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 provisions 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/A 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. It’s 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 holiday’s/ festive days when the business premises are closed.
The question arises whether 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 there from. However no seizure of cash stock or valuable articles can be made during the course 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 course 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 surrendered. 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 doesn’t 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 surrendered 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 whether such difference is explainable.
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 don’t have any personal grudges against the assessee. The authorities do their work and they should be cooperated. The presence 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 lenient behavior from the taxman.