The Union Budget presented by Finance Minister Arun Jaitley recently may have proposed that the Income-Tax Department can carry out raids without disclosing ‘reason to believe’ but the Chairman of the Central Board of Direct Taxes (CBDT) says the common man has nothing to worry.The CBDT chief Sushil Chandra told the Economic Times that the powers to carry out raids has been vested with responsibility, and tax authorities have to submit a "satisfaction note" to a high court explaining why a raid has been carried out and providing evidence for the conclusions.
Chandra's clarification comes after some consternation was felt in industry circles from the Budget proposal, which seems to grant arbitrary power to I-T officials when it comes to carrying out raids.
What the Budget proposed?
The Union Budget 2017 proposal had said, “Confidentiality and sensitivity are the hallmarks of proceedings under Section 132 and Section 132A. However, certain judicial pronouncements have created ambiguity in respect of the disclosure of ‘reason to believe’ or ‘reason to suspect’ recorded by the income tax authority to conduct a search under Section 132 or to make requisition under Section 132A.”
Rationale behind Jaitley's proposal
The tax department in the last few years has been dealing with commissioner appeals and tribunals asking for the satisfaction note that was not their basic domain as it cannot be appealed against. According to the CBDT Chief, to avoid quashing of searches on flimsy grounds by junior appellate authorities, Jaitley proposed to give more powers to the income tax officers.What is a satisfaction note?
A satisfaction note provides the reason for a search and also includes evidence to support the conclusion. The common practice followed by the policy-making body has been to show this note in the court in a sealed cover before initiating a search.What does the I-T chief say?
Chandra says that there will be no procedure change in seeking permission to conduct a search. The approval will come from the Director General and warrants will be issued by the Principal Director General of income tax. If the Director General deems a case fit for a search then the permission will be given, said Chandra. And without the approval of the Director General, no officer of the level of assessing officer, income tax officer, assistant commissioner, deputy commissioner, additional commissioner or even commissioner can carry out a raid.
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