This is easy learning notes on Taxation law of India.

1. Presented By

2. Fundamental Principles relating to Tax Laws
Basic concepts by which a government is meant to be
guided in designing and implementing an equitable
taxation regime. These include:
(1) Adequacy: taxes should be just-enough to generate
revenue required for provision of essential public services.
(2) Broad Basing: taxes should be spread over as wide as
possible section of the population, or sectors of economy,
to minimize the individual tax burden.
(3) Compatibility: taxes should be coordinated to ensure tax
neutrality and overall objectives of good governance.
(4) Convenience: taxes should be enforced in a manner that
facilitates voluntary compliance to the maximum extent
possible.

3. (5) Earmarking: tax revenue from a specific
source should be dedicated to a specific purpose
only when there is a direct cost-and-benefit link
between the tax source and the expenditure, such
as use of motor fuel tax for road maintenance.
(6) Efficiency: tax collection efforts should not
cost an inordinately high percentage of tax
revenues.
(7) Equity: taxes should equally burden all
individuals or entities in similar economic
circumstances.

4. (8) Neutrality: taxes should not favor any
one group or sector over another, and
should not be designed to interfere-with or
influence individual decisions-making.
(9) Predictability: collection of taxes should
reinforce their inevitability and regularity.
(10) Restricted exemptions: tax exemptions
must only be for specific purposes (such as
to encourage investment) and for a limited
period.
(11) Simplicity: tax assessment and
determination should be easy to understand
by an average taxpayer.

5. Taxing power and constitutional limitations
Apart from Art 265 and the limitations
imposed by the division of the taxing
power between the Union and the State
Legislature by the relevant entries in the
Legislative list, the taxing power of either
Legislature is particularly subject to the
following limitation imposed by particular
provision of our constitution.

6. (i) It must not contravene Art 13.
(ii) It must not deny equal protection of the
laws (Art 14).
(iii) It must not constitute an unreasonable
restrictions upon the rights of business
[Art 19(l)(g)].
(iv) No tax shall be levied over the proceeds of
which are specifically appropriated in
payment of expenses for the promotion or
maintenance of any particular religion or
religions denomination. (Art 27).

7. (v) A State legislature or any authority within
the State cannot tax the property of the Union
(Art 285).
(vi) The Union cannot tax the property and
income of a State (Art 289).
(vii) The power of a State to levy tax on sale or
purchase of goods is subject to Art 286.
(viii) Save in so far as Parliament may by Law
otherwise provide a State shall not tax the
consumption or sale of electricity in the case
specified in Art 287.

8. (ix) Imposition of tax should not impede the
free flow of trade. Commerce and intercourse
(Art 301)
(x) Levy of tax must not offend Art 304 (a).

9. Some Important Case Laws
 The scope of Art 301 was again defined
by the Supreme 29 Court in Automobile
Transport Ltd., V State of Rajasthan
There the majority held that
regulatory measure of imposing
compensatory taxes for the use of
trading facilities did not hamper trade
commerce and inter-course but rather
facilitated them and therefore were
not hit by the freedom declared by the
Art 301.

10.  In State of Assam, V Labanya Prabha , the
impunged Act imposed tax on motor vehicles
in Assam. The petitioner challenged the tax as
violative of Art 301. The court rejected the
plea as the said Act was only regulatory
measures imposing compensatory taxes for
facilitating trade commerce and intercourse .

11. Distinction between : Tax, Fee and Cess
 Tax - Any money the government takes from you (legally)
for doing any economic activity is referred to as tax.
Generally, this is a percentage of the money you receive or
give. Taxes can be either direct, where the money goes directly
from your pocket to the govt's kitty like income tax, or
indirect, where the money goes from your pocket to someone
else's pocket and then to the govt's pocket like customs or
excise.
 Duty - In economics, a duty is a kind of tax levied by a
state. It is often associated with customs, in which context they
are also known as tariffs or dues. The term is often used to
describe a tax on certain items purchased abroad.

12. This is an on-border tax charged on goods
(commodities, or things that you can physically touch)
either while coming into the country or going out of the
country. Generally, a percentage of the value of the
good.
Cess - This is a tax on tax, levied by the govt
for a specific purpose. Generally, cess is
expected to be levied till the time the govt gets
enough money for that purpose. The education
cess, that is levied currently, is meant to
finance basic education in the country.

13. The term cess is confusing because it means
different things to different people, depending on
where a person lives. In Ireland, Cess is nothing but
a tax, while in Scotland it means a property tax. In
Thailand, the term is used to refer to Rubber Export
Tax.
However in modern India, cess refers to a tax that is
levied for a particular reason to collect money to
fund particular project for the betterment of the
country. For example, education cess is collected in
order to provide education in rural countries.
Fee is nothing but amount charged for providing
the services,

14. Tax avoidance and Tax evasion.
What Is Tax Avoidance?
Tax avoidance is the legitimate minimizing
of taxes, using methods included in the tax
code. Businesses avoid taxes by taking all
legitimate deductions and by sheltering
income from taxes by setting up employee
retirement plans and other means, all legal
and under the Internal Revenue Code or
state tax codes.

15. What is Tax Evasion?
 Tax evasion, on the other hand, is the illegal practice
of not paying taxes, by not reporting income,
reporting expenses not legally allowed, or by not
paying taxes owed. In this situation, the phrase
"ignorance of the law is no excuse" comes to mind.
 Tax evasion is most commonly thought of in relation
to income taxes, but tax evasion can be practiced by
businesses on state sales taxes and on employment
taxes. In fact, tax evasion can be practiced on all the
taxes a business owes.
 Tax evasion is the illegal act or practice of failing to
pay taxes which are owed. In businesses, tax
evasion can occur in connection with income
taxes, employment taxes, sales and excise taxes, and
other federal, state, and local taxes.

16. Double taxation
Double taxation is a taxation principle
referring to income taxes paid twice on
the same source of earned income. It can
occur when income is taxed at both the
corporate level and personal level.
Double taxation also occurs in
international trade when the same
income is taxed in two different
countries.

17. Tax planning and Tax management
Tax Planning Tax Management
(i) The Objective of Tax Planning is to
minimize the tax liability
The objective of Tax Management is to comply with
the provisions of Income Tax Law and its allied rules.
(ii) Tax Planning also includes Tax
Management
Tax Management deals with filing of Return in time,
getting the accounts audited, deducting tax at source
etc.
(iii) Tax Planning relates to future.
Tax Management relates to Past ,. Present, Future.
Past – Assessment Proceedings, Appeals, Revisions etc.
Present – Filing of Return, payment of advance tax etc.
Future – To take corrective action
(iv) Tax Planning helps in minimizing Tax
Liability in Short-Term and in Long Term.
Tax Management helps in avoiding payment of
interest, penalty, prosecution etc.
(v) Tax Planning is optional. Tax Management is essential for every assessee.

18. Overviewof tax litigation
Tax litigation under the Indian judicial system
occupies a large portion of judicial time. The
adjudicating and quasi-judicial appellate
authorities, which act as fact-finding bodies
under the Income Tax Act 1961, Central Excise
Act 1944, Customs Act 1962, Good & Service
Tax Law. The key statutes on the Goods &
Service Tax Law are the:
 Central Goods and Services Act 2017.

19.  Union Territory Goods and Services Act 2017.
 Integrated Goods and Services Act 2017.
 GST
Legislative framework
Civil tax litigation
 Income Tax Act 1961 (Chapters XIX-A, XIX-
B and XX).
 Income Tax Rules 1962.
 The Constitution of India 1950.
 Double taxation avoidance agreements.

20.  Income Tax (Dispute Resolution Panel) Rules
2009.
 Income Tax (Appellate Tribunal) Rules 1963.
 Authority for Advance Rulings (Procedure)
Rules 1993.
 Income Tax Settlement Commission
(Procedure) Rules 1997.
 Black Money (Undisclosed Foreign Income
and Assets) and Imposition of Tax Act 2015
 Benami Transactions (Prohibition)
Amendment Act 2016

21.  Good & Service Tax Law.
 Code of Civil Procedure 1908.
 Central Excise Act 1944.
 Customs Act 1962.
 Finance Act 1994 (Service Tax).
 State-level value added tax, sales tax, entry
tax, luxury tax and advertisement tax
legislation.

22. Criminal tax litigation
 Criminal tax litigation is regulated by the following
principal pieces of legislation:
 Income Tax Act 1961 (Chapter XXII).
 Income Tax Rules 1962.
 Code of Criminal Procedure 1973.
 Black Money (Undisclosed Foreign Income and Assets)
and Imposition of Tax Act 2015
 Benami Transactions (Prohibition) Amendment Act,
2016
 Good & Service Tax Law
 Central Excise Act 1944.
 Customs Act 1962.
 Finance Act 1994 (Service Tax)

23. Resolving disputes before
commencing court proceedings
Under the administrative procedure (which is
in the remit of the Commissioner of Income
Tax (CIT) and the Commissioner of Income
Tax (Appeals) (CIT(A)), the main procedures
used to resolve disputes before
commencing proceedings are:

24.  Filing objections with the Dispute Resolution Panel
(DRP).
The taxpayer must file objections to the draft order
proposed by the Assessing Officer (AO) within 30 days of
the receipt of the draft order. Taxpayers are not obliged to
guarantee the payment of the tax assessed until the final
order is passed by the AO in accordance with DRP
directions. The DRP has nine months to consider the AO's
and the taxpayer's facts and arguments and issue
directions to the AO. Directions issued by the DRP are
binding on the AO and the AO must issue the final order
in accordance with these directions within 30 days of
receipt. The DRP can confirm, reduce or enhance the
additions proposed by AO. However, it cannot remand the
matter back to the AO. If the taxpayer is unsatisfied with
the decision, he can file an appeal with the Income Tax
Appellate Tribunal.

25.  Filing an appeal with the CIT(A).
The taxpayer can file an appeal (even for transfer pricing
cases as well as cases of foreign companies and non-
residents) with the CIT(A) within 30 days of receipt of the
final order. Taxpayers are not obliged to guarantee the
payment of the tax assessed. However, they must pay
additional taxes, unless the demand is stayed by
administrative authorities. The CIT(A) can confirm,
reduce, enhance or annul the assessment. In addition, a
taxpayer can ask the Principal Commissioner of Income
Tax (PCIT) / Commissioners of Income Tax (CIT) to
grant immunity from prosecution if he has made an
application for settlement under the Income Tax Act 1961
(Income Tax Act) and the proceedings for settlement have
abated (section 278AB, Income tax Act).

26.  Resolving a dispute under the jurisdiction of
the Income Tax Settlement Commission
(ITSC).
The ITSC provides a mechanism for a one-time
settlement of taxes to evaders or taxpayers who
default unintentionally. The ITSC has wide powers
to settle tax disputes on facts and circumstances of
the case. Orders passed by the ITSC are final and
cannot be appealed, except by way of writ before
the High Court only on points of law. The ITSC also
has powers to grant immunity from penalty and
prosecution.

27.  Resolving a dispute under the jurisdiction of
the Authority for Advance Rulings (AAR).
The AAR is an independent adjudicatory body,
which issues binding rulings in relation to civil tax
disputes. The scheme of advance rulings was
introduced by the Finance Act 1993 (effective from
1 June 1993). Accordingly, a high-level body
headed by a retired judge of the Supreme Court has
been set-up which is empowered to issue rulings,
which are binding both on the Income Tax
Department and the applicant. Advance rulings are
written opinions or authoritative decisions such as
determinations:

28. Resolving a dispute by
advance pricing agreements
(APA).The APA mechanism was introduced in 2013 to
determine the arm's length price and the method of
determination of arm's length price of an
international transaction between two associated
enterprises. An APA is valid for five years with
provision for four years' rollback. The progress of
the APA scheme strengthens the government's
resolve to foster a non-adversarial tax regime. The
Indian APA programme has been appreciated
nationally and internationally for being able to
address complex transfer pricing issues in a fair and
transparent manner.

29. BASIC CONCEPTS OF INCOME
TAX
 An assesses may get income from different sources,
eg:- salaries-house property income-profits and gains
of business or profession - capital gains income from
other sources like interest on securities , lottery
winnings, races etc.

Income from each of these sources calculated first to
find out the gross total income, and then permissible
deduction allowed arriving in total income according
to sec 80 c to 80 u. Every person whose taxable
income in the previous year exceeds the minimum
taxable limit is liable to pay income tax during the
current financial year at the rates applicable to the
current financial year.

30. ASSESSMENT YEAR SEC 2(9)
 Assessment year means the period of 12
months commencing on the first day of
April every year and ending on 31st
march of the next year. The current
assessment year is 2007 -008(1.4.2007 to
31.03.2008).
An Assessee is liable to pay tax on the
income of the previous year during the
next following assessment year. Eg: -
during the Assessment year 2007-08
income earned during 2006-07 is taxed.

31. PREVIOUS YEAR SEC 3
 Previous year means the financial
year immediately preceding the
assessment year. The previous year
relevant to the Assessment year
2007-08 is 20017-07(1.4.06 to
31.03.18).ie the year in which
income is earned is known as
previous year.

32. PERSONS SEC 2(34)
 1. Individual
2. Hindu undivided family
3. Company
4. Firm
5. Association of persons or body of
individual
6. Local authority
7. Artificial juridical person

33. ASSESSEE SEC 2(7)
Assessee is a person, who has liability to
pay tax or any other sum of money under
Income Tax act of 1961, so the afore said
persons include in the category of
Assessee. Every Assessee whose taxable
income in the previous year exceeds the
minimum taxable limit is liable to pay
income tax during the current financial
year at the rates applicable to the current
financial year.

34. EXCEPTIONS TO THE GENERAL
RULE
Generally income earned in the previous year is
taxed in the assessment year. But there are certain
exceptions to the general rule. Ie the previous year
and assignment year are same; the Assessee is liable
to be assessed in the same year in which he earns the
income in the following case,
1. Income from non resident shipping company
2. Income of person leaving India
3. Income of person likely to transfer assets to avoid
tax
4. Income from discontinued business.

35. RESIDENTIAL STATUS
Income tax is charged on total income earned by an
Assessee during the previous year, but at the rate
applicable to the assessment year. It shall be
determined on the basis of the residential status of
the Assessee. Sec.6 of the act divides the Assessee into
3 categories’
*Resident
*Non resident
*Not ordinary resident
There is basic and additional condition for
determining the residential status of different
assessee.

36. Basic condition
1. If he has been India in that previous
year for a period or periods amounting in
all to 182 days or more
2.if he has been India for a period or
periods amounting in all to 365 days or
more, during the 4 years preceding the
relevant previous year and has been in
India for a period or periods amounting
in all to 60 days or more in that previous
year.

37. Additional conditions
1.An individual who has been in
India at least 2 out of 10 previous
years preceding the relevant
previous year.
2.The individual has been India for
at least 730 days in all during the 7
previous year preceding the relevant
previous year.

38. RESIDENT AND ORDINARY
RESIDENT
Persons who are resident in India is
popularly known as ordinary
resident. An individual, to become an
ordinary resident in India in any
previous year should also satisfy the
two additional conditions along with
basic conditions.

39. NOT ORDINARILY RESIDENT INDIVIDUAL-
SEC.6 (6)
If an individual fulfills any one
of the basic conditions
(specified in the case of
resident) but doesn’t satisfy
both additional conditions, he
becomes a ‘not ordinary
resident’

40. NON RESIDENT INDIVIDUAL
As per section 2(30) of the
income tax act, if an Assessee
doesn’t fulfill any of the two
basic conditions or tests will
be treated as non resident
Assessee during the relevant
previous year.

41. Clubbing of Income

42. SEC
TION
NATURE OF
TRANSACTIO
N
CLUBBED IN
THE
HANDS OF
CONDITIONS/
EXCEPTIONS
RELEVANT
REFERENCE
60 Transfer of
Income without
transfer of
Assets.
Transferor who
transfers the
income.
Irrespective of:
1. Whether
such transfer
is revocable or
not. 2.
Whether the
transfer is
effected before
or after the
commenceme
nt of IT Act.
1. Income for the
purpose of Section 64
includes losses. [P.
Doriswamy Chetty 183
ITR 559 (SC)] [also see
Expl. (2) to Section 64]
2. Section 60 does not
apply
if corpus itself is
transferred.
[Grandhi Narayana Rao
173
ITR 593 (AP)]
Clubbing of Income

43. SECT
ION
NATURE
OF
TRANSA
CTION
CLUBBED
IN THE
HANDS OF
CONDITIONS/
EXCEPTIONS
RELEVANT REFERENCE
61 Revocabl
e transfer
of Assets.
Transferor
who
transfers the
Assets.
Clubbing not
applicable if: 1.
Trust/transfer
irrevocable during
the lifetime of
beneficiaries/transf
eree or
2. Transfer made
prior to 1-4-1961
and not revocable
for a period of 6
years.
Provided the
transferor derives
no direct or indirect
benefit from such
income in either
case.
Transfer held as revocable
1. If there is provision to re-
transfer directly or indirectly
whole/part of income/asset to
transferor;
2. If there is a right to
reassume power, directly or
indirectly, the transfer is held
revocable and actual exercise
is not necessary.
[S. Raghbir Singh 57 ITR 408
(SC)]
3. Where no absolute right is
given to transferee and asset
can revert to transferor in
prescribed circumstances,
transfer is held revocable.
[yotendrasinhji vs. S. I.
Tripathi 201 ITR 611 (SC)]

44. SECT
ION
NATURE OF
TRANSACTIO
N
CLUBBED IN
THE
HANDS OF
CONDITIONS/
EXCEPTIONS
RELEVANT
REFERENCE
64(1)(
ii)
Salary,
Commission,
Fees or
remuneration
paid to spouse
from a concern
in which an
individual has a
substantial*
interest.
Spouse whose
total income
(excluding
income to be
clubbed) is
greater.
Clubbing not
applicable
if:Spouse
possesses
technical or
professional
qualification
and
remuneration is
solely
attributable to
application of
that
knowledge/qual
ification.
1. The relationship of
husband and wife must
subsist at the time of
accrual of the income.
[Philip John Plasket
Thomas 49 ITR 97 (SC)]
2. Income other than
salary,
commission, fees or
remune-
ration is not clubbed
under
this clause

45. SECT
ION
NATURE
OF
TRANSA
CTION
CLUB
BED
IN THE
HAND
S OF
CONDITIONS/
EXCEPTIONS
RELEVANT
REFERENCE
64(1)(
iv)
Income
from
assets
transferr
ed
directly
or
indirectly
to the
spouse
without
adequat
e
consider
ation.
Individ
ual
transfe
rring
the
asset.
Clubbing not applicable if, The
assets are transferred;
1. With an agreement to live
apart.
2. Before marriage.
3. Income earned when
relation does not exist.
4. By Karta of HUF gifting co-
parcenary property to his wife.
L. Hirday Narain vs. ITO 78
ITR 26 (SC)
5. Property acquired out of pin
money. [R.B.N.J. Naidu vs.
CIT
29 ITR 194 (Nag.)]
1. Income earned out of
Income arising from
transferred assets not
liable for clubbed.
[M.S.S. Rajan 252 ITR
126 (Mad)]2. Cash gifted
to spouse and he/she
invests to earn interest.
[Mohini Thaper vs.
CIT 83 ITR 208 (SC)]3.
Capital gain on sale of
property which was
received without
consideration from
spouse [Sevential M.
Sheth
vs. CIT 68 ITR 503
(SC)]4. Transaction must
be real.

46. SECT
ION
NATURE OF
TRANSACTIO
N
CLUBBED IN
THE
HANDS OF
CONDITIONS/
EXCEPTIONS
RELEVANT
REFERENCE
64(1)(
vi)
Income from
the assets
transferred to
son’s wife.
Individual
transferring the
Asset.
Condition:
The transfer
should be
without
adequate
consideration.
Cross transfers are also
covered
[C.M.Kothari 49 ITR 107
(SC)]

47. SECT
ION
NATURE OF
TRANSACTIO
N
CLUBBED IN
THE
HANDS OF
CONDITIONS/
EXCEPTIONS
RELEVANT
REFERENCE
64(1)(
vii),(vi
ii)
Transfer of
assets by an
individual to a
person or AOP
for the
immediate or
deferred benefit
of his:
(vii) – Spouse.
(viii) – Son’s
wife.
Individual
transferring the
Asset.
Condition:
1. The transfer
should be
without
adequate
consideration.
1. Transferor need not
necessarily have taxable
income of his own. [P.
Murugesan 245 ITR 301
(Mad)]2. Wife means
legally wedded
wife. [Executors of the
will of
T.V. Krishna Iyer 38 ITR
144
(Ker)]

48. S
E
C
TI
O
N
NATUR
E OF
TRANS
ACTION
CLUBBED IN THE
HANDS OF
CONDITIO
NS/
EXCEPTIO
NS
RELEVANT
REFERENCE
6
4(
1
A)
Income
of a
minor
child
[Child
includes
step
child,
adopted
child
and
minor
married
daughte
r].
1. If the marriage subsists, in
the hands of the parent
whose total income is
greater; or;
2. If the marriage does not
subsist, in the hands of the
person who maintains the
minor child.
3. Income once included in the
total income of either of
parents, it shall continue to be
included in the hands of some
parent in the subsequent year
unless AO is satisfied that it is
necessary to do so (after
giving that parent opportunity
of being heard)
Clubbing
not
applicable
for:—
1. Income
of a minor
child
suffering
any
disability
specified
u/s. 80U.
2. Income
on account
of manual
work done
by the
minor child.
1. Income out of property
transferred for no
consideration to a minor
married daughter, shall
not
be clubbed in the
parents’
hands. [Section 27]2.
The parent in whose
hands
the minor’s income is
clubbed is entitled to an
exemption up to Rs.
1,500
per child. [Section
10(32)]
Column 3.= 3. Income on
account of any activity
involving application of
skills, talent or specialized
knowledge and
experience.

49. SEC
TIO
N
NATURE
OF
TRANSAC
TION
CLUBBED IN THE
HANDS OF
CONDITIONS/
EXCEPTIONS
RELEVANT
REFERENCE
64(2) Income of
HUF from
property
converted
by the
individual
into HUF
property.
1. Income is
included in the
hands of
individual & not
in the hands of
HUF.
Clubbing
applicable even
if:
The converted
property is
subsequently
partitioned;
income derived
by the spouse
from such
converted
property
will be taxable in
the hands
of individual..
Fiction under this section
must
be extended to
computation of
income also. [M.K.
Kuppuraj
127 ITR 447 (Mad)]

50. Income Tax Authorities: Power and Functions
Appointment of Income Tax Authorities in
India
The Central Government can appoint those persons which
it thinks are fit to become Income Tax Authorities. The
Central Government can authorize the Board or a Director-
General, a Chief Commissioner or a Commissioner or a
Director to appoint income tax authorities below the ranks
of an Deputy Commissioner or Assistant Commissioner,
According to the rules and regulations of the Central
Government controlling the conditions of such posts.

51. Powers of Income Tax Authorities
1) Power relating to Discovery, Production of evidence,
etc: The Assessing Officer, The Joint Commissioner, the Chief
Commissioner or the Commissioner has the powers as are
provided in a court under the code of Civil Procedure, 1908,
when trying to suit for the following matters:
(a) discovery and inspection;
(b) to enforce any person for attendance, and examining him on
oath
(c) issuing commissions; and
(d) compelling the production of books of account and other
document.

52. 2) Power of Search and Seizure:
Today it is not hidden from income tax
authorities that people evade tax and keep
unaccounted assets. When the prosecution
fails to prevent tax evasion, the department
has the to take actions like search and
seizure.

53. 3) Requisition of Books of account, etc:
Where the Director or the Director-General or
Commissioner or the Chief Commissioner in consequence
of information in his possession, has reason to believe that
(a), (b), or (c) as mentioned under section 132(1) and the
book of accounts or other documents or the assets have
been taken under custody by any authority or officer under
any other law, then the Chief Commissioner or the
Director General or Director or Commissioner can
authorize any Joint Director, Deputy Director, Joint
Commissioner, Assistant Commissioner, Assistant
Director, or Income tax Officer to require the authority to
provide sue books of account, assets or any documents to
the requisitioning officer, when such officer is of the
opinion that it is no longer necessary to retain the same in
his custody.

54. 4) Power to Call for Information:
The Commissioner The Assessing Officer or the Joint Commissioner
may for the purpose of this Act:
(a) can call any firm to provide him with a return of the addresses and
names of partners of the firm and their shares;
(b) can ask any Hindu Undivided Family to provide him with return
of the addresses and names of members of the family and the
manager;
(c) can ask any person who is a trustee, guardian or an agent to deliver
him with return of the names of persons for or of whom he is an agent,
trustee or guardian and their addresses;
(d) can ask any person, dealer, agent or broker concerned in the
management of stock or any commodity exchange to provide a
statement of the addresses and names of all the persons to whom the
Exchange or he has paid any sum related with the transfer of assets or
the exchange has received any such sum with the particulars of all
such payments and receipts;

55. 5) Power of Survey:
The term 'survey' is not defined by the Income Tax Act.
According to the meaning of dictionary 'survey' means
casting of eyes or mind over something, inspection of
something, etc. An Income Tax authority can have a
survey for the purpose of this Act.
The objectives of conducting Income Tax surveys are:
• To discover new assessees;
• To collect useful information for the purpose of
assessment;
• To verify that the assessee who claims not to maintain
any books of accounts is in-fact maintaining the books;
• To check whether the books are maintained, reflect the
correct state of affairs.

56. 6) Collection of Information:
For the purpose of collection of information
which may be useful for any purpose, the
Income tax authority can enter any building
or place within the limits of the area assigned
to such authority, or any place or building
occupied by any person in respect of whom
he exercises jurisdiction.

57. Offences and Penal Sanctions Revenue
Default in complying with provisions of or
with conditions prescribed under the Income-
tax Act would attract certain penalty and in
critical cases prosecutions as well.
There are three modes built in the fiscal
legislation for encouraging tax compliance:
(a) Charge of Interest, (b) imposition of
penalty (c) launching of prosecution against
tax delinquents.

58. The defaults which may invite levy of penalty
Chapters XVII and XXI of Income-tax Act,
1961, contain various provisions empowering
an Income-tax Authority to levy penalty in
case of certain defaults. The following
defaults may invite levy of penalty:
 (i) When the assessee is in default or is
deemed to be in default in making payment
of tax, including the tax deducted at source,
advance tax and the self assessment tax.
[Section 221 read with Sec.201(1)]

59.  (ii) Failure to pay the advance tax as
directed by the Assessing Officer or as
estimated by the assessee. [Section 273(1)]
 (iii) Failure to comply with a notice issued
under section 142(1) or 143(2) or failure to
comply with the direction issued under
section 142(2A) to get the accounts
audited. [Section 271(1)(b)]
 (iv) Concealment of particulars of income
or furnishing of inaccurate particulars of
income. [Section 271(1)(c)]

60.  (v) Failure to maintain books of accounts and documents
by persons carrying on profession or business as
prescribed under section 44AA. [Section 271A]
 (vi) Failure to get the accounts audited in prescribed
circumstances or failure to obtain the prescribed audit
report within prescribed time period of failure to furnish
the audit report along with the return, as required under
section 44AB. [Section 271B]
 (vii) Failure to subscribe to the eligible issue of capital
[Section 271BB]
 (viia) Penalty for failure to deduct tax at source. [Section
271C]
 (viii) Accepting of any loan or deposit or repayment of
deposit of Rs.20,000 or more otherwise than by account
payee cheque or account payee draft, in contravention of
the provisions of Section 269SS. [Section 271D]

61.  (viiia) Repayment of loan in
contravention of the conditions
imposed in section 269T. [Section
271E]
 (viiib) A. Failure of file the return of
income as required under Section 239
(1), shall entail imposition of penalty.
[Section 271F]

62. B. Failure to file the return as required under
the proviso to Section 139(1), in the event of
assessee fulfilling the prescribed conditions,
i.e., certain persons in occupation of
immovable property or owner of motor
vehicle or subscriber to telephone, one who
incurred expenditure on foreign travel, the
holder of the credit card or a member of a
club, subject to specific conditions, are
required to file the return as per proviso to
Section 139(1), failing which penalty may be
imposed. (Proviso to Section 271F)

63.  (ix) Refusal to answer in contravention of legal
obligation. [Section 272A(1)(a)]
 (x) Refusal to sign any statement made in the course
of income-tax proceedings. [Section 272A(1)(b)
 (xi) Failure to attend or give evidence or produce
books of accounts and documents in compliance
with the requirements of summons under section
131(1). [Section 272A(1)(c)]
 (xii) Failure to comply with the provisions of section
139A dealing with the application for and allotment
of Permanent Account Number or General Index
Register Number. [Section 272A(1)(d)]

64.  (xiii) Failure to furnish information regarding
securities. [Section 272A(2)(a)]
 (xiv) Failure to give notice of discontinuance
of business or profession. [Section 272A(2)(b)]
 (xv) Failure to furnish in due time information
sought under section 133 of Income-tax Act.
[Section 272A(2)(c)]
 (xvi) Failure to furnish in due time prescribed
returns/statements. [Section 272A(2)(c)]

65.  (xvii) Failure to allow inspection or take copies of
registers of registers of companies. [Section
272A(2)(d)]
 (xviii) Failure to furnish in due time the return of
income by charitable or religious institutions. [Section
272A(2)(e)]
 (xix) Failure to deliver in due time a copy of declaration
of non-deduction of tax at source u/s.197A. [Section
272A(2)(f)]
 (xx) Failure to furnish a certificate of tax deducted at
source to the person on whose behalf tax has been
deducted or collected as required by Section 203 or
Section 206C. [Section 272A(2)(g)]
 (xxi) Failure to deduct and pay tax from salary payable
to an employee as directed by the Assessing Officer or
the Tax Recovery Officer as required by Section 226(2).
[Section 272A(2)(h)]