Section 129 of the Income Tax Act: An Overview
Section 129 of the Income Tax Act deals with the provisions related to the ‘Seizure of Books of Accounts, Documents, and Assets’ by the tax authorities. The section empowers the Income Tax Officer to seize any books of accounts, documents, or assets during the course of an income tax raid or search conducted under Section 132 or Section 132A of the Income Tax Act. In this blog, we will discuss the various aspects of Section 129 of the Income Tax Act in detail.
When can the Income Tax Officer exercise powers under Section 129?
The Income Tax Officer can exercise powers under Section 129 in the following situations:
- During a Search Operation: The Income Tax Officer can seize books of accounts, documents, and assets if he/she has reasons to believe that the same are relevant to the assessment of the taxpayer.
- During a Survey: The Income Tax Officer can seize books of accounts, documents, and assets if he/she has reasons to believe that the same are relevant to the assessment of the taxpayer.
- In Case of Non-Compliance: The Income Tax Officer can seize books of accounts, documents, and assets if the taxpayer fails to comply with the summons issued by the tax authorities under Section 131 of the Income Tax Act.
What assets can be seized under Section 129?
The Income Tax Officer can seize the following assets under Section 129:
- Books of Accounts: The Income Tax Officer can seize any books of accounts maintained by the taxpayer.
- Documents: The Income Tax Officer can seize any documents relevant to the assessment of the taxpayer.
- Assets: The Income Tax Officer can seize any assets, including cash, jewelry, and property, if he/she has reasons to believe that the same are undisclosed or unaccounted for.
What is the procedure for the seizure of assets under Section 129?
The procedure for the seizure of assets under Section 129 is as follows:
- The Income Tax Officer shall issue a ‘Panchnama’ in the presence of at least two independent witnesses, describing the assets seized.
- The seized assets shall be placed in the custody of the Income Tax Officer or any other authorized officer.
- The taxpayer shall be provided with a copy of the Panchnama.
- The seized assets shall be released only after the taxpayer has furnished satisfactory evidence to prove that the assets are accounted for.
What is the time limit for the release of seized assets?
The seized assets shall be released within 120 days from the date of the seizure. However, if the assessment proceedings are not completed within 120 days, the time limit for the release of seized assets shall be extended until the completion of the assessment proceedings.
What are the consequences of non-compliance with Section 129?
Non-compliance with Section 129 can lead to the following consequences:
- Penalty: The taxpayer can be penalized under Section 271AAC of the Income Tax Act, which imposes a penalty of 10% of the value of the seized assets.
- Prosecution: The taxpayer can be prosecuted under Section 276C of the Income Tax Act, which provides for imprisonment for a term ranging from 6 months to 7 years.
Challenging the seizure under Section 129
If the taxpayer is aggrieved by the seizure made under Section 129, he/she can challenge the same before the Commissioner of Income Tax (Appeals) or the Income Tax Appellate Tribunal. The taxpayer can also file a writ petition before the High Court if he/she feels that the seizure is illegal or arbitrary.
However, it is important to note that the taxpayer must prove that the assets seized were accounted for and disclosed in the books of accounts. If the taxpayer fails to do so, the challenge against the seizure may not be successful.
Protection of assets under Section 132(5)
Section 132(5) of the Income Tax Act provides protection to the assets seized under Section 129. The section states that no person shall be entitled to any claim in respect of any seizure made under Section 129, except when it is proved that the same does not belong to the person against whom the search is conducted.
This means that if the taxpayer fails to prove that the assets seized do not belong to him/her, then he/she cannot claim any rights over the same. The assets will be treated as undisclosed and unaccounted for and will be subject to assessment under the Income Tax Act.
Conclusion
Section 129 of the Income Tax Act empowers the Income Tax Officer to seize books of accounts, documents, and assets during the course of an income tax raid or search conducted under Section 132 or Section 132A of the Income Tax Act. The section is aimed at curbing tax evasion and ensuring compliance with the provisions of the Income Tax Act. Taxpayers are advised to maintain proper books of accounts and comply with the provisions of the Income Tax Act to avoid any penalties or prosecution under Section 129.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
What is Section 129 of the Income Tax Act?
Answer: Section 129 of the Income Tax Act deals with the seizure of books of accounts, documents, and assets by the tax authorities during a search operation, survey, or in case of non-compliance by the taxpayer.
Who can exercise powers under Section 129?
Answer: The Income Tax Officer can exercise powers under Section 129.
What assets can be seized under Section 129?
Answer: The Income Tax Officer can seize books of accounts, documents, and assets, including cash, jewelry, and property, if he/she has reasons to believe that the same are undisclosed or unaccounted for.
What is the procedure for the seizure of assets under Section 129?
Answer: The Income Tax Officer shall issue a ‘Panchnama’ in the presence of at least two independent witnesses, describing the assets seized. The seized assets shall be placed in the custody of the Income Tax Officer or any other authorized officer.
What is the time limit for the release of seized assets under Section 129?
Answer: The seized assets shall be released within 120 days from the date of the seizure. However, if the assessment proceedings are not completed within 120 days, the time limit for the release of seized assets shall be extended until the completion of the assessment proceedings.
Can the taxpayer challenge the seizure made under Section 129?
Answer: Yes, the taxpayer can challenge the seizure made under Section 129 before the Commissioner of Income Tax (Appeals) or the Income Tax Appellate Tribunal. The taxpayer can also file a writ petition before the High Court.
What is the penalty for non-compliance with Section 129?
Answer: The taxpayer can be penalized under Section 271AAC of the Income Tax Act, which imposes a penalty of 10% of the value of the seized assets.
What is the punishment for non-compliance with Section 129?
Answer: The taxpayer can be prosecuted under Section 276C of the Income Tax Act, which provides for imprisonment for a term ranging from 6 months to 7 years.
What is the purpose of Section 129?
Answer: Section 129 is aimed at curbing tax evasion and ensuring compliance with the provisions of the Income Tax Act.
How can taxpayers avoid penalties or prosecution under Section 129?
Answer: Taxpayers can avoid penalties or prosecution under Section 129 by maintaining proper books of accounts and complying with the provisions of the Income Tax Act.
