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TMI BlogEvolution of Tax Enforcement : Clause 247 of Income Tax Bill, 2025 Vs. Section 132, Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ive tax enforcement, and the protection of citizens' rights against arbitrary or excessive exercise of state power. This commentary provides a clause-by-clause analysis of Clause 247, situates it within its legal and policy context, and undertakes a comparative study with Section 132 of the 1961 Act and the relevant rules. It also explores the practical and procedural implications of the new regime, highlighting continuities, innovations, and areas of potential ambiguity or concern. Objective and Purpose The core objective of Clause 247 is to empower income tax authorities to uncover undisclosed income and property by authorizing searches and seizures when there is credible information suggesting non-compliance or concealment. The provision is designed to: * Enable the collection of evidence that may otherwise be inaccessible due to non-cooperation or deliberate concealment by taxpayers. * Address the challenges posed by digital records and electronic storage of information, reflecting the realities of modern business and financial practices. * Provide a legal framework for the provisional attachment and valuation of assets to protect the interests of the revenue. * E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... significant expansion to address digital data). * Breaking open locks and overriding digital security if access is denied. * Personal search of individuals suspected of concealing assets or documents. * Marking, copying, and extracting from documents and computer systems. * Inventorying assets and stock-in-trade (but only seizing non-stock assets). * Seizure of books, documents, computer systems, or assets (excluding stock-in-trade); * Deemed seizure: Order prohibiting removal or dealing with bulky, dangerous, or otherwise impracticable items. Comparative Note: Section 132(1) confers similar powers but is less detailed regarding electronic records. Clause 247's explicit reference to "virtual digital space" and "electronic media" is a critical update, reflecting the realities of digital evidence. The "deemed seizure" mechanism (Clause 247(1)(viii)) parallels the second proviso to Section 132(1), providing for situations where physical seizure is impracticable. The exclusion of stock-in-trade from seizure is also retained. 3. Jurisdictional Flexibility and Emergency Powers Clause 247(2) allows a tax authority to conduct a search outside its normal jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rised officer to examine, on oath, any person found in possession or control of assets, documents, or computer systems, or present at the premises, and to use such statements as evidence in any proceedings. The examination may extend to all matters relevant to any investigation under the Act. Comparative Note: Section 132(4) is almost identical, and the explanation appended to it has been judicially interpreted to allow examination on matters beyond the immediate search findings, provided they are relevant to tax proceedings. 7. Legal Presumptions Clause 247(7) introduces statutory presumptions: * That books of account, computer systems, digital space, documents, or assets found belong to the person in possession; * That the contents of such books/documents/electronic records are true; * That signatures and handwriting are genuine; * That stamped/executed/attested documents and electronic communications are authentic and exchanged between the parties. Comparative Note: Section 132(4A) provides for similar presumptions, but Clause 247 expands the language to cover electronic records and digital communications, reflecting the increasing importance of digital evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of electronic records and digital assets increases the risk of scrutiny for businesses and individuals who maintain financial information in digital form. * Greater inter-agency cooperation and the explicit inclusion of the Black Money Act heighten the exposure of those with undisclosed foreign assets. * The presumptions regarding digital records place a heavier evidentiary burden on taxpayers to rebut findings arising from electronic evidence. * Procedural safeguards (requirement to record reasons, time limits, approvals) offer some protection, but the non-disclosure of reasons to the affected party continues to limit transparency and challengeability. For Tax Authorities * Modernized powers facilitate more effective enforcement, especially in cases involving digital concealment or cross-border assets. * Clearer procedures for valuation and attachment help preserve the revenue's interests pending assessment or litigation. * The ability to requisition technical assistance and override digital security measures is crucial in an era of encrypted and cloud-based data. For Legal and Tax Professionals * Need for updated compliance advice, particularly regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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