The Finance Bill 2025 proposes amendments to Sections 132 and 132B of the Income-tax Act to streamline search and seizure procedures. Currently, under Section 132(8), approval for retaining seized books and documents must be obtained within 30 days of the assessment or reassessment order. This timeline is challenging when multiple assessments within a group occur at different times. The amendment extends the approval deadline to one month from the end of the quarter in which the order is issued. Additionally, in Explanation 1 of Section 132, the term “authorisation” will be changed to “authorisations” to reflect multiple warrants issued for a single assessee. Section 132B, which deals with applying seized or requisitioned assets, will also be updated. Explanation 1 currently references Section 158BE for the definition of “execution of an authorisation for search or requisition.” However, due to legislative changes, this reference will be updated to Section 158B. These amendments aim to simplify compliance and will take effect from April 1, 2025.
Budget 2025: Amendments proposed in sections 132 and 132B for rationalising provisions
Section 132 of the Act relates to search and seizure. As per the provisions of sub-section (8) of section 132 of the Act the last date for taking approval for retention of seized books of account or other documents is 30 days from the date of the assessment or reassessment or recomputation order. In the course of search assessment proceedings in group cases, the assessment orders of one assessee may be passed earlier than the assessment orders of another assessee. Further, the segregation of seized books of account or other documents pertaining to various assesses is also very difficult in case the searched premise is same. It is also the case that the seized books of account or other documents pertaining to the completed assessment cases may be required for assessment of ongoing/pending assessment cases. Since, the time limit of taking approval for retention will be different for different cases, the Assessing Officers are required to have constant vigil on the floating time-barring dates for taking the approval for retention of the seized books of account or other documents, the burden of which is avoidable.
2. Therefore, it is proposed to amend sub-section (8) of section 132 of the Act to provide that the time limit for taking approval for retention shall be one month from end of the quarter in which the assessment or reassessment or recomputation order has been made.
3. Explanation 1 to section 132 of the Act defines the circumstances in which last of the authorisation for search is to be deemed as to have been executed. In order to align the same with the other provisions of the Act, It is proposed to substitute the word “authorisation” with “authorisations”.
4. Explanation 1 to the section 132B of the Act provides that “execution of an authorisation for search or requisition” shall have the same meaning as assigned to it in Explanation 2 to section 158BE of the Act. Vide Finance (No. 2) Act, 2024 the concept of block assessment was introduced by amending provisions of Chapter XIV-B (sections 158B to 158BI of the Act). As per amended provisions, “execution of an authorisation for search or requisition” is now defined in Explanation to section 158B of the Act. In order to reflect this change, it is proposed to amend clause (ii) of Explanation 1 to the section 132B of the Act to update referencing to section 158B of the Act instead of the present section 158BE of the Act.
5. These amendments will take effect from the 1st day of April, 2025.
[Clauses 37 & 38]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 37 of the Bill seeks to amend section 132 of the Income-tax Act relating to search and seizure.
Sub-section (8) of the said section provides that the last date for taking approval for retention of seized books of account or other documents is thirty days from the date of the order of assessment or reassessment or recomputation.
It is proposed to amend the said sub-section so as to provide that the said time limit for taking approval for retention shall be one month from the end of the quarter in which the assessment or reassessment or recomputation order has been made.
This amendment will take effect from 1st April, 2025.
Clause (a) to Explanation 1 to the said section provides the circumstances in which last of authorisation for search is to be deemed as to have been executed.
It is proposed to amend the clause (a) to Explanation 1 so as to substitute the word “authorisation” with “authorisations” as there may be more than one warrant executed in the case of one assessee.
This amendment will take effect from 1st April, 2025.
Clause 38 of the Bill seeks to amend section 132B of the Income-tax Act which deals application of seized or requisitioned assets.
Explanation 1 defines “execution of an authorisation for search or requisition” shall have the same meaning assigned to it in Explanation 2 to section 158BE.
It is proposed to amend Explanation 1 to section 132B to update the reference of Explanation to section 158B.
This amendment will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
37. Amendment of section 132
In section 132 of the Income-tax Act,
(a) in sub-section (8), for the words “thirty days from the date of the order of assessment or reassessment or recomputation”, the words “one month from the end of the quarter in which the order of assessment or reassessment or recomputation is made” shall be substituted;
(b) in Explanation 1, in clause (a), for the word “authorisation”, the word “authorisations” shall be substituted.
38. Amendment of section 132B.
In section 132B of the Income-tax Act, in the Amendment of Explanation 1, in clause (ii), for the words, figures and letters section 132B. “Explanation 2 to section 158BE”, the words, figures and letter
“Explanation to section 158B” shall be substituted.
