TaxTMI 
TaxTMI 
Quasi-Judicial Powers of Income-tax Authorities : Clause 246 of the Income Tax Bill, 2025 Vs. Section 131 of the Income-tax Act, 1961
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.... and attendance of witnesses, among other procedural powers. These powers are critical for ensuring that tax authorities can conduct thorough inquiries, investigations, and assessments, thereby upholding the integrity of the tax system. The proposed Clause 246 seeks to modernize and, in some respects, re-codify the existing powers u/s 131. It incorporates contemporary administrative structures, addresses procedural nuances, and aims to clarify the scope and application of these powers. This commentary provides a comprehensive analysis of Clause 246, its objectives, detailed provisions, practical ramifications, and a comparative assessment with Section 131 of the 1961 Act. The analysis also considers the broader legal and policy context, hi....
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....ner, and the Dispute Resolution Panel (as referred to in section 275(17)(a)). This list reflects the contemporary administrative hierarchy and aligns with the evolution of appellate and dispute resolution mechanisms in tax law. Nature of Powers: The authorities are vested with powers equivalent to those of a civil court under the Code of Civil Procedure, 1908, specifically in relation to: * Discovery and inspection; * Enforcing the attendance of any person, including officers of banking companies, and examining them on oath; * Compelling the production of books of account and other documents; * Issuing commissions. These powers are pivotal in facilitating a robust fact-finding process, enabling authorities to break through non-coo....
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....on grants substantial latitude to authorities, emphasizing the primacy of effective enforcement. Sub-section (3): Power to Impound Documents Clause 246(3) empowers authorities to impound books of account or other documents produced during proceedings, subject to rules made in this behalf. This is an essential tool to prevent tampering, destruction, or concealment of evidence. The sub-section is broadly worded, covering both proceedings under sub-sections (1) and (2), thus extending to both pending and non-pending proceedings. Sub-section (4): Procedural Safeguards for Impounding To prevent misuse of the impounding power, Clause 246(4) introduces procedural safeguards: * The Assessing Officer or Assistant Director must record reasons ....
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....of powers and reduces ambiguity. * Checks and Balances: While the provision grants wide powers, it also mandates procedural compliance, thereby fostering responsible exercise of authority. For the Legal System The provision's alignment with the CPC facilitates judicial review and ensures that the exercise of such powers can be challenged on established legal grounds, including abuse of process, violation of natural justice, or lack of jurisdiction. Comparative Analysis: Clause 246 of the Income Tax Bill, 2025, and Section 131 of the Income-tax Act, 1961 Structural and Substantive Parallels Both Clause 246 and Section 131 are fundamentally similar in their structure and purpose. They confer powers equivalent to those of a civil co....
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....en in Section 131. * International Agreements: Clause 246(2)(a) refers to agreements u/s 159, while Section 131(2) references sections 90 and 90A (Double Taxation Avoidance Agreements and related provisions). This reflects updated cross-referencing and possibly a reorganization of international tax provisions in the 2025 Bill. * Authorised Officer's Powers: Clause 246(2)(c) expressly refers to authorised officers u/s 247(1), aligning the exercise of powers with specific search and seizure actions, whereas Section 131(1A) references the authorised officer u/s 132(1). * Procedural Refinement: Clause 246(4) expressly excludes holidays from the fifteen-day impounding limit, providing greater clarity. Section 131's corresponding pr....
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....eview of compliance protocols and legal strategies. The explicit references to new authorities and procedures will require stakeholders to stay abreast of administrative changes. For the Judiciary The harmonization of powers and clearer procedural safeguards may reduce litigation over technicalities, though disputes over the exercise of discretion and procedural propriety will persist. Comparative Perspective with Other Jurisdictions The conferral of civil court-like powers on tax authorities is a common feature in many jurisdictions, reflecting a global recognition of the need for effective enforcement. However, the Indian approach, as reflected in Clause 246, is notable for its detailed procedural safeguards and explicit legislative a....