Section 133(6) Of Income Tax Act

Section 133 (6) of the Income Tax Act plays a prominent role in empowering income tax authorities and gathering the necessary information for proceedings and inquiries relating to tax.

This provision enables authorised assessing officers and other officials to request specific details from taxpayers or third parties through formal notices. These notices serve as a means to address discrepancies, unreported income and misrepresented claims made at the time of filing taxes.

Generally, scenarios that prompt such notices include:

• Underreporting of income

• Wrongful claims of deductions or exemptions

• Incomplete or inaccurate filings or

• Refusal to file income tax returns

When irregularities are suspected in any of the above scenarios, it leads to investigations via the issuance of notices under Section 133 (6) of the Income Tax Act. It is important to note that these notices are not exclusively limited to taxpayers but are also issued to any individual or entity that possesses relevant information regarding the transactions or financial dealings of the person in question.

It is imperative to adhere to the guidelines outlined in these notices and promptly offer the requested information. Failing to comply can result in penalties for non-cooperation by the assessing officer. The Section 133 (6) of the Income Tax Act time limit ensures timely responses and efficient investigations, reinforcing the need for taxpayers as well as other recipients of the notice, to act promptly.

Now that we understand the basics concerning Section 133 (6) of the Income Tax Act, let’s dive deeper into understanding other prominent aspects.

Section 133 (6) of the Income Tax Act’s time limit has not been defined explicitly to afford the income tax department flexibility in asking for information. Under this provision, the department looks for details about accounts, opinions and other relevant matters related to tax proceedings or inquiries at any time deemed necessary.

When a taxpayer receives a notice under this provision, especially regarding arrears or discrepancies in tax filings, it is important to act promptly. To prevent any additional complications, it is crucial to respond immediately and cooperate. Individuals must collate and submit all the necessary documents and evidence within the timeline specified in the notice. If the individual fails to comply within the specified time frame, they may have to pay penalties or face prolonged investigations.

Understanding the obligations under Section 133 (6) of the Income Tax Act time limit ensures that taxpayers are prepared to address such notices efficiently, thereby safeguarding themselves from any unnecessary financial or legal obligations.

Case Laws on Section 133 (6) of the Income Tax Act provide valuable insights into how this provision applies to taxpayers in the real world. The following scenarios showcase the scope of the provision and the associated implications regarding compliance.

• Case 1: Imagine that a taxpayer, Mr. Ramesh has purchased goods worth ₹15 lakhs from Ms. Kriya, but failed to report this transaction when filing his taxes. The income tax department takes notice of this discrepancy and decides to investigate Mr. Ramesh.

  So, the department issues a notice under Section 133 (6) that obligates Mr. Ramesh to provide the details of the transaction, which includes submitting invoices and payment records. Mr. Ramesh then furnished the requested documents and revised his returns to rectify the omission, thereby ensuring compliance.

• Case 2: Until FY2021, Ms. Kavita has been an Indian citizen who later moves to Canada for her career. She has continued to earn interest on her investments in India, however, has neglected the filing of her income tax return for the said earnings.

  The income tax department then issues a notice under Section 133 (6) to procure statements from her Indian as well as Canadian bank accounts. In addition to this, she is also asked to submit investment-related documents. The timeline provided to Ms Kavita to gather and submit the requested information is 30 days. If she fails to comply with the notice, she will have to pay the necessary penalties levied by the assessing officer.

  The above-mentioned case laws on Section 133 (6) of the Income Tax Act highlight the importance of prompt and accurate responses to notices. Taxpayers need to ensure that all the requested documentation is submitted in a timely manner to avoid penalties and maintain compliance with tax regulations.

The scope of required information under Section 133 (6) is broad and generally depends on the nature of the specific inquiry and proceedings. The tax authority can ask for a wide array of documents, such as:

• Account Books: These are comprehensive records detailing all financial transactions.

• Account Statements: This offers a summary of the financial data showcasing account balance and activities.

• Financial Statements: This includes important documents such as profit and loss statements, balance sheets as well as cash flow statements.

• Other Relevant Documents: Any other information considered relevant and necessary for the ongoing proceedings or investigation.

The type of document is also different based on the nature of the case:

• For Individual Taxpayers: The relevant authorities may seek documents such as bank statements, salary slips, proofs of investment, or other records associated with earnings to ensure income declaration.

• For Business Entities: Requests can comprise financial statements, balance sheets, audit reports and transaction details to analyse compliance and tax accuracy.

Knowing what kind of documents may be requested can help in timely compliance at the time of tax inquiries.

Under Section 133 (6), certain individuals under the income tax department are authorised to issue notices and procure information or tax inquiries or proceedings. These authorised persons include:

• Assessing Officer (AO) who is responsible for assessing the income of taxpayers.

• The Deputy Commissioner (Appeals) who is responsible for handling appeals concerning assessments.

• Joint Commissioner and Joint Commissioner (Appeals) are senior officials who oversee assessments and appeals.

• The Director General or Chief Commissioner are high-ranking officials supervising tax administration.

In cases that involve taxpayers in countries that have a Double Taxation Avoidance Agreement (DTAA), the authority that is permitted to issue notices is extended to the above-listed officials above the rank of Assistant Director or Assistant Commissioner. This ensures compliance and cooperation across international jurisdictions.

The process for the issuance of notices under Section 133 (6) of the Income Tax Act, of 1961, is structured in a manner that ensures clarity and compliance. Key steps include:

• Clear Details in the Notice: The notice must be in written form and must mention the exact details or documents required, along with the reasons for seeking the information.

• Timeline and Location: It must mention the timeline for submitting the information as well as the location where it needs to be provided.

• Mode of Delivery: Notices can either be delivered in person or sent via post to the individual or entity from whom the information is requested.

• Acknowledgment of Receipt: Any notices sent via post are considered to be officially served on the date when they are received by the recipient.

This formalised procedure ensures that notices served under Section 133 (6) of the Income Tax Act are transparent, thereby enabling taxpayers to respond appropriately.

If an individual receives a notice u/s 133 (6), they must ensure that they respond in a prompt and well-prepared manner. The accuracy and promptness of the response are considered important for efficiently addressing the inquiry. Here is a guide to handling notice u/s 133 (6):

Consider for instance that you have claimed HRA for rent paid and received a notice regarding arrears. In this case, you will be expected to submit supporting documents such as salary slips and rent receipts to clarify your position. Similarly, for claims such as leave travel allowance, documents such as travel tickets, hotel bookings, and invoices will need to be provided.

Responses can either be submitted in person at the income tax department, or online via the official e-filing portal. If you are not sure about the procedure, it is advised to consult a qualified and professional tax advisor or chartered accountant.

Key Tips for Responding to a Notice Under Section 133 (6)

• Understand the Notice: It is important to carefully read the notice to understand why it has been issued and what documents and details are asked of you.

• Collect All Relevant Documents: Collect all the necessary financial records such as bank statements, proof of income, etc. as evidence to support your response.

• Be Honest: Do not provide inaccurate or misleading information as it can result in further penalties or scrutiny.

• Request an Extension if Needed: If necessary documents cannot be provided within the provided deadline, contact the income tax department and request an extension.

• Provide Tax Advisor Details: If your notice is being handled by a professional tax advisor or chartered accountant, include their name and contact information in your response.

By following these steps, taxpayers can ensure a thorough and compliant response to notice u/s 133 (6) and avoid any unnecessary complications.

The official website of the Income Tax Department offers taxpayers a convenient way to respond to notice u/s 133 (6) via the Comply to Notices (CTN) facility. The CTN feature under the “Quick Links” section enables taxpayers to submit responses to Section 133 (6) with the help of the DIN (Document Identification Number) and important and relevant details.

In certain cases, notices may be provided through email but may not appear in the E-Proceeding Tab. Using the CTN ensures that your response is submitted in a timely manner preventing delays or penalties. Employing this tool enables taxpayers to streamline the process and effortlessly maintain compliance.

If the taxpayer fails to file a response to notice u/s 133 (6) the income tax department deems your response to be unsatisfactory. In this case, the income tax department may undertake the following consequences:

• The respective AO will consider your tax returns to be invalid and issue another notice under Section 148 of the Income Tax. This notice necessitates that the taxpayer re-file their income tax return within a stipulated time and provide an explanation for any arrears.

• The taxpayer may also be asked to file revised tax returns including undisclosed income and withdraw claims for deductions and exemptions that do not have sufficient proof.

• Non-compliance with these directions can result in penalties under Section 272A (2) of the Income Tax Act. The individual is penalised starting at ₹100 per day until revised returns are filed. Depending on the severity of the case, the penalties could be a lot more severe.

• If the investigation reveals any misreported income or invalid claims for deductions or exemptions, the consequences might include paying penal interest of 12% per annum or a penalty of up to 200% of the evaded tax amount. In more serious cases, the taxpayer could also face more serious consequences such as facing prosecution, which may result in imprisonment.

Considering the above, it is evident that individuals who receive notice u/s 133 (6) must respond to the same promptly. Send your response with the necessary information and if required, seek help from a professional such as a chartered accountant. To efficiently respond to disputes that could arise in the future, taxpayers should ideally preserve their tax filing documents for at least 10 years.

Here are some common errors to avoid when responding to notice u/s 133 (6):

• Ignoring the notice: Non-compliance and failure to respond to the income tax department within the stipulated timeline can lead to penalties and legal action.

• Providing incomplete information: All the relevant details and documents asked for in the form must be submitted to prevent additional scrutiny or penalties.

• Delaying your response: It is important to respond to the notice within the stipulated deadline to ensure compliance with notice requirements.

• Not storing records: Maintain copies of all the submitted documents and correspondence as proof of compliance.

Here are some important details about Section 133 (6) that taxpayers should make note of:

• Section 133 (6) empowers income tax authorities to ask for information not only from taxpayers but also from third parties who may possess relevant information regarding the proceedings or investigation.

• Depending on the nature of the inquiry, the provision permits requests related to books of accounts, financial statements, bank records and more.

• The CTN facility on the income tax portal offers a streamlined online process to ensure prompt response to notice u/s 133 (6).

• It is important to maintain records of all submitted documents and communication to resolve any disputes or follow-up actions.

• The consequence of non-compliance can result in penalties, starting from ₹100 per day and escalating depending on the severity.

Understanding these aspects helps taxpayers effectively navigate Section 133 (6) notices and remain compliant with tax regulations.

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