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TMI BlogEvolution and Implications of Requisition Powers in Indian Income Tax Law : Clause 248 of the Income Tax Bill, 2025, Vs. Section 132A of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... s and non-compliance with summons or notices. They empower tax authorities to access material evidence or assets that may otherwise be inaccessible due to their custody with other agencies. Understanding and evaluating Clause 248 in light of its predecessor, Section 132A, is essential to appreciate legislative continuity, reforms, and the evolving policy objectives of the Indian taxation regime. This commentary seeks to provide an in-depth analysis of Clause 248, examine its objectives, dissect its operative mechanisms, and compare its provisions with the existing Section 132A of the Income-tax Act, 1961, highlighting similarities, differences, and practical implications. 2. Objective and Purpose Legislative Intent and Policy Consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ministrative processes. 3. Detailed Analysis of Clause 248 of the Income Tax Bill, 2025 Clause 248 can be broken into three main sub-sections, each addressing a specific aspect of the requisitioning process: 3.1 Sub-section (1): Conditions for Requisition Sub-clause (1) sets out the conditions under which the approving authority (notably, a senior officer designated under the Act) may authorise a requisition. The key elements are: * Information and Reason to Believe: The approving authority must possess information that gives rise to a "reason to believe" that one of three situations exists. The "reason to believe" standard, a well-established threshold in tax law, ensures that the power is not exercised arbitrarily but is based on ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce) and proactive anticipation of non-production upon return of material. * The scope extends to "assets" representing undisclosed income, not just documents or books. 3.2 Sub-section (2): Delivery of Material Upon requisition, the officer or authority in possession of the material is mandated to deliver it to the requisitioning officer, either immediately or when it is no longer necessary to retain it. Interpretative Notes: - The provision balances the interests of the requisitioning income-tax authority and the authority currently holding the material, allowing the latter to retain it if necessary for their own proceedings. - The use of "forthwith or when...no longer necessary" prevents undue delay while respecting the procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring cooperation among agencies. * Retention Rights: Agencies can retain material until their purpose is served, after which they are obliged to hand over to the tax authorities. 4.3 For Taxpayers and Assessees * Potential for Multiple Proceedings: Material seized by one agency can become the basis for tax proceedings, increasing exposure to parallel investigations. * Procedural Safeguards: The requirement of "reason to believe" and authorisation by a senior officer offers some protection against arbitrary action. * Digital Privacy Concerns: The inclusion of electronic records raises issues of data privacy and the scope of permissible requisition. 4.4 Compliance and Procedural Impacts * Record-Keeping and Audit Trails: Both auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe, ensuring digital evidence is not excluded. 5.3 Triggers for Requisition * Section 132A: Triggered when a person fails to comply with summons/notice, or when it is believed that material will not be produced upon return, or when assets represent undisclosed income. * Clause 248: Mirrors these triggers, with more detailed references to the nature of material (including electronic records) and the relevant sections for summons/notices (Section 246(1) and 268(1) in the new Bill, as opposed to Section 131 and 142 in the old Act). * Observation: The triggers are functionally identical, but Clause 248 updates statutory cross-references to the new Bill. 5.4 Procedure for Delivery * Section 132A(2): The authority in possession "shall d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Potential Issues 6.1 Subjectivity of "Reason to Believe" The standard of "reason to believe" is inherently subjective, though it must be based on tangible material. Courts have held that this cannot be mere suspicion, but the threshold is lower than "proof." The absence of a requirement to disclose reasons (as in Section 132A's Explanation) can shield arbitrary action, making judicial oversight crucial. 6.2 Interface with Other Laws While the provision mandates delivery of material, it allows the original authority to retain it if necessary. Potential conflicts may arise if both agencies assert priority, especially in high-stakes criminal or economic offenses. 6.3 Digital Evidence The explicit inclusion of electronic records ..... X X X X Extracts X X X X X X X X Extracts X X X X
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