Non-disclosure of bond acquisition protects holders from inquiry, seizure and tax-accounting in assessment processes.
The Act grants bond-holders a statutory non-disclosure privilege under section 3(1)(a) and bars inquiries based on acquisition under section 3(1)(b), subject to section 3(2) exceptions. Section 4 provides that subscription or acquisition shall not be taken into account for Income-tax, Wealth-tax and Gift-tax proceedings; officers must ignore claims that concealed income was invested in Bonds, cannot inventory or seize Bonds during searches or surveys, and must not accept Bonds in satisfaction of tax arrears.