Taxpayers jitters with extensive search and seizure powers to Assessing Officers

The amendments and changes in the procedural rules including changes in search and seizure provisions in Income Tax Act have had the consequence of setting a cat among pigeons.

Now Assessing Officer can raid any Office or House Without giving any Reason- Start of Tax Terrorism days- a grim reminder of Indira Gandhi Emergency Period

The proposed Finance Bill 2017 modified as many as 40 of existing laws. Under the amendments made in the Finance Bill 2017, an assessing officer can now search (raid) your office or house without giving any reason.

The ghost of “tax terrorism” is haunting the nation once again.

Power of Search of Seizure to Assessing Officers made retrospectively

The central government in the Finance Bill 2017 has made several amendments to the Income Tax Act to provide more powers to the Assessing Officers in conducting search and seizures. The income tax official will not be required to provide any reason to the assessee or to the appellate authorities for whom the search was conducted. This amendment has been done to sustain sensitivity and secrecy of the search action, will be retrospectively effective from 1st of April, 1962.

The Amendment against spirit of Minimum Government-Maximum Governance

As per one of the experts from the Big Four audit firms, this amendment is just opposite of the promise made by the Prime Minister of “minimum government and maximum governance”. This proposed change will just increase harassment and litigation of business owners in the country. Some of the experts consider this change as “new era of inspector Raj”

That’s not all- now Assessing Officers can go back to re-open assessments for past ten years

There is a proposal to widen the scope of search and seizures operations to charitable institutions. Previously, the power to call for a search and seizure operation was vested with a Principal. Commissioner of the Income Tax Department. The Finance Bill, 2017 has delegated this power to the AO, who is 3-4 rank below down the hierarchy.

Also, where the disputed assets valuing rupees 50 lakh are found in a search, the department now could reopen assessments going back 10 years.  Earlier this limit to reopen the assessment U/s 147 of the IT Act was restricted to six years.

Now Assessing Officer can attach your property provisionally for 6 Months

Another amendment in the Income Tax Act is to allow the Assessing Officer to provisionally attach any property of the taxpayer for 6 months, though with prior consent of senior officials.  Now the Income Tax Authorities can avail valuation officer’s services to determine the fair market value of any property or security.

We only wish such powers not abused by Assessing Officers- but as Indira had once said- Absolute Power Corrupts Absolutely

The Finance and Tax experts noted that these powers are fairly extensive and have the possibility of being abused. Both assessee and the tax experts are cautious of the extensive powers given to the Assessing Official.

Corporate leaders believe such amendments in the Finance Bill will impact the investment environment of the country.

Also Read- Now Assessing Officer is not obliged to share reasons of search and Seizure