TaxTMI 
TaxTMI 
Procedural Safeguards and Retention of Seized Materials during search and seizure operations : Clause 251 of the Income Tax Bill, 2025 Vs. Section 132(8), (9), (9A), and (10) of the Income Tax Act, 1961
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....ned procedural and temporal limits. The context for this clause arises from the need to balance the investigative powers of the tax department with the protection of property and procedural rights of individuals and entities. Historically, the search and seizure provisions u/s 132 of the Income-tax Act, 1961, have been the subject of intense judicial scrutiny and evolving legislative amendments, primarily to address concerns of arbitrariness, excessive retention, and lack of procedural safeguards. Clause 251 seeks to codify and, where necessary, reformulate these safeguards and procedures in the new legislative framework proposed by the Income Tax Bill, 2025. 2. Objective and Purpose The legislative intent behind Clause 251 is twofold: * To empower tax authorities to retain and utilize books of account, documents, and electronic data seized during search operations for the purposes of assessment, reassessment, or recomputation of income. * To ensure that such retention is not indefinite or arbitrary, but subject to specific time limits, procedural safeguards, and oversight by higher authorities, thereby protecting the rights of the persons from whom such materials are seized.....
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.... could lead to practical delays or disputes. Sub-Clause (2): Right to Copies and Extracts The authorised officer or the Assessing Officer referred in sub-section (1), shall, on an application made by the person referred to therein, allow him to make copies or take extracts from, the material seized or requisitioned, at such place and time as appointed, and in the presence of a person empowered by such officer in this behalf. Interpretation and Implications: - Right of Access: The provision guarantees the right of the affected person to access seized materials for copying or extracting information. - Procedural Safeguards: The process is subject to application, appointment of place and time, and supervision by an empowered official, balancing access with security and evidentiary integrity. - Business Continuity: This right is crucial for enabling taxpayers to continue their business operations and prepare their defense during ongoing investigations. Comparative Perspective: - Section 132(9), 1961 Act: The corresponding provision in the current Act also allows the person from whom documents are seized to make copies or take extracts, under similar supervised conditions. T....
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....evant, are completed. Interpretation and Implications: - Absolute Cap: This provision imposes an absolute maximum on retention-no authority can allow retention beyond thirty days after the completion of all proceedings for the relevant years. - Finality and Certainty: This ensures that once the tax proceedings are concluded, the taxpayer can expect the return of their documents within a predictable timeframe. - Prevention of Abuse: The cap guards against administrative inertia or misuse of seizure powers. Comparative Perspective: - Section 132(8) Proviso, 1961 Act: The current Act similarly prohibits retention beyond thirty days after the conclusion of all proceedings. The 2025 Bill preserves this safeguard, underscoring its importance as a procedural guarantee. Ambiguity/Potential Issue: The determination of when "all proceedings...are completed" may be contentious, particularly if appeals, revisions, or other collateral proceedings are initiated. Sub-Clause (5): Objection and Remedy to the Board If a person legally entitled to the material seized or requisitioned u/s 247(1) or section 248, objects for any reason, to the approval given by approving authority under su....
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....t out below: 5.1. Section 132(8): Retention of Books of Account and Documents Section 132(8) stipulates that seized books/documents cannot be retained for more than one month from the end of the quarter in which the relevant assessment order is made, unless reasons are recorded in writing and approval of a higher authority is obtained. The approving authority cannot authorize retention beyond 30 days after completion of all proceedings for the relevant assessment years. Comparison: * Clause 251(3) & (4) closely mirror Section 132(8), with similar time frames and requirements for written reasons and higher approval for extended retention. * The language in Clause 251 is streamlined and refers to "approving authority" rather than enumerating specific officials, which may allow for administrative flexibility. * Both provisions seek to prevent indefinite retention and require oversight for extensions. 5.2. Section 132(9): Right to Copy and Extract Section 132(9) provides that the person from whose custody books/documents are seized may make copies or take extracts in the presence of the authorized officer at a time and place appointed. Comparison: * Clause 251(2) is subst....