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No use of coercive powers by tax officers in case of recoveries: CBDT


The Central Board of Direct Taxes (CBDT) has restricted the coercive or intrusive powers of tax officers in case of tax recoveries, with immediate effect. CBDT said such powers should be exercised only as a last resort after other means of recovery have been exhausted. The Board has restricted recovery surveys to non-responsive or non-traceable taxpayers. It also reiterated that specific provisions have been amended to allow survey only by the investigation and tax deducted at source (TDS) wings.

“Any coercive or intrusive action for recovery of tax demands should be taken only after exhaustive alternative means of recovery,” the Board said in an order issued on Friday. The recovery survey will be approved by a Collegium, which will consist of two officers of the level of principal chief commissioner of income tax or chief commissioner of income tax rank, including one from the TDS division. Recovery surveys of Central charges will be conducted by officers of the investigation wing after taking approval from the Collegium, comprising the director general of income tax for investigations and chief commissioner of income tax heading central charges.

The government had made enabling provisions for these directions in the taxation and other laws bill which was amended by Parliament last month. As per the order, the involvement of assessing officers or tax recovery officers from surveys has been excluded. Monitoring of the surveys has been mandated by the principal chief commissioner of income tax or commissioner of income tax to ensure that it does not go beyond the scope approved by the collegium. The survey team must also prepare a report and share with the Income Tax Business Application (ITBA) and concerned assessing officer or tax recovery officer, the order noted, pressing for strict compliance with the survey manual rules and guidelines for attachment of movable or immovable properties.

Tax experts welcomed the development, saying it would provide clarity to taxpayers and tax authorities. “It will reduce the arbitrariness or subjectivity and permit authorities to take coercive action only after following the due procedure under law,” said Shailesh Kumar, partner at Nangia & Co LLP. “This will also help taxpayers to take necessary remedial actions in tax recovery proceedings and duly represent their case in such proceedings,” he added.

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