TaxTMI 
TaxTMI 
Balancing Tax Enforcement and Procedural Fairness in the Search and Seizure : Clause 249 of the Income Tax Bill, 2025 Vs. Explanation to sub-section (1) of section 132A of the Income Tax Act, 1961
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....tive pronouncement on the confidentiality of the subjective satisfaction that forms the basis for coercive actions such as search and seizure. This commentary undertakes a detailed analysis of Clause 249, examining its structure, objective, and implications, followed by a comparative study with the Explanation to sub-section (1) of section 132A of the Income-tax Act, 1961, which similarly provides for non-disclosure of "reason to believe" recorded by the income-tax authority. The analysis will also consider the legislative and judicial context, policy considerations, and practical effects on stakeholders. Objective and Purpose Legislative Intent and Policy Considerations The primary objective of Clause 249 is to insulate the subjective ....
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....249 is concise and categorical. It applies to both "reason to believe" and "reason to suspect" as referred to in sections 247 and 248, which presumably relate to powers of search, seizure, or requisition in the Income Tax Bill, 2025. The clause prohibits disclosure of such reasons to: * Any person (including the assessee or taxpayer concerned) * Any authority (which would include other government agencies or courts, save for constitutional courts exercising writ jurisdiction) * The Appellate Tribunal (the highest fact-finding authority under the Act) The language is unequivocal and admits of no exceptions within the statutory framework of the Income Tax Bill, 2025. The provision thus ousts even the Appellate Tribunal from accessing t....
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....sion does not specify any mechanism for ensuring that the reasons are indeed recorded and are not arbitrary. This places a premium on internal checks and accountability within the department. * Impact on Appellate Review: By barring the Appellate Tribunal from accessing the reasons, the provision curtails the Tribunal's ability to examine the validity of search or seizure proceedings, which may have significant consequences for the taxpayer. Relationship with Sections 247 and 248 Clause 249 is expressly linked to sections 247 and 248 of the Income Tax Bill, 2025, which are presumed to deal with the powers of search, seizure, or requisition. The "reason to believe" or "reason to suspect" forms the jurisdictional foundation for the ex....
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....rities to meticulously record their reasons for "belief" or "suspicion," as these may be subject to judicial scrutiny even if not disclosed to the assessee. For taxpayers, the provision underscores the importance of procedural compliance and limits the grounds for challenging search or seizure actions. Comparative Analysis with Explanation to sub-section (1) of section 132A of the Income-tax Act, 1961 Text of the Explanation to Section 132A(1) Explanation.--For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal. Comparison of Provisions A close reading of Clause 249 and th....
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....lusion of Clause 249 in the 2025 Bill continues this legislative policy, indicating a conscious decision to maintain the confidentiality of the authority's satisfaction. Judicial Interpretation Prior to the insertion of the Explanation to section 132A(1), courts had sometimes required disclosure of the "reason to believe" to the assessee or the Tribunal, especially in cases where the validity of search or seizure was challenged. The legislative response was to bar such disclosure, as reflected in both the Explanation and Clause 249. However, courts have also clarified that while the reasons need not be disclosed to the assessee, they must be recorded in writing and can be called for and examined by constitutional courts in judicial r....