Presumption as to assets, books of account, etc., in certain cases.

489(1)

Where during the course of any search made under section 247, any money, bullion, jewellery, virtual digit asset or other valuable article or thing (herein referred to as the assets) or any books of account or other documents, has or have been found in the possession or control of any person and such assets or books of account or other documents are tendered by the prosecution in evidence against such person, or against such person and the person referred to in section 484, for an offence under this Act, the provisions of section 247(7) shall, so far as may be, apply in relation to such assets or books of account or other documents.

489(2)

Where any assets or books of account or other documents taken into custody from the possession or control of any person, by the officer or authority referred to in section 248(1)(a) or (b) or (c) are delivered to the requisitioning officer under sub-section (2) of that section and such assets, books of account or other documents are tendered by the prosecution in evidence against such person, or against such person and the person referred to in section 484, for an offence under this Act, the provisions of section 247(7) shall, so far as may be, apply in relation to such assets or books of account or other documents.

Explanation

Section Summary:

This section deals with the presumption of ownership or control over assets, books of account, or other documents found during a search conducted under Section 247 of the Income Tax Act. It applies when such items are used as evidence in prosecutions for tax-related offenses. The section ensures that the provisions of Section 247(7) (which relate to the admissibility and treatment of evidence) apply to these assets or documents when presented in court.

Key Changes:

1. Inclusion of Virtual Digital Assets: The new law explicitly includes "virtual digital assets" (e.g., cryptocurrencies, NFTs) as part of the assets that can be seized and used as evidence. This is a significant update, reflecting the growing importance of digital assets in financial transactions.
2. Clarification on Custody and Delivery: The section clarifies the process of how assets or documents taken into custody are delivered to the requisitioning officer and how they are treated as evidence in prosecutions.

Practical Implications:

• For Taxpayers: If a search is conducted, any assets (including virtual digital assets) or documents found in their possession can be used as evidence in tax-related prosecutions. Taxpayers must ensure proper documentation and compliance to avoid disputes.
• For Businesses: Businesses dealing with virtual digital assets must maintain accurate records, as these assets are now explicitly covered under search and seizure provisions.
• For Authorities: The section streamlines the process of handling seized assets and documents, ensuring they are admissible as evidence in court.

Critical Concepts:

• Virtual Digital Assets: These include cryptocurrencies, non-fungible tokens (NFTs), and other digital representations of value. They are now treated similarly to physical assets like money or jewellery for tax purposes.
• Section 247(7): This provision governs how evidence collected during a search is treated in legal proceedings. It ensures that such evidence is admissible and can be used to establish ownership or control.

Compliance Steps:

1. Maintain Accurate Records: Ensure all assets, including virtual digital assets, are properly documented and accounted for.
2. Prepare for Searches: Be aware that during a search, any assets or documents found can be used as evidence in prosecutions.
3. Understand Legal Rights: Know how seized assets or documents are handled and the legal implications of their use in court.

Examples:

• Scenario 1: During a search, tax authorities find cryptocurrency holdings in a taxpayer's digital wallet. Under this section, these holdings can be treated as evidence in a prosecution for tax evasion.
• Scenario 2: A business is found to have undisclosed jewellery and unaccounted cash during a search. Both the jewellery and cash can be used as evidence in court, and the provisions of Section 247(7) will apply to determine their admissibility.

This section strengthens the enforcement mechanisms for tax compliance, particularly in the context of emerging digital assets.