Gireesh Bhalla : Info collection on requests from tax authorities outside India

In order to to facilitate prompt collection of information requested for by tax authorities outside India in relation to an agreement for exchange of information under DTAA provisions contained in section 90 or 90A of the Act, a new sub-section (2) has been inserted in section 131 of the Act.  This sub-section provides that it shall be competent for any notified income-tax authority to exercise the powers at present conferred on   income-tax authorities referred to in section 131(1).  The notified authority shall be able to exercise those powers notwithstanding that no proceedings with respect to such person or class of persons are pending before it or any other income-tax authority.  Section 131(3) has also been amended so as to empower the notified authority to impound and retain any books of account and other documents produced before it in any proceeding under the Act.  This amendment takes effect from June 1, 2011.

Under section 282B of the Act, inserted by the Finance (No. 2) Act, 2009 with effect from October 1, 2010 every income tax authority shall, on or after July 1, 2011, allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued by him to any other income-tax authority or assessee or any OTHER person, and such number should be quoted thereon.  Though there is still       4 months left to initiate this process, this section has been omitted with retrospective effect from April 1, 2011.  The Explanatory Memorandum states that “considering the practical difficulties due to non-availability of requisite infrastructure on an all-India basis, the section has been proposed to be omitted”. 

Thus, this section has become          a  still-born baby. This causes grave concern about the possibility of the GST regime taking wings in the near future, since that scheme’s success totally depends upon a foolproof I.T. Infrastructure, as otherwise it will crumble on its own.