TaxTMI 
TaxTMI 
TaxTMI 
The Transformation of Information-Gathering Powers : Clause 259 of the Income Tax Bill, 2025 Vs. Section 133C of the Income-tax Act, 1961
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....mpetent to exercise such powers. The evolution of these statutory provisions reflects the changing landscape of tax administration in India, emphasizing transparency, data-driven verification, and efficient information processing. The legal significance of Clause 259 lies in its role in enhancing the administrative capabilities of the income-tax department, ensuring that tax authorities are equipped to verify information in their possession and thereby curb tax evasion and promote compliance. The provision also aligns with the ongoing digital transformation and centralization of tax administration, as seen in the schemes notified under related sections. This commentary undertakes a comprehensive analysis of Clause 259, its objectives, detai....
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.... The evolution from Section 133C to Clause 259 signifies a move towards greater centralization, digitalization, and standardization of these powers, in line with global best practices. Detailed Analysis of Clause 259 of the Income Tax Bill, 2025 Sub-clause (1): Power to Call for Information "For the purposes of verification of information in the possession of the prescribed income-tax authority, such authority may issue a notice requiring any person to furnish any information as may be useful for, or relevant to, any inquiry or proceeding under this Act in such form and manner and within such time, as specified in such notice." This sub-clause vests the prescribed authority with the power to issue notices to any person, requiring the fu....
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.... prescribed income-tax authority may process and utilise such information and document received by him as per the scheme notified u/s 260." This sub-clause provides for the processing and utilization of information received in response to a notice, in accordance with a scheme to be notified u/s 260. Key Features: * Scheme-Based Processing: The reference to a notified scheme u/s 260 indicates a move towards standardized, possibly automated, procedures for handling information, enhancing efficiency and consistency. * Utilization of Information: The authority is empowered not only to process but also to utilize the information for the purposes of inquiries and proceedings, ensuring that the information collected serves its intended purpo....
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....oader trend of digitalization and centralization, facilitating faster and more reliable verification. * Resource Optimization: Standardized procedures can help optimize administrative resources, reduce duplication of efforts, and minimize errors. Comparative Analysis with Section 133C and Rule 12D Section 133C of the Income-tax Act, 1961 Section 133C, inserted by the Finance (No. 2) Act, 2014, and subsequently amended, is the current statutory basis for the power to call for information by prescribed income-tax authorities. It provides as follows: * Empowers the prescribed authority to issue a notice to any person for furnishing information or documents for verification purposes. * Allows for the processing and utilization of such ....
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....ting legislative continuity. * The reference to a scheme u/s 260 in Clause 259 is analogous to the scheme provisions u/s 133C and section 135A, reflecting a shift towards centralized, scheme-based administration. * Clause 259 omits the explicit definition of "proceeding" and the sunset provision, which may be addressed elsewhere in the new Bill or in the notified scheme. Rule 12D of the Income-tax Rules, 1962 Rule 12D prescribes the authority competent to issue notices u/s 133C. As per the current version, the prescribed authority is an income-tax authority not below the rank of Assistant Commissioner of Income-tax, authorized by the Central Board of Direct Taxes (CBDT). Key Elements: * Ensures that only senior officers, specifical....
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....inistrative burden and enable more effective targeting of information requests. * Requirement to adhere to procedural fairness and ensure that notices are justified, relevant, and proportionate. * Accountability mechanisms, including internal oversight and the possibility of judicial review, serve as checks on the exercise of these powers. For the Legal System * Potential for increased litigation around the scope, relevance, and procedural propriety of information requisition notices. * Need for judicial clarification on the limits of these powers, especially in relation to privacy rights and the principle of proportionality. * Importance of harmonizing the centralised schemes with other statutory provisions, including those rela....