TaxTMI 
TaxTMI 
Penal Provisions for Non-Compliance during Tax Inspections : Clause 474 of the Income Tax Bill, 2025 Vs. Section 275B of the Income-tax Act, 1961
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....nise financial records during searches, surveys, or investigations. Their inclusion reflects the legislative intent to deter obstruction and ensure compliance with statutory requirements, thereby safeguarding the integrity of the tax administration process. The Income Tax Bill, 2025, represents a significant overhaul of the existing tax framework, aiming to modernise and rationalise the law. Clause 474, in particular, seeks to penalise non-compliance with section 247(1)(b)(ii), mirroring the objectives of Section 275B of the 1961 Act, which pertains to non-compliance with section 132(1)(iib). This commentary examines the text, purpose, and implications of Clause 474, compares it with its predecessor, and analyses their practical and legal ....
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....acility" to inspect books of account or other documents. * Reference to Section 247(1)(b)(ii): This provision is activated in the context of section 247(1)(b)(ii), which presumably (by analogy to the current law) empowers officers to inspect documents during searches or investigations. * Punishment: The penalty is rigorous imprisonment for up to two years and a fine, indicating the seriousness with which such obstruction is viewed. Key Elements and Interpretation * "Necessary Facility": Both provisions use the phrase "necessary facility," which is not defined in detail. Judicial interpretation has clarified that this includes making available the physical records, providing access to premises, and not obstructing or hiding documents.....
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....minal law and the Code of Criminal Procedure. Comparative Analysis with Section 275B of the Income-tax Act, 1961 1. Structural and Substantive Similarities * Language and Content: Both provisions are nearly identical in language, structure, and content. They criminalise failure to provide inspection facilities and prescribe the same punishment. * Reference to Enabling Section: Both are triggered by failure to comply with a specific enabling provision-section 247(1)(b)(ii) in the 2025 Bill and section 132(1)(iib) in the 1961 Act. * Scope and Application: Both apply to any "person" required to facilitate inspection. 2. Differences and Legislative Evolution * Reference Section: The key difference lies in the enabling section referen....
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....nd Potential Conflicts * Severity of Punishment: The provision for rigorous imprisonment up to two years is notably stringent, reflecting the seriousness with which such offences are viewed. * Potential for Misuse: The broad wording may, in some cases, lead to allegations of misuse or overreach by authorities. Safeguards such as sanction for prosecution and judicial scrutiny are essential to prevent abuse. * Overlap with Other Provisions: Non-compliance may also attract penalties under other sections (e.g., for destruction of evidence or non-appearance). Care must be taken to avoid double jeopardy. Practical Implications of the Transition For Taxpayers The transition from Section 275B to Clause 474 does not materially alter the sub....
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....liance may also constitute offences under other provisions (e.g., destruction of evidence, obstruction of public servant), raising issues of double jeopardy or multiplicity of proceedings. * Procedural Safeguards: The provision does not specify procedural safeguards for the accused, such as notice requirements or opportunity to be heard before prosecution. These may need to be read in from general principles or procedural rules. Conclusion Clause 474 of the Income Tax Bill, 2025, and Section 275B of the Income-tax Act, 1961, serve as critical tools in the enforcement of tax laws, ensuring that authorised officers can access and inspect financial records without obstruction. The provisions are nearly identical in substance, reflecting le....