TaxTMI 
TaxTMI 
Remedies Against Property of Representative Assessees : Clause 304(5) of the Income Tax Bill, 2025 Vs. Section 167 of the Income-tax Act, 1961
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.... of their relationship, control, or management, hold or receive income on behalf of others. This mechanism is particularly significant in contexts such as trusts, guardianships, and agency relationships, where income may accrue to one person but is legally or beneficially owned by another. Clause 304(5) of the Income Tax Bill, 2025, and Section 167 of the Income-tax Act, 1961, both address the remedies available to the Assessing Officer against the property of representative assessees. These provisions are central to the enforceability of tax demands and the practical administration of tax laws, especially in cases involving intermediaries or fiduciaries. This commentary delves into the legislative intent, detailed analysis, practical impl....
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....ax, whether the demand is raised against the representative assessee or against the beneficiary direct." This clause is situated within a comprehensive framework (Clause 304) governing the liabilities and responsibilities of representative assessees. Key aspects of Clause 304(5) include: * Scope of Property: The provision is expansive, covering "all property of any kind" vested in, controlled, or managed by the representative assessee. This includes movable and immovable property, tangible and intangible assets, and any form of beneficial interest. * Remedies Available: The Assessing Officer is empowered to exercise "the same remedies in the same manner" as would be available against the property of a direct assessee. This encompasses ....
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....iciary direct." Section 167, as it stands, is almost identical in language and effect to Clause 304(5) of the 2025 Bill. The key features are: * Remedies Against Property: The provision empowers the Assessing Officer to proceed against any property vested in or managed by the representative assessee, mirroring the remedies available against a direct assessee. * Comprehensive Reach: The phrase "in as full and ample a manner" further emphasizes the breadth of the Assessing Officer's powers, ensuring that no lesser standard applies in cases involving representative assessees. * Demand Addressed to Either Party: The section clarifies that the remedies are available "whether the demand is raised against the representative assessee or ....
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...., certain practical issues may arise: * Scope of "Control or Management": The phrase "vested in or under the control or management" could, in some cases, give rise to disputes about the extent of control necessary to trigger the provision. For instance, where a representative assessee has only limited powers, questions may arise as to whether the property can be subjected to recovery proceedings. * Priority of Claims: In cases where the representative assessee holds property on behalf of multiple beneficiaries, or where the property is subject to other claims (e.g., secured creditors), the priority of the tax department's claim may be contested. * Interaction with Other Laws: The enforcement of remedies under these provisions may ....
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....ts to use trusts or other fiduciary arrangements as vehicles for tax evasion or avoidance. Comparative Analysis: Clause 304(5) vs. Section 167 A close reading of Clause 304(5) of the Income Tax Bill, 2025, and Section 167 of the Income-tax Act, 1961, reveals that the two are substantively identical in language, scope, and effect. However, a comparative analysis highlights the following points: * Legislative Continuity: The near-identical wording reflects a deliberate choice to maintain legislative continuity in the transition from the 1961 Act to the 2025 Bill. This provides certainty and stability to taxpayers and administrators alike. * Structural Integration: Clause 304(5) is part of a broader, more systematically organized provisi....