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Income Tax Notice U/S 133(6)
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Income Tax Notice under Section 133(6)
All you need to know
What is Section 133 (6) of the Income Tax Act?
Section 133(6) of the Income Tax Act, 1961, allows the Income Tax Department to summon anyone who might have useful information for tax assessments. This means the Assessing Officer (AO) or other officials can ask people or businesses to provide documents, accounts, or evidence that can help determine a taxpayer’s income or tax amount. The goal is to ensure accurate tax assessments, and if someone does not comply with the request, they may face penalties. In short, this section helps tax authorities gather important information to keep the tax system fair and transparent.
What is the Purpose Section 133 (6) of the Income Tax Act?
The purpose of Section 133(6) of the Income Tax Act is to enable the Income Tax Department to effectively gather information that is essential for the accurate assessment of income and taxes. Here are the key objectives of this provision:
- Information Gathering: The section empowers tax authorities to summon any person or entity believed to have relevant information about a taxpayer’s financial matters, helping to uncover details that may not be readily available from the taxpayer.
- Ensuring Transparency: By allowing the collection of information from various sources, this provision promotes transparency in the tax assessment process. It helps ensure that all pertinent financial data is considered.
- Accurate Assessments: The primary goal is to ensure that income tax assessments are based on complete and accurate information. This helps in identifying any discrepancies, unreported income, or improper claims of deductions or exemptions.
- Deterrence Against Tax Evasion: By having the authority to gather information from third parties, the provision acts as a deterrent against tax evasion and fraudulent practices, as individuals and entities are aware that their financial dealings can be scrutinized.
- Streamlining Investigations: The section aids in the investigation process by allowing the department to collect necessary evidence quickly and efficiently, which can be crucial for assessing complex financial situations.
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Who is Authorized to Issue a Notice Under Section 133(6)?
A notice under Section 133(6) of the Income Tax Act can be issued by:
- Assessing Officer (AO): The main official who issues these notices. They handle tax assessments and inquiries.
- Commissioner of Income Tax (CIT): In some cases, the CIT can issue notices, especially when more authority is needed.
- Additional Commissioner of Income Tax (Addl. CIT): This officer can also issue notices if it falls under their role.
- Deputy Commissioner of Income Tax (DCIT): Like the AO, the DCIT can issue notices during assessments or inquiries.
Under Section 133(6) who can be summoned ?
Under Section 133(6) of the Income Tax Act, the Income Tax Department has the authority to summon any person who is believed to have information relevant to the assessment or inquiry being conducted. The individuals who can be summoned include:
- Any Person: This includes individuals, whether they are taxpayers or not, who may possess relevant information regarding a taxpayer’s financial affairs.
- Associates and Related Parties: Individuals associated with the taxpayer, such as business partners, directors, or family members, may also be summoned if their information is deemed necessary.
- Bank Officials: Officials from banks or financial institutions can be summoned to provide information regarding the taxpayer’s bank accounts, transactions, or loans.
- Accountants and Financial Advisors: Professionals who have handled the taxpayer’s accounts or provided financial advice can also be called upon to provide relevant information.
- Any Other Relevant Entities: This can include entities like companies, firms, or organizations that may hold information pertinent to the inquiry or assessment.
Penalties or Consequences of Non-compliance of IT notice under section 133 (6)
Failing to respond to notices from the Income Tax Department (ITD) appropriately can result in severe consequences. Here’s a detailed overview of what might occur:
- Invalidation of Your Return: If you ignore notices, your initial tax return may be deemed invalid, leading to a new notice under Section 148. This notice will require you to refile your return, clarify any discrepancies, and submit additional documentation within a specified timeframe.
- Revised Returns: The ITD may require you to file revised returns to disclose any unreported income or to retract any unsupported exemptions or deductions. Failure to comply could lead to further complications.
- Penalties for Non-compliance: Ignoring these requests can attract penalties under Section 272A(2). The penalty starts at ₹100 per day until you comply, which can accumulate to a substantial amount if prolonged.
- Severe Penalties for Tax Evasion: If the inquiry uncovers false income claims or unjustified deductions, taxpayers may face penalties of up to 200% of the evaded tax. Additionally, penal interest will be charged at a rate of 12% per annum, compounding the financial repercussions.
- Legal Action: Persistent non-compliance may also lead to legal proceedings, further complicating your situation and potentially resulting in additional fines or sanctions.
