INCOME TAX
INSTRUCTION NO. 1875/1991
Dated: July 1, 1991
A study was conducted to evaluate the efficacy of survey under section 133B of the Income-tax Act and utilisation of the information collected in Form No. 45D. The study pointed out certain inadequacies in the procedures for conducting survey, forwarding of information in Form No. 45D, and its utilisation. It is , therefore, considered necessary to explain the provisions of section 133B and the procedure to be followed in implementing the said provisions.
2. Section 133B of the Income-tax Act empowers an income-tax authority to enter any building or place, within the limits of his jurisdiction, at which a business or profession is carried on and to require the proprietor, employee or any other person, who may be attending to the business or profession, to furnish information in the prescribed Form No. 45D.
3. The objective of survey under section 133B is to identify and detect new tax-payers. Accordingly, surveys under section 133B should be carried out in such a way that the maximum number of new tax-payers are added to the existing tax-payers without giving rise to any complaints of harassment from the public. Such surveys should, therefore, be preceded by proper planning and publicity. As survey under section 133B is not a secret operation, advance notice of the proposed survey may be given. Prior publicity should also be given, explaining the scope of enquiries that can be made under section 133B. The names, addresses and telephone numbers of the controlling officers, namely, the Income-tax Officer (Survey-cum-CIB), the Assistant Director of Income-tax (Inv.) and the Deputy Director of Income-tax (Inv.) of the survey unit, should also be publisized so that they can be easily contacted if there is any problem during survey. This will remove any fear or misconception from the minds of the public.
The selection of areas, markets, commercial complexes etc. for survey should be made by the Director of Income-tax (Inv.) in consultation with the concerned Commissioner of Income-tax. For this purpose, the officer in-charge of survey under section 133B should have complete municipal maps of the areas within his jurisdiction.
4. In order to ensure that survey under section 133B is conducted systematically and thoroughly, the procedures as under, should be strictly followed:-
(a) The ITO (Survey-cum-CIB) will pass an order authorising a team of Inspectors to carry out survey under section 133B in an area within a specified time. This authorisation will contain the names of the Inspectors forming the survey team, the specific area to be covered and the dates within which the survey must be completed. A copy of the authorisation should be kept in a permanent folder by the ITO.
(b) At the commencement of the Survey, the Inspectors will be directed to cover the area systematically and from end to end, to ensure that no premises are omitted. In the case of a street, the survey party will start from one end of the street. They will then proceed premise-by-premise on that side of that street till they reach the other end. Then they will cross over and follow the same pattern till they reach the end from where they had started.
(c) In the case of multi-storeyed complexes, the survey party will systematically move from floor to floor and on each floor, from room to room.
5. In order to maintain proper control over the survey, it is necessary to have a 'Street/Area Directory' in which information about each of the premises covered will be noted. Separate directories should be maintained in respect of each area/locality/street covered by the survey. The first page of the directory should contain a sketch map of the area/locality/street giving important landmarks. Municipal door numbers at important junctions etc. so that an area can be clearly identified. The names of the authorised Inspectors carrying out the survey and the period during which the survey of the area was carried out should also be mentioned on the first page. The main body of the directory should contain a record of the all buildings with their Municipal numbers in the same order as they actually exist in the area/locality/street. If a building with a particular Municipal number has more than one premise, the details in respect of all the premises of the building should be recorded. Similarly if a building with a particular Municipal number is a multistoreyed building, the details in respect of all the premises on each of the floors of the building should be recorded systematically. The 'Street/Area Directory' should contain the following information about the building actually existing:
(a) Municipal No.
(b) Address of the premises/floor No./room No. or other identification.
(c) Date of survey
(d) Name of the concern occupying the premises
(e) Status of the concern
(f) Nature of business or profession
(g) Whether new assessee or an existing assessee (if latter, the PAN to be mentioned)
(h) Action recommended and D.C (Range) to whom report sent.
6. While recording information in respect of a specific Municipal number information in respect of all the premises in that building should be recorded before moving to the next Municipal number. If, during survey, any premise is found to be residential or vacant, the Inspector should merely note this fact in the directory and proceed to the next premise.
7. All the premises of the area selected for survey should be covered without exception while undertaking survey for the first time. Re-survey should be taken up after a reasonable interval of time depending on the phase of commercial development and new businesses set up in that area. During the course of re-survey of the same area. only such premises may be covered which have come up subsequently and have not been covered by the earlier survey. The 'Street Area/ Directory' prepared earlier should be utilized for knowing exactly the premises which had been covered earlier. Thus as far as possible, the existing assessees should be avoided during re-survey.
8. The prescribed Form No. 45D seeks comprehensive information on various aspects of the business or profession, namely, nature of business or profession ownership details, nature of accounts, bank account details and finally an estimate of income from all sources and agricultural income. There are 14 columns in the form, which are required to be filled in by the persons present in the premises. However, if the concern is an existing assessee who has filed the return of income for the preceding assessment year, only columns 1 to 6 of the form are required to be filled in. The form ends with a declaration (to be signed by the person giving the information) that the information furnished is correct, complete and truly stated to the best of his knowledge and belief. The form is to be got filled in duplicate.
9. While collecting the information in Form 45D, the Inspector may ask the person present on the spot to explain any entry in the columns of the form. He may also seek clarification if there are any obvious or glaring contradictions in the information furnished. If necessary, the Inspector may also make discreet enquiries relating to the information given in the form and give a report. On receipt of the completed Form No. 45D in the case of new tax-payers, the survey Inspector should incorporate therein an estimate of the income, the basis for such an estimate and the recommendations for action under section 142(1)/147 of the Income-tax Act.
The reports should be put up to the ITO (Survey) for his approval. The Assistant Director of Income-tax (Inv.) should also check at least 5% of the survey reports. In a few cases the Deputy Director of the Income-tax (Inv.) or the Assistant Director of Income-tax (Inv.) may also visit the premises surveyed for checking the reports.
10. The forms collected by the Inspectors during the course of survey should be sorted out so as to separate forms pertaining to the existing assessees and those in respect of which no action is required to be taken by the Assessing Officer. Such forms should be filed in the Investigation Wing. However, a test check should be carried out by picking up a few of the forms of the existing assessees at random to see if the claim of being an existing assessee has been correctly made.
11. Forms pertaining to those persons in respect of whom action under sections 142(1)/147 of the Income-tax Act is required, should be forwarded every month to the concerned range Deputy Commissioner. These forms should be sent appended to a list of the cases in the following format.
|
S.NO. |
Name & Address of the survey report |
Action proposed in party surveyed |
A copy of the list should be retained in the Investigation Wing which may be kept in a permanent folder.
The range Deputy Commissioner should send the forms to the concerned Assessing Officers immediately on receipt of forms from the Investigation Wing.
12. On receipt of the forms from the range Deputy Commissioner, the Assessing Officer should initiate action by way of issue of notice etc., in respect of each survey report. Necessary entries in part III of the 'CIB and Survey' register, prescribed by Board Instruction No. 1874 dated 7.1.91 issued from F.No. 414/35/90-IT(Inv.I) should also be made.
13. For ascertaining the results of utilisation of survey reports, Proforma-I of the monthly report of 'Survey & New Assessees' prescribed vide Board's letter No. 415/21/89-IT (Inv.I) dated 18th August., 1989, has been modified and the revised format has been issued separately. Boards Instruction No. 1876 dated 7.1.91 issued from F.No. 414/17/90-IT (Inv.I) may be referred to in this context.
14. The Commissioners and the range Deputy Commissioners of Income-tax will carry out random checks regarding action taken by the Assessing Officer in respect of the survey reports in Form No. 45D. This aspect will also be examined by the Commissioners/range Deputy Commissioners during the course of inspection of the Assessing Officers work.
15. The aforesaid instructions may be brought to the notice of all concerned and steps may be taken to implement them with immediate effect.