Power to call for information by prescribed income-tax authority.
259(1)
For the purposes of verification of information in the possession of the prescribed income-tax authority, such authority may issue a notice requiring any person to furnish any information as may be useful for, or relevant to, any inquiry or proceeding under this Act in such form and manner and within such time, as specified in such notice.
259(2)
The prescribed income-tax authority may process and utilise such information and document received by him as per the scheme notified under section 260.
Section Summary:
Section 259 of the Income Tax Act grants prescribed income-tax authorities the power to call for information from any person to verify details relevant to an inquiry or proceeding under the Act. This section ensures that tax authorities can gather necessary information to assess compliance and investigate potential discrepancies.
Key Changes:
- Expanded Scope of Information Gathering: Unlike earlier provisions, this section explicitly allows tax authorities to request any information deemed useful or relevant for an inquiry or proceeding. This broadens the scope of what can be demanded.
- Form and Manner of Submission: The section introduces a formalized process for how information must be furnished, including the format and timeline specified in the notice.
- Processing and Utilization of Information: Subsection (2) clarifies that the information collected can be processed and utilized as per the scheme notified under Section 260, ensuring a structured approach to handling such data.
Practical Implications:
- For Taxpayers: Individuals and businesses may receive notices requiring them to provide specific information or documents. Failure to comply within the specified time could lead to penalties or further scrutiny.
- For Tax Authorities: This provision enhances the ability of tax authorities to conduct thorough investigations and ensure compliance, reducing the likelihood of tax evasion or underreporting.
- Increased Compliance Burden: Taxpayers must maintain accurate records and be prepared to respond to such notices promptly.
Critical Concepts:
- Prescribed Income-Tax Authority: Refers to the specific tax officials authorized under the Act to issue such notices. These could include assessing officers, commissioners, or other designated authorities.
- Scheme under Section 260: This refers to a structured framework notified by the government for processing and utilizing the information collected under Section 259. It ensures consistency and transparency in handling taxpayer data.
Compliance Steps:
- Respond to Notices: Upon receiving a notice under Section 259, taxpayers must furnish the requested information in the specified format and within the given timeline.
- Maintain Records: Ensure all financial and tax-related documents are organized and readily available to respond to potential notices.
- Verify Accuracy: Double-check the information provided to avoid discrepancies that could trigger further inquiries.
Examples:
- Scenario 1: A business receives a notice under Section 259(1) asking for details of all transactions with a specific vendor over the past three years. The business must compile and submit this information in the prescribed format within 30 days.
- Scenario 2: An individual taxpayer is asked to provide proof of investments claimed as deductions under Section 80C. The taxpayer must submit the relevant documents, such as investment receipts or certificates, within the specified time frame.
This section strengthens the tax authorities' ability to verify information and ensures taxpayers maintain transparency in their financial dealings.