Authorisation and assessment in case of search or requisition.

525(1)

Irrespective of anything contained in this Act,—

• (a) it shall not be necessary to issue an authorisation under section 247 or make a requisition under section 248 separately in the name of each person;
• (b) where an authorisation under section 247 has been issued or requisition under section 248 has been made mentioning therein the name of more than one person, the mention of such names of more than one person on such authorisation or requisition shall not be considered to construe that it was issued in the name of an association of persons or body of individuals consisting of such persons.

525(2)

Irrespective of an authorisation issued under section 247 or a requisition made under section 248 mentioning therein the name of more than one person, the assessment or reassessment shall be made separately in the name of each of the persons mentioned in such authorisation or requisition.

Explanation

Section Summary:

This section clarifies the process for authorizing and conducting assessments or reassessments in cases where a search or requisition involves multiple individuals. It ensures that the tax authorities can issue a single authorization or requisition covering multiple persons without implying that these individuals are part of an association of persons (AOP) or body of individuals (BOI). Additionally, it mandates that assessments or reassessments must be conducted separately for each individual mentioned in the authorization or requisition.

Key Changes:

1. Single Authorization for Multiple Persons: Previously, tax authorities may have needed separate authorizations or requisitions for each individual in a search or requisition case. Now, a single authorization or requisition can cover multiple individuals.
2. No Implication of AOP/BOI: The mention of multiple names in a single authorization or requisition does not imply that these individuals are part of an AOP or BOI, which could have led to joint tax liabilities.
3. Separate Assessments: Even if multiple individuals are covered under a single authorization or requisition, assessments or reassessments must be conducted separately for each person.

Practical Implications:

• For Taxpayers: Individuals involved in a search or requisition case will not be treated as part of an AOP or BOI simply because their names appear together in the authorization or requisition. This prevents unintended joint tax liabilities.
• For Tax Authorities: The process of issuing authorizations or requisitions is streamlined, as a single document can cover multiple individuals. However, the tax authorities must still conduct separate assessments for each individual.
• For Businesses: Businesses or individuals involved in group activities or transactions can avoid being inadvertently classified as an AOP or BOI, which could have led to higher tax liabilities or compliance burdens.

Critical Concepts:

• Authorization under Section 247: This refers to the legal permission granted to tax authorities to conduct a search.
• Requisition under Section 248: This refers to the legal process of demanding documents or information from a taxpayer.
• Association of Persons (AOP) / Body of Individuals (BOI): These are legal classifications where multiple individuals are treated as a single entity for tax purposes, often leading to joint tax liabilities.

Compliance Steps:

1. For Tax Authorities:
   • Issue a single authorization or requisition covering multiple individuals, if applicable.
   • Ensure that assessments or reassessments are conducted separately for each individual mentioned in the authorization or requisition.
2. For Taxpayers:
   • Be aware that being named in a single authorization or requisition does not create a joint tax liability with others named in the same document.
   • Cooperate with the tax authorities during the assessment process, ensuring that all individual tax matters are addressed separately.

Examples:

• Scenario 1: A tax authority conducts a search on a business premises where multiple individuals are involved. Instead of issuing separate authorizations for each individual, the authority issues a single authorization mentioning all relevant individuals. Despite this, each individual will be assessed separately for their tax liabilities.
• Scenario 2: A group of investors is involved in a real estate transaction. The tax authority issues a requisition for documents related to the transaction, listing all investors. The investors are not treated as an AOP or BOI, and each investor’s tax liability is assessed individually.

This section simplifies the process for tax authorities while protecting taxpayers from unintended joint tax liabilities.