Clause 252 Power to call for information.

Income Tax Bill, 2025

Introduction

Clause 252 of the Income Tax Bill, 2025 ("Clause 252") and Section 133 of the Income-tax Act, 1961 ("Section 133") are pivotal statutory provisions that empower income tax authorities to call for information from various persons, entities, and intermediaries for the effective administration and enforcement of income tax law in India. These provisions play a crucial role in the investigation, assessment, and verification processes, underpinning the ability of tax authorities to ensure compliance, detect evasion, and protect the integrity of the tax system. The significance of such powers has grown in the context of increasing complexity in financial transactions, the proliferation of financial intermediaries, and the need for timely access to information in a globalized economy. Both Clause 252 and Section 133 reflect legislative intent to strike a balance between the investigatory needs of the tax administration and the rights of taxpayers and third parties. This commentary provides a detailed analysis of Clause 252, explores its objectives and practical implications, and undertakes a comparative examination with Section 133, highlighting similarities, differences, and the evolution of statutory powers in this domain.

Objective and Purpose

The primary objective of Clause 252 is to confer broad and flexible powers upon specified income tax authorities to require information from a wide range of persons and entities. The legislative intent is to facilitate the collection of information necessary for the proper conduct of enquiries or proceedings under the Income Tax Act, including assessment, reassessment, and investigation into possible tax evasion or avoidance. Historically, the power to call for information has been a cornerstone of tax administration, enabling authorities to trace the flow of funds, verify the accuracy of returns, and uncover concealed income. The policy considerations underlying these powers include:

• Ensuring effective tax compliance and enforcement.
• Deterring tax evasion and avoidance by enhancing transparency.
• Enabling cross-verification of information provided by taxpayers.
• Facilitating international cooperation under tax treaties.

Clause 252, like its predecessor, is designed to be comprehensive in scope, covering not only taxpayers but also intermediaries such as banks, brokers, and agents who may possess relevant information.

Detailed Analysis of Clause 252 of the Income Tax Bill, 2025

Clause 252 is structured into three sub-sections, each delineating the scope, manner, and conditions for exercising the power to call for information.

Sub-section (1): Persons from Whom Information Can Be Called and Nature of Information

Sub-section (1) enumerates six categories of persons or entities from whom information may be required:

1. General Power to Call for Information (Clause 252(1)(a)):
   The Assessing Officer, Joint Commissioner, Joint Commissioner (Appeals), or Commissioner (Appeals) may require any person, including a banking company or its officer, to furnish requisite information or statements of account and affairs, verified in a specified manner, relating to matters deemed useful or relevant to any enquiry or proceedings.
   Interpretation: This provision is drafted in broad terms, allowing authorities to seek information from any person, not limited to the taxpayer, if such information is considered relevant. The inclusion of banking companies is significant, as banks are often custodians of vital financial data.
2. Firms (Clause 252(1)(b)):
   Firms may be required to provide returns containing names and addresses of partners and their respective shares.
   Interpretation:This facilitates the identification of persons with a beneficial interest in the firm's income and aids in the allocation of income for tax purposes.
3. Hindu Undivided Families (Clause 252(1)(c)):
   HUFs may be required to furnish returns of the names and addresses of the manager and members.
   Interpretation:This provision recognizes the unique status of HUFs in Indian law and enables authorities to trace income to individual members.
4. Trustees, Guardians, or Agents (Clause 252(1)(d)):
   Persons believed to be trustees, guardians, or agents may be required to provide returns of names and addresses of beneficiaries or principals.
   Interpretation: This is critical for uncovering income held on behalf of others and preventing the use of trusts or agency arrangements for tax avoidance.
5. Assessees Regarding Specified Payments (Clause 252(1)(e)):
   Assessees may be required to furnish statements of names and addresses of persons to whom they have paid, in any tax year, rent, interest, commission, royalty, brokerage, or any annuity (other than those taxable under "Salaries") exceeding Rs. 10,000 or such higher amount as prescribed, with particulars of all such payments.
   Interpretation: This enables authorities to cross-check the claims of recipients and ensure proper reporting of income. The threshold of Rs. 10,000 (or higher if prescribed) reflects an intent to focus on significant transactions.
6. Dealers, Brokers, Agents, and Stock/Commodity Exchanges (Clause 252(1)(f)):
   Such persons may be required to provide statements of names and addresses of all persons to whom or on whose behalf payments have been made or received in connection with the transfer of assets, along with particulars of all such payments and receipts.
   Interpretation: This provision is vital for tracing transactions in financial markets and preventing the use of exchanges for unreported or illicit transfers.

Sub-section (2): Extension of Power to Other Authorities

Clause 252(2) extends the power under sub-section (1)(a) to the "competent authority" or the "Assistant Director." This ensures that investigatory powers are not unduly concentrated and can be exercised at appropriate levels within the tax administration.

Sub-section (3): Procedural Safeguards and Special Situations

Sub-section (3) introduces important procedural safeguards and special conditions:

• Approval Requirement (Clause 252(3)(a)):
  Where no proceedings are pending, authorities below the rank of Principal Director/Director or Principal Commissioner/Commissioner (excluding the Joint Director or Assistant Director) must obtain prior approval from the higher authority before exercising the power.
  Interpretation:This is a significant procedural check aimed at preventing misuse or overreach of the power in situations where there is no ongoing proceeding, thereby protecting the interests of persons from whom information is sought.
• Exercise of Power for International Agreements (Clause 252(3)(b)):
  Income-tax authorities notified u/s 246(2)(a) may exercise these powers for the purposes of an agreement referred to in section 159, even if no proceedings are pending.
  Interpretation: This facilitates India's obligations under tax information exchange agreements and double taxation avoidance agreements, ensuring that information can be obtained even in the absence of a domestic proceeding.

Ambiguities and Potential Issues

While Clause 252 is comprehensive, certain ambiguities and interpretational challenges may arise:

• The phrase "in the opinion of such authority, will be useful for, or relevant to, any enquiry or proceedings" is subjective and may be prone to challenge on grounds of arbitrariness or lack of specificity.
• The scope of "any person" is extremely broad and could potentially include entities not directly related to the taxpayer, raising concerns about proportionality and privacy.
• The threshold for reporting payments (Rs. 10,000 or higher as prescribed) may need periodic revision to reflect inflation and changes in economic conditions.
• The mechanism for verification and the manner in which statements are to be furnished may require further elaboration in subordinate legislation or rules.

Practical Implications

For Taxpayers and Third Parties

Clause 252 imposes compliance obligations on a broad spectrum of persons, including taxpayers, financial institutions, intermediaries, and fiduciaries. The key implications are:

• Requirement to maintain detailed records and be prepared to furnish information at short notice.
• Potential exposure to scrutiny not only for one's own affairs but also for transactions involving others (e.g., payments to third parties, fiduciary relationships).
• Increased compliance costs, especially for small businesses and intermediaries.
• Obligation to ensure accuracy and completeness of information provided, as furnishing false or incomplete information may attract penalties or prosecution.

For Tax Authorities

For tax authorities, Clause 252 is a powerful investigatory tool that:

• Enables effective detection of unreported or concealed income.
• Facilitates cross-verification of information from multiple sources.
• Supports international cooperation in tax matters, including exchange of information.
• Requires careful exercise of discretion and adherence to procedural safeguards to prevent abuse of power and protect the rights of persons from whom information is sought.

Procedural and Compliance Aspects

• Authorities must specify the manner and form in which information is to be furnished, and may require verification.
• Where approval is required (in cases where no proceeding is pending), authorities must document the reasons and obtain prior sanction.
• Persons receiving notices under Clause 252 must comply within the stipulated time and may seek extensions or clarifications if necessary.

Comparative Analysis: Clause 252 vs. Section 133

A close examination reveals both continuity and evolution in the statutory framework.

Structural Comparison

Both Clause 252 and Section 133 are structured to enumerate the categories of persons from whom information can be called and the nature of such information. However, there are notable differences in drafting, sequencing, and the breadth of powers.

Provisions-wise Comparison

Provision	Section 133 of the Income-tax Act, 1961	Clause 252 of the Income Tax Bill, 2025	Key Differences/Observations
General Power to Call for Information	Clause (6): Any person, including banking company, to furnish information/statements as specified by AO, DC(A), JC, JC(A), or C(A).	Clause (1)(a): Any person, including banking company/officer, to furnish requisite information/statements as specified by authority.	Clause 252 brings the general power to the forefront (first clause), signaling its primacy. The wording is more expansive ("requisite information") and explicitly includes verification "in such manner specified."
Firms	Clause (1): Return of names/addresses of partners and respective shares.	Clause (1)(b): Same.	No substantive change; language modernized.
Hindu Undivided Families	Clause (2): Names/addresses of manager and members.	Clause (1)(c): Same.	No substantive change; language modernized.
Trustees, Guardians, Agents	Clause (3): Names of persons for/of whom acting, and addresses.	Clause (1)(d): Same.	No substantive change; language modernized.
Assessees: Payments Above Threshold	Clause (4): Statement of names/addresses of payees of rent, interest, commission, royalty, brokerage, or annuity (excluding "Salaries") above Rs. 1,000 or prescribed higher amount.	Clause (1)(e): Statement for payments above Rs. 10,000 or prescribed higher amount.	Threshold increased from Rs. 1,000 to Rs. 10,000, reflecting inflation and administrative efficiency by focusing on substantial transactions.
Dealers, Brokers, Exchanges	Clause (5): Names/addresses of persons to whom/for whom payments made/received in connection with transfer of assets, with particulars.	Clause (1)(f): Same.	No substantive change; language modernized.
Authority to Exercise Power	AO, DC(A), JC, JC(A), C(A); also, higher authorities (Principal DG, DG, Principal CC, CC, Principal D, D, Principal C, C, Joint D, Deputy D, Assistant D).	AO, JC, JC(A), C(A); also, competent authority or Assistant Director (for 1(a)).	List of authorities slightly restructured; "competent authority" and "Assistant Director" added for certain powers.
Approval Requirement (No Proceedings Pending)	Below Principal D or D or Principal C or C (other than Joint D, Deputy D, Assistant D) must obtain prior approval in cases where no proceedings are pending.	Similar; below Principal D or D or Principal C or C (other than Joint D or Assistant D) must obtain prior approval.	Deputy Director is omitted in Clause 252, possibly reflecting administrative restructuring.
International Agreements	Income-tax authority notified u/s 131(2) can exercise these powers for agreements u/s 90/90A, even if no proceedings pending.	Income-tax authority notified u/s 246(2)(a) can exercise these powers for agreements u/s 159, even if no proceedings pending.	References updated to correspond to the new Bill's section numbering and international cooperation framework.

Other Observations

• Modernization and Reorganization: Clause 252 modernizes language, reorganizes the sequence, and updates cross-references to conform with the new Bill's structure.
• Threshold for Reporting: The increase in the monetary threshold for reporting payments (from Rs. 1,000 to Rs. 10,000) is a significant change, reducing compliance burden for small transactions and focusing administrative resources on larger, potentially riskier payments.
• Verification Requirements: Clause 252 expressly mentions that statements may be required to be "verified in such manner specified," providing explicit authority for the form and manner of verification.
• Procedural Safeguards: Both provisions retain the requirement for prior approval in cases where no proceedings are pending, but Clause 252 omits reference to Deputy Director, possibly reflecting a rationalization of authority levels.
• Alignment with International Standards: The express provision for use of these powers in connection with international agreements reflects India's increasing commitment to tax transparency and cooperation.

Conclusion

Clause 252 of the Income Tax Bill, 2025 continues the tradition of robust investigatory powers for income-tax authorities, updating and refining the framework established by Section 133 of the Income-tax Act, 1961. The provision maintains the breadth of powers while introducing modernization in language, increasing reporting thresholds, and streamlining the list of authorized officers. The core objectives-ensuring effective tax compliance, facilitating investigation, and supporting international cooperation-remain intact. The procedural safeguards embedded in both provisions reflect a conscious effort to balance investigative needs with the rights and interests of taxpayers and third parties. Looking forward, further clarity may be required through rules or subordinate legislation regarding the manner of furnishing information, verification processes, and the scope of "requisite information." Periodic review of monetary thresholds and the list of authorities empowered to exercise these powers would help ensure continued relevance and proportionality.

---

Full Text:

Clause 252 Power to call for information.

Power to call for information enables tax authorities to require verified data from wide categories to support tax enquiries. Clause 252 confers an expansive authority on specified income-tax officers to require verified information, accounts, and returns from a wide range of persons and intermediaries - including banks, firms, HUFs, trustees, assessees in relation to specified payments, and dealers/brokers/exchanges - to support enquiries, assessments, investigations and international information-exchange, while prescribing approval safeguards where no proceedings are pending and authorising prescribed forms and verification.