Gireesh Bhalla : Survey of functions, ceremonies or events: Section 133A (5) of the Income Tax Act

In order to get full information about the nature and scale of expenditure, being incurred by a taxpayer in connection with the any function, ceremony or event, power has been vested in the income-tax authorities listed in Explanation (a) to section   133A to-

(a)  (i)   require the assessee who is incurring or has incurred the expenditure on the function or ceremony, or

 (ii)  require any person who is likely to possess information as respects the expenditure incurred, to furnish such information as may be required, which may be useful for or relevant to any proceeding under the Act, or

(b)  the authority may record the statements of the assessee or any other person about the expenditure incurred by the assessee for any function, ceremony or event, Such a statement can be used in evidence as and when required.

Survey only after the function and not during the function :-

(a) The main idea and object of this provision under section 133A is to help the Revenue to collect evidence about ostentatious expenditure immediately after the event so that the same information can be used at the time of assessmentHowever, the intention behind this drive for collection of information regarding expenditure incurred after the function is not to harass the taxpayers.

(b) The first point to be taken note of is that the collection of information is to be “after the function, ceremony or event” is over and not before the function and there is no provision for collecting information during the function.  The person celebrating a function or ceremony or event is not to be pestered with questions while the function is still on or is being held and there is no provision for disturbing the function by the income-tax authorities in visiting the assessee during the marriage or other ceremony.

(c) In fact the sub-section does not allow posing questions or recording statements of other persons present.

(d) In fact, the Board in Circular No. 179 dated 30th September, 1975 (para 1.8 supra) had clarified that the power to collect information and record statements will be “at any time after any function, ceremony or event and even before the stage of assessment proceedings for the following year for which the information may be relevant”.  The Board further clarified that “the object of this provision is to help collecting evidence about ostentatious expenditure, immediately after the event, to be used at the time of assessment.”

e) Therefore, powers under section 133A(5) can be invoked only after the holding of the function or ceremony or event and not before or during the course of the function.