be recorded during the cource of survey.

It is generally seen that the survey party always try to record a confessional statement of the assessee so that income can be made surrunderred. But such a statement recorded under pressure can be retracted and the assessee can file a declaration to that effect afterwards. Since the statement recorded U/S 133A(3)(iii) is not recorded on oath it doesnot have evidentiary value.

Certain following things should be kept in mind before making any confessional statement:

Whether any evidence has been found or will be found at a later stage regarding concealment of income

The provisions of section 40-A(3), 269SS, 269T etc should be kept in mind before making any confession.

If the income surrendered relates to current year then it would be liable to interest only as no concealment of current year’s income can be established since no return is being filed for the current year. But if the income surrundered is declared as the income of previous years regarding which the return has already been filed it may attract penalty proceedings since it would amount to concealment of income.

If there is any difference between the value of stock recorded by the income tax authority and the value of stock recorded in books of accounts and wheather such difference is explanable

The last and most important thing is that one should not panic when survey party enters the business premises. One thing should be kept in mind that the income tax authorities donot have any personal grudges against the assesses. The authorities do their work and they should be cooperated. The presense of a tax professional can be of great help to both the assessee and the authorities Non cooperation with the survey party may result in adverse. Whereas the cooperation with the authorities might result in wining leneant behaviour from the taxman.

Survey can be converted to search and seizure. If the income tax authority finds during the cource of survey huge amount of cash, valuable articles or other thing indicating huge evasion of tax, the authority can inform its counterpart from investigation wing and can convert the survey proceedings into search and seizure after getting due authorization.