REGISTERED NO. D. (D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 1

PUBLISHED BY AUTHORITY

No. 49]

NEW DELHI, THURSDAY, AUGUST 7,1975/SRAVANA 16,1897

Separate paging is given to this Part in order that it may be filed

as a separate compilation

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(Legislative Department)

New Delhi the 1th August. 1975/Sravana 16, 1897 (Saka)

The following Act of Parliament received the assent of the President

on the 7th August, 1975, and is hereby published for general information: —

THE TAXATION LAWS (AMENDMENT) ACT, 1975

No. 41 OF 1975

[7th August, 1975]

An Act further to amend the Income-tax Act, 1961, the Wealth-tax

Act, 1957, the Gift-tax Act, 1958 and the Companies (Profits)

Surtax Act, 1964.

BE it enacted by Parliament in the Twenty-sixth Year of the Republic

of India aw follows: —

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Taxation Laws (Amendment) Act,

1975.

(2) It shall come into force on such dale as the Central Government

may, by notification in the Official Gazette, appoint and different dates

may be appointed for different provisions of this Act; and any reference

to "the commencement of the Taxation Laws (Amendment) Act, 1975" in

any amendment made by any provision of this Act shall be

construed

as a reference to the coming into force of that provision.

Short

title and

com-

mence-

ment.

(271)

272

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

CHAPTER II

AMENDMENTS TO THE INCOME-TAX ACT, 1961

2. In section 2 of the Income-tax Act, 1961 (hereafter in this Chapter

referred to as the Income-tax Act), after clause (15), the following

clause shall be inserted, namely: —

43 0X1961.

Amend-

ment of

section 2.

' (15A) "child", in relation to an individual, includes a step-

child and an adopted child of that individual;'.

3, In section 10 of the Income-tax Act,—

(i) in clause (6), after sub-clause

(m), the following sub-

clause shall be inserted, namely: —

" (via) the remuneration received by him as an employee of,

or a consultant to, an institution or association or a body es-

tablished or formed outside India solely for philanthropic purpo-

ses, for services rendered by him in India in connection with such

purposes; provided that such institution or association or body

and the purposes for which his services are rendered in India

are approved by the Central Government;";

(ii) after clause (23B), the following clause shall be inserted,

namely: —

" (23C) any income received by any person on behalf of—

(i) the Prime Minister's National Relief Fund; or

(ii) the Prime Minister's Fund (Promotion of Folk Art);

(in) the Prime Minister's Aid to Students Fund; or

(iv) any other fund or institution established for chari-

table purposes which may be notified by the Central Gov-

ernment in the Official Gazette, having regard to the objects

of the fund or institution and its importance throughout India

or throughout any State or States; or

(v) any trust (including any other legal obligation) or

institution, being a trust or institution wholly for public reli-

gious purposes or wholly for public religious and charitable

purposes, which may be notified by the Central Government in

the Official Gazette, having regard to the manner in which

the affairs of the trust or institution are administered and

supervised for ensuring that the income accruing thereto is

properly applied for the purposes thereof:

Provided that any notification issued by the Central Gov-

ernment under sub-clause (iv) or sub-clause (v) shall have

effect for such assessment year or years (including an assess-

ment year or years commencing before the date on which

such notification is Issued) as may be specified in the noti-

fication;".

Amend-

ment of

section 10,

4. In section 11 of the Income-tax Act,—

(i) in sub-section (1),—

(a) for clauses (a) and (b), the following clauses shall be

substituted, namely: —

Amend-

ment of

section 11.

SEC. 1]

THE GAZETTE OP INDIA EXTRAORDINARY

373

" (a) income derived from property held under trust

wholly for charitable or religious purposes, to the extent to

which such income is applied to such purposes in India; and,

where any such income is accumulated or set apart

for

application to such purposes in India, to the extent to which

the income so accumulated or set apart is not in excess of

twenty-five per cent, of the income from such property;

(b) income derived from property held under trust in

part only for such purposes, the trust having been created

before the commencement of this Act, to the extent to which

such income is applied to such purposes in India; and,

where any such income is finally set apart for application

to such purposes in India, to the extent to which the income

so set apart is not In excess of twenty-flve per cent, of

the income from such property;";

(b) for the Explanation, the following Explanation shall be

substituted, namely: —

"Explanation.-—For the purposes of clauses (a) and

(b),-

(1) in computing the twenty-five per cent, of the

income which may be accumulated or set apart, any such

voluntary contributions as are referred to in section 12

shall be deemed to be part of the income;

(2) if, in the previous year, the income applied to

charitable or religious purposes in India falls short of

seventy-five per cent, of the income derived during that

year from property held under trust, or, as the case may

be, held under trust in part, by any amount—

(i) for the reason that the whole or any part of

the income has not been received during that year,

(it) for any other reason,

then—

(a) in the case referred to in sub-clause (i), so-

much of the income applied to such purposes in India

during the previous year in which the income is

received or during the previous year immediately

following as does not exceed the said amount; and

(b) in the case referred to in sub-clause

(ii),

so much of the income applied to such purposes in

India during the previous year immediately follow-

ing the previous year in which the income was

derived as does not exceed the said amount,

may, at the option of the person in receipt of the incom*

[such option to be exercised in writing before the expiry

of the time allowed under sub-section (1) or sub-section

(2) of section 139, whether fixed originally or on ex-

tension for furnishing the return of income] be deemed

to be income applied to such purposes during

the

274

T H E GAZETTE OF INDIA EXTRAORDINARY

[PART II—

previous year in which the income was derived, and the

income so deemed to have been applied shall not be taken

into account in calculating the amount of income applied

to such purposes, in the case referred to in sub-clause

(i), during the previous year in Which the income is

received or during the previous year immediately follow-

ing, as the case may be, and, in the case referred to in

sub-clause (ii), during the previous year immediately

following the previous year in which the income was

derived.";

(ii) after sub-section (1A), the following sub-section shall be

inserted, namely: —

"(IB) Where any income in respect of which an option is

exercised under clause (2) of the Explanation to sub-section (1)

is not applied to charitable or religious purposes in India during

the period referred to in sub-clause (a) or, as the case may be,

sub-clause (b), of the said clause, then, such income shall be

deemed to be the income of the person in receipt thereof—

(a) in the case referred to in sub-clause (i) of the said

clause, of the previous year immediately following the pre-

vious year in which the income was received, or

(b) in the case referred to in sub-clause (ii) of the said

clause, of the previous year Immediately following the pre-

vious year in which the income was derived.";

(iii) in sub-section (2), for the portion beginning with the words,

brackets, letters and figure "Where any income referred to in clause

(a) or clause (b) of sub-section (1)" and ending with the words "the

following conditions are complied with, namely:—", the following

shall be substituted, namely: —

"Where seventy-five per cent, of the Income referred to in

clause (a) or clause (b) of sub-section (1) read with the Expla-

nation to that sub-section is not applied, or is not deemed to have

been applied, to charitable or religious purposes in India dur-

ing the previous year but is accumulated or set apart, either in

whole or in part, for application to such purposes in India, such

income so accumulated or set apart shall not be included in the

total income of the previous year of the person in receipt of the

income, provided the following conditions are complied with,

namely:—";

(iv) after sub-section (3), the following sub-section shall be in-

serted, namely: —

" (3A) Notwithstanding anything contained in pub-section

(3), where due to circumstances beyond the control of the person

in receipt of the income, any income invested or deposited in

accordance with the provisions of clause (b) of sub-section (2)

cannot be applied for the purpose for which it was accumulated

or set apart, the Income-tax Officer may, on an application made

to him in this behalf, allow such person to apply such Income

for such other charitable or religious purpose in India as is spec!-'

J3.ed in the application by such person and as is in conformity with

Sue 1]

THE GAZE1TB OF INDIA EXTRAORDINARY

275

the objects of the trust; and thereupon the provisions of sub-

section (3) shall apply as if the purpose specified by such persoii

in the application under this sub-section wore a purpose specified

in the notice given to the Income-tax Officer under clause (a)

of sub-section (2).".

5. In section 13 of the Income-tax Act,—

(i) in sub-section (I),—

(a) after clause (b), the following clause shall be inserted,

namely: —

"(bb) in the case of a charitable trust or institution for

the relief of the poor, education or medical relief, which

carries on any business, any income derived from such busi-

ness, unless the business is carried on in the course of the

actual carrying out of a primary purpose of the trust or

institution;";

(b) after clause (c) and the provisos thereto, the following

clause shall be inserted, namely: —

"(d) subject to the provisions of clause (bb), in the case

of a trust for charitable or religious purposes or a charitable

or religious institution, any income thereof assessable for any

assessment year commencing on or after the 1st day of April,

~ 1979, if any funds of the trust or institution are invested or

deposited or continue to remain invested or deposited for

any period during any previous year commencing on or

after the 1st day of April, 1978, otherwise than, in any of the

forms or modes specified in sub-section (5).";

(ii) in sub-section (3), for clause (b), the following clause shall

be substituted, namely: —

"(b) any person who has made a substantial contribution to

the trust or institution, that is to say, any person whose total

contribution up to the end of the relevant previous year exceeds

five thousand rupees;";

(Hi) after sub-section (4) and before Explanation 1, the follow-

ing sub-sections shall be inserted, namely: —

' (5) The forms and modes of investing or depositing funds

referred to in clause (d) of sub-section (1) shall be—

(a) subject to the provisions of clause (b), in a case

where such funds represent the original corpus of the trust or

institution or any contributions made to the trust or institu-

tion with a specific direction that they shall form part of the

corpus of the trust or institution,—

(/) investment in savings certificates as defined in

clause (c) of section 2 of the Government Savings Certi-

ficates Act, 1999, and any other securities or certificates

issued by the- Central Government under the small sav-

ings schemes of that Government;

(ii) deposit in any account with the Post Office

Savings Bank;

Amend-

ment of

section

13.

46 of 1990.

i76

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(Hi) deposit in any account with any nationalised

bank, that is to say, any corresponding new bank consti-

tuted under section 3 of the Banking Companies (Acqui-

sition and Transfer of Undertakings) Act, 1970;

(iv) investment in units in the Unit Trust of India

established under the Unit Trust of India Act, 1963;

(v) investment in any security for money created

and issued by the Central Government or a State Gov-

ernment:

5 of 1970.

52 of 1963.

(vi) investment in debentures issued by, or on behalf

of,

any

company

or corporation

both the principal

whereof and the interest whereon are fully and uncondi-

tionally guaranteed by the Central Government or by a

State Government;

(vii) investment or deposit in any Government com-

pany as denned in section 617 of the Companies Act,

1956;

lmt 1986.

(b) in a case where such funds represent—

(i) the corpus of the trust or institution immediately

before the 1st day of June, 1973; or

(ii) the original corpus

(being assets other than

cash) of any trust or institution created or established

on or after the 1st day of June, 1973; or

(iii) any

contributions

(otherwise than in cash)

made to any trust or institution on or after the 1st day

of June, 1973, with a specific direction, that they shall

form part of the corpus of the trust or institution,

any form or mode, other than investment in shares (not

being shares entitled to a fixed rate of dividend whether

with or without a further right to participate in profits) in

a company (not being a Government company as defined in

section 617 of the

Companies Act, 1956 or a corporation

established by or under a Central, State or Provincial Act);

sub-clause (i), sub-clause (ii),

sub-clause

(Hi) and sub-

clause (iv) of clause (a).

(6) Nothing contained in clause (d) of sub-section (1) shall

apply in relation to any monies accumulated or finally set apart

and invested or deposited in the manner referred to in clause (b)

of sub-section (2) of section 11.'.

1 of 1966.

6. In section 23 of the Income-tax Act,—

(i) in sub-section (1),—

(a) for the opening paragraph, the following shall be sub-

stituted, namely: —

"(1) For the purposes of section 22, the annual

value

of any property shall be deemed to be—

(a) the sum for which the property might reason-

ably be expected to let from year to year; or

(b) where the property is let and the annual rent

received or receivable by the owner in respect thereof

Amend-

ment of

section

23.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

277

is in excess of the sum referred to in clause (a), the

amount so received or receivable:";

(b) the following Explanation ahall be inserted at the end,

namely: —

'Explanation.—For the purposes of this sub-section,

"annual rent" means—

(a) in a case where the property is let throughout

the previous year, the actual rent received or receivable

by the owner in respect of such year; and

(6) in any other case, the amount which bears the

same proportion to the amount of the actual rent re-

ceived or receivable by the owner for the period for

which the property is let, a3 the period of twelve months

bears to such period.';

(ii) for sub-section (2), the following sub-sections shall be aub-

stituted, namely: —

"(2) Where the property consists of—

(i) a house in the occupation of the owner for the pur-

poses of his own residence, the annual value of such house

shall first be determined in the same manner as if the pro-

perty had been let and further be reduced by one-half of

the amount so determined or one thousand and eight hun-

dred rupees, whichever is less;

(ii) more than one house in the occupation of the owner

for the purposes of his own residence, the provisions of

clause (i) shall apply only in respect of one of such houses,

which the assessee may, at his option, specify In this behalf:

Provided that for the purposes of clauses (i) and (ii), where

the sum so arrived at exceeds ten per cent, of the total Income

of the owner (the total income for this purpose being computed

without including therein any income from such property and

before making any deduction under Chapter VIA), the excess

shall be disregarded.

Explanation..—Where any such residential unit

as is re-

ferred to in the second proviso to sub-section

(1) is In the

occupation of the owner for the purposes of his own residence,

nothing contained in that proviso shall apply in computing the

rmmifll value of that residential unit

(2A) For the removal of doubt, it is hereby declared that,

where the property consists of more than one house and such

houses are in the occupation of the owner for the purposes of

his own residence, the annual value of the houses, other than

that the annual value of which is required to be determined

under clause (ii) of sub-section (2), shall be determined under

sub-section (1) as if such houses had been let.".

2 7 ⁸

THE GAZETTE OF INDIA EXTRAORDINARY

LPART II—

7. In section 26 of the Income-tax Act, the following Explanation

shall be inserted at the end, namely: —

"Explanation.—For the purposes of this section,

in applying

the provisions of sub-section (2) of section 23 for computing

the

share of each such person as is referred to in this section, such

share shall be computed, as if each such person is individually en-

titled to the relief provided in that sub-section.".

Amend-

ment of

section

20.

8. in sub-section (l) of section iz of me income-tax Act, lor clause

(i), the following clause shall be substituted, namely: —

"(i) in the case of ships other than ships ordinarily plying on

inland waters, such percentage on the actual cost thereof to

the

assessee as may, in any case or class of cases or in respect of any

period or periods, be prescribed:

Provided that different percentages may

prescribed

for

different periods having regard to the date of acquisition of the

ship;".

Amend-

ment of

•action

S2.

0. In sub-section (I) of section 35C of the Income-tax Act,—

({) in clause (a), after the words "Where any company", the

words "ipr a co-operative society" shall be inserted;

(H) for the words "the company", wherever they occur,

the

words "the company or co-operative society" shall be substituted.

Amend-

ment of

section

35C.

10. In sub-section (1) of section 37 of the Income-tax Act, after the

words and figures "sections 30 to 36", the words, figures and letters "and

section 80W" shall be inserted.

Amend-

ment of

section

37.

11, In Chapter IV of the Income-tax Act, under the heading "D.—

Froflts and gains of business or profession", after section 44A, the fol-

lowing section shall be inserted, namely:—

"44AA. (1) Every person carrying on legal, medical, engineer-

ing or architectural profession or the profession of accountancy or

technical consultancy or interior decoration or any other profes-

aion as is notified by the Eoard in the Official Gazette shall keep

and maintain such books of account and other documents as may

enable the Income-tax Officer to compute his total Income in ac-

cordance with the provisions of this Act.

(2) Every person carrying on business or profession [not being

a profession referred to in sub-section (1)1 shall,—

(i) if his income from business

profession

exceeds

twenty-five thousand rupees or his total sales, turnover or gross

receipts, as the case may be, in business or profession exceed or

exceeds two hundred and fifty thousand rupees in any one of

the three years immediately preceding the previous year; or

(li) where the business or profession is newly set up In any

previous year, if his income from business or profession is

likely to exceed twenty-five thousand rupees or his total sales,

turnover or gross receipts, as the case may be, in business - or

profession are or Is likely to exceed two hundred gnd fifty

Insertion

of new-

section

44AA.

Mainte-

nance of

accounts

by cartaln

peraong

carrying

on profes-

sion or

business.

Sec. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

379

thousand rupees, during such previous year,

keep and maintain such books of account and other documents as

may enable the Income-tax Officer to compute his total income in

accordance with the provisions of this Act.

(3) The Board may, having regard to the nature of the busi-

ness or profession carried on by any class of persons, prescribe, by

rules, the books of account and other documents (including inven-

tories, wherever necessary) to be kept and maintained under sub-

section (1) or sub-section (2), the particulars

to be contained

therein and the form and the manner in which and the place at

which they shall be kept and maintained.

(4) Without prejudice to the provisions of sub-section (3), the

Board may prescribe, by rules, the period for which the books of

account and other documents to be kept and maintained Under sub-

section (1) or sub-section (2) shall be retained.".

12. In sub-section (1) of section 49 of the Income-tax Act,—

(a) after clause (Hi), the following clause shall be inserted,

namely: —

" ($v) such assessee being a Hindu undivided family,

the mode referred to In sub-section (2) of section 64 at any

time after the 31st day of December, 1969,";

(b) in the Explanation, for the words, brackets and

figures

"clause (ii) or clause (Hi)", the words, brackets and figures "clause

(ii) or clause (Hi) or clause (iv)" shall be substituted.

Amend-

ment of

section

49.

13. In section 64 of the Income-tax Act,—

(a) for sub-section. (1), the following sub-section shall be sub-

stituted, namely:—

"(1) In computing the total income of any individual, there

shall be included all such income as arises directly or indirectly—

(i) to the spouse of such individual from the member-

ship of the spouse in a firm carrying on a business in which

such individual is a partner;

(ii) to the spouse of such individual by way of salary,

commission, fees or any other form of remuneration whether

In cash or in kind from a concern in which such individual

has a substantial interest:

Provided that nothing in this clause shall apply In re-

lation to any income arising to the spouse where the spouse

possesses technical or professional qualifications and the in-

come is solely attributable to the application of his or her

technical or professional knowledge and experience;

(Hi) to a minor child of such Individual from the ad-

mission of the minor to the benefits of partnership in a firm;

(iv) subject to the provisions of clause (i) of section 27,

in a case not falling under clause (i) of this sub-section,

to the spouse of such individual from assets transferred

directly or indirectly to the spouse by such individual other-

Amend-

ment of

section

64.

aSo

THE GAZETTE OF INDIA EXTRAORDINARY

[PART U _

wise than for adequate consideration or in connection with

an agreement to live apart;

(v) subject to the provisions of clause (i) of section 27,

in a case not falling under sub-clause (iil) of this sub-sec-

tion, to a minor child (not being a married daughter) of

such individual, from assets transferred directly or indir-

ectly to the minor child by such individual otherwise than

for adequate consideration;

(vi) to the son's wife, or son's minor child, of such in-

dividual, from assets transferred directly or indirectly on

or after the 1st day of June, 1973, to the son's wife or son's

minor child by such individual otherwise than for adequate

consideration; and

(vll) to any person or association of persons from assets

transferred directly or indirectly otherwise than for adequate

consideration to the person or association of persons by such

individual, to the extent to which the income from such

assets is for the immediate or deferred benefit of his or her

spouse or minor child (not being a married daughter) or

both.

'Explanation 1.—For the purposes of clause (f). the individual,

in computing whose total income the income referred to in that

clause is to be included, shall be the husband or wife whose total

income (excluding the income referred to in that clause)

greater; and, for the purposes of clause (iil), the income of the

minor child from the partnership shall be included in the in-

come of that parent whose total income (excluding the income

referred to in that clause) is greater; and where any such income

Is once included in the total income of either spouse or parent,

any such income arising in any succeeding year shall not be in-

cluded In the total income of the other spouse or parent unless

the Income-tax Officer is satisfied, after giving that spouse or

parent an opportunity of being heard, that it 1E necessary so to do.

Explanation 2.—For the purposes ofi clause (ii), an individual

shall be deemed to have a substantial interest in a concern—

(i) In a case where the concern is a company,

its

shares (not being shares entitled to a fixed rate of dividend

whether with or without a

further right

participate

in profits) carrying not less than twenty per cent,

the

voting power are, at any time during the previous year, owned

beneficially by such person or partly by such

person

and

partly by one or more of his relatives;

(It) in any other case, if such person is entitled, or such

person and one or more of his relatives are entitled in the

aggregate, at any time during the previous year, to not less

than twenty per cent, of the profits of such concern.

Explanation 'i.—For the purposes of clauses (iv) and (v),

where the assets transferred directly or indirectly by an indi-

vidual to his spouse or minor child are invested by the spouse or

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

281

minor child in any business, that part of the income arising

out of the business to the spouse or minor child in any previous

year, which bears the same proportion to the income of the

spouse or minor child from the business as the value of the assets

aforesaid as on the first day of the previous year bears to the total

investment in the business by the spouse or the minor child as on

the said day, shall be included in the total income of the indivi-

dual in that previous year.";

(b) in sub-section (2),—

(i) in clause (b), the words ", in so far as it is attributable to

the interest of the individual in the property of the family,"

shall be omitted;

(ii) for clause (c), the following clause shall be substituted,

namely: —

"(c) where the converted property has been the subject-

matter of a partition (whether partial or total) amongst the

members of the family, the income derived, from such

converted property as is received by the spouse or minor

child on partition shall be deemed to arise to the spouse or

minor child from assets transferred indirectly by the

individual to the spouse or minor child and the provisions of

sub-section (1) shall, no far as may be, apply accordingly:";

(iii) in the proviso, for the words "minor son", the words

"minor child" shall be substituted;

(iv) in the Explanation,--

(A) the brackets and figure "(-0" shall be omitted;

(B) clause (2) shall be omitted.

14. In Chapter VI of tlic Income-lax Act, under the heading "Aggre-

gation of income", after section 69B, the following

sections

shall

inserted, namely: —

"6&C. Where in any financial year an assessee has incurred any

expenditure and he offers no explanation about the source of such

expenditure or part thereof, or the explanation if any, offered by him

is not, in the opinion of the Income-tax Officer, satisfactory, the

amount covered by such expenditure or part thereof, as the case may

be, may be deemed to be the income of the assessee for such financial

year.

Inser-

tion of

new sec-

tions 69C

and 69D.

Unex-

plained

expand!

ture.etc.

6flD. Where any amount is borrowed on a hundi from, or any

amount due thereon is repaid to, any person otherwise than through

an account payee cheque drawn on a bank, the amount so borrowed

or repaid shall be deemed to be the income of the person borrowing

or repaying the amount aforesaid for the previous year in which the

amount was borrowed or repaid, as the case may be;

Provided that, if in any case any amount borrowed on a hundi

has been deemed under the provisions of this section to be the

income of any person, such person shall not be liable to be assessed

again in respect of such amount under the provisions of this section

on repayment of such amount.

Amount

borrowed

or repaid

on hundi.

i82

fHfc GAZETTE OF INDIA EXTRAORDINARY

[PART 11—

Explanation.—For the purposes of this section, the amount re-

paid shall include the amount of interest paid on the amount bor-

rowed.".

15. In section 73 of the Income-tax Act, the following Explanation

shall be inserted at the end, namely; —

"Explanation.—Where any part of the business of a company

[other than an investment company, as defined in clause (ii) of sec-

tion 109, or a company the principal business of which is the business

of banking or the granting of loans and advances] consists in the

purchase and sale of shares of other companies, such company shall,

for the purposes of this section, be deemed to be carrying on a specu-

lation business to the extent to which the business consists of the

purchase and sale of such shares.".

Amend-

ment of

section

73.

16. In section 80A of the Income-tax Act,—

(i) in sub-section (1), for the figures and letter '"80U", the figures

and letters "80VV" shall be substituted;

(ii) in sub-section (3), the words, figures and letter "or section

80H" shall be omitted.

Amend-

ment oi

section

80A.

17. In section 80S of the Income-tax Act, clauses (1) and (9) shall be

emitted.

Amend,

ment of

section

80B.

18. In section BOG of the Income-tax Act,—

(i) for sub-section (1), the following sub-section shall be substi-

tuted, namely: —

"(1) in computing the total income of an assessee, there shall

be deducted, in accordance with and subject to the provisions of

this section, an amqunt equal to fifty per cent, of the aggregate of

th« sums specified in sub-section (2).";

(ii) in clause (i) of sub-section (5), after the words, brackets and

figures "or clause (23)", the words, brackets, figures and letter "or

clause (23C)" shall be inserted.

Amend,

ment of

section

80G.

19. In Chapter VIA of the Income-tax Act, under the heading "B.—

Deductions in 'respect oj certain payments", after

section 80G, the

following section shall be inserted, namely; —

'80GO. In computing the total income of an assessee, not being

an assessee having any income falling within clause (13A) of section

10, there shall be deducted any expenditure incurred by him in excess

of ten per cent, of his total income towards payment of rent (by what-

ever name called) in respect of any

furnished or

unfurnished

accommodation occupied by him for the purposes of his own resi-

dence, to the extent to which such excess expenditure does not ex-

ceed three hundred rupees per month or fifteen per cent, of his total

income for the year, whichever is less, and subject to such other

conditions or limitations as may be prescribed, having, regard to the

area or place in which such accommodation is situated and other

relevant considerations:

Provided that nothing in this section shall apply to an assessee

In any case where any residential accommodation is owned by him or

by his spouse or minor child, or, where such assessee is a member of

a Hindu undivided family, by such family.

Inser-

tion of

new sec-

tion 80GG,

Deduction

in respect

of renta

paid.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINABY

iga

Explanation.—In this section, the expressions "ten per cent, of

his total income" and "fifteen per cent, of his total income" shall

mean ten per cent, or fifteen per cent,, as the case may be, of the

assessee's total income before allowing deduction for any expendi-

ture under this section.'.

20. Section 80H of the Income-tax Act shah he omitted.

Omission

of section

BOH.

31. In section 80HH of the Income-tax Act, sub-section (8) shall be

dmitted.

82. In section 80J of the Income-tax Act,—

(i) in sub-section (1), for the brackets, words, figures and letters

"(reduced by the aggregate of the deductions, if any, admissible to

the assessee under section 80H and section 80HH)", the brackets,

words, figures and letters "(reduced by the deduction, if any, admis-

sible to the assessee under section 80HH)" shall be substituted;

(ii) in sub-section (3), the word, figures and letter "section 80H,"

shall be omitted.

Amend-

ment of

section

aoHit.

Amend-

ment of

section

80J.

23. In sub-section (1) of section 80L of the Income-tax Act, after

clause (vii), the following clause shall be inserted, namely: —

" (viia) interest on deposits with any authority constituted

India by or under any law enacted either for the

purpose

dealing with and satisfying the need for housing accommodation

or for the purpose, of planning, development or improvement of

cities, towns and villages, or for both;".

Amend-

ment of

section

80L,

24 In sub-section (3) of section 80P of the Income-tax Act,—

(i) the words, figures and letter

"section 80H or" shall

omitted;

(ii) for the words, figures and letters "deductions under section

80H, section 80HH, section 80.T and section 80JJ", the words, figures

and letters "deductions under section 80HH} section 80.T and section

Rn.TJ" shall be substituted

Amend-

ment of

section

BOP.

25. In sub-section (2) of section 80QQ of the Income-tax Act,—

(i) the words, figures and letter "section 80H or" shall be

omitted;

(ii\ thp word, fieures and letter "section 80H," shall be omitted.

Amend-

ment of

section

80QQ.

26. In Chapter VIA of the Income-tax Act, under the heading "D.~-

Other deductions", after section 80U, the following sections shall be

Inserted, namely:—.

"80V. In computing the total income of an assessee, there shall

be allowed by way of deduction any interest paid by him in the

previous year on any money borrowed for the payment of any tax

due from him under this Act.

Inser-

tion of

new

sections

80V and

80W.

Deduction

of interest

money 3

borrowed

to pay

taxes.

284

T H f i GAZETTE OF INDIA EXTRAORDINARY

[PART II—

80VV. In computing the total income of an assessee, there shall

be allowed by way of deduction any expenditure incurred by him

in the previous year in respect of any proceedings

before

any

income-tax authority or the Appellate Tribunal or any court relat-

ing to the determination of any liability under this Act, by way of

tax, penalty or interest:

Provided that no deduction under this section shall, in any case;

exceed in the aggregate five thousand rupees.".

£7. In section 104 of the Income-tax Act, for sub-section (4), the

following sub-section shall be substituted, namely: —

"(4) Without prejudice to the provisions of section 108, nothing

contained in this section shall apply to a company which is neither

an Indian company nor a company which has made the prescribed

arrangements for the declaration and payment of dividends within

India.".

Deduc-

tion in

respect of

expenses

Incurred

in con-

nection

with

certain

proceed-

ings

under

the Act.

Amend-

ment Of

section

104.

28. In section 109 of the Income-tax Act,—-

(a) after

clause

(t), the following clauses shall be inserted,

namely:—

'(ia) "industrial company" means an Indian company whose

business consists wholly in the construction of ships or in the

manufacture or processing of goods or in mining or in the gene-

ration or distribution of electricity or any other form of power;

(ib) "consultancy service company" means an Indian com-

pany whose business consists wholly in the provision of technical

know-how, or in the rendering of services in connection with the

provision of technical know-how, to other persons.

Explanation.—In this .clause and in sub-clause (3) of clause

(in), the expression "provision of technical know-how" has the

meaning assigned to it in sub-section (2) of section 80MM;';

(fa) in clause (in),—

(t) for sub-clause (1), the following sub-clauses shall be

substituted, namely: —

"(2) in the case of an industrial company or

a consultancy service company

45%;

(2) in the case of an investment company

other than an investment company which falls

Under sub-clause (3) of this clause

90%;";

(ii) in sub-clause (3), for the portion beginning

with the words "in the case of an Indian company"

and ending with the words "attributable to such

business

• • Nil;",

the following shall be substituted, namely: —

"in the Case of an Indian company, not being an indus-

trial company or a consultancy service company, a part of

whose gross total income consists of profits and gains attri-

butable to the business of provision of technical know-how,

or of rendering services in connection with the provision of

technical know-how, to o,ther persons, or of construction of

ships or of manufacture or processing of goods or of mining

or of generation or distribution of electricity or any other

form of power—

Amen 4-

ment of

section

109.

SEC. 1]

THE GAZETTE OF INDIA EXTRAOBDINARY

285

(a) in relation to the said part of its gross

total income

. . 45%;":

(Hi) for the Explanation below sub-clause (3), the following

Explanation shall be substituted, namely: —

"Explanation.—The provisions of this Chapter shall apply

at; if the aforesaid two parts of the gross total income of the

company were respectively the gross total income of the com-

pany in relation to" each such part and as if the amount of

dividends actually distributed and the distributable income

were also similarly apportioned for the purposes of section 104

and this section;".

29. In sub-section (2) of section 124 of the Income-tax Ant, for the

portion beginning with the words "and shall perform such functions"

and ending with the words "work to be performed.", the following shall

be substituted, namely: —

"and shall perform their functions in relation to the said area, or

persons or classes of persons, or incomes or classes of income, or cases

or classes of cases, in accordance with such general or special orders

in writing as the Commissioner or the Inspecting Assistant Commis-

sioner authorised by the Commissioner in this behalf, may make for

the purpose of facilitating the performance of such functions.".

Amend-

ment of

Kection

124,

30. In sub-section (1) of section 125 of the Income-tax Act, in the pro-

viso,—

(1) after the figures and letter "132A,", the figures and

letter

"132B," shall be Inserted;

(ii) for the words, figures and brackets "and 271 to 274 (both

inclusive)", the figures, words and brackets ", 271 to 273 (both in-

clusive) and 274" shall be substituted.

31. After section 125 of the Income-tax Act, the following section shall

be inserted, namely: —

"125A. (1) The Commissioner may, by general or special order

in writing, direct that all or any of the powers or functions conferred

on, or assigned to, the Income-tax Officer or Income-tax Officers by

or under this Act in respect of any area, or persons or classes oi

persons, or incomes or classes of income, or cases or classes of cases,

shall be exercised or performed concurrently by the Inspecting As-

sistant Commissioner.

(2) Where under sub-section (1), an Inspecting Assistant Com-

missioner exercises concurrent jurisdiction with one or more Income-

tax Officers in respect of any area, or persons or classes of persons,

or incomes or classes of income, or cases or classes

of cases, the

Income-tax Officer or Income-tax Officers shall exercise the powers

and perform the functions under this Act in relation thereto as the

Inspecting Assistant Commissioner may direct.

(3) Without prejudice to the generality of the provisions con-

tained in sub-section (3) of section 119, every Income-tax Officer shall

also observe and follow <^h instructions as may be issued to him

for his guidance by the Inspecting Assistant Commissioner

within

whose jurisdiction he performs his functions in relation to any parti-

cular proceeding or the initiation of any proceeding under this Act;

-Amend-

ment of

section

125.

Inser-

tion of

new sec-

tion

125 A.

Concur-

rent juris-

diction

of Inspect-

ing Assis-

tant

Commis-

sioner

and

Income-

tax

Officer.

286

THE GAZETTE OH INDIA EXTRAORDINARY

[PART II—

Provided that no instructions, which are prejudicial to the as-

sessee, shall be issued before an opportunity is given to the assessee

to be heard-

Eoqplanation.—For the purposes of this sub-section, no instruc-

tion as to the lines on which an investigation connected with the

assessment should be made shall be deemed to be an instruction pre-

judicial to the assessee.

(4) Where an order is made under sub-section (1) and the Ins-

pecting Assistant Commissioner exercises the powers or performs the

functions of an Income-tax Officer in relation to any area, or persons

or classes of persons, or incomes or classes of income, or cases or

classes of cases, references in this Act or in any rule made thereunder

to the Income-tax Officer and the Appellate Assistant Commissioner

shall be construed as references to the Inspecting Assistant Com-

missioner and the Commissioner respectively and, accordingly: —

(i) any provision of this Act requiring approval or sanction

of the Inspecting Assistant Commissioner shall not apply;

(ii) any appeal which would otherwise have lain to the

Appellate Assistant Commissioner shall lie to the Commissioner;

(Hi) any appeal which would have lain from an order of the

Appellate Assistant Commissioner to the Appellate Tribunal shall

lie from the order of the Commissioner.".

32. In section 127 of the Income-tax Act, for sub-section (1), the fol-

lowing sub-section shall be substituted, namely: —

" (1) The Commissioner may, after giving the assessee a reason-

able opportunity of being heard in the matter, wherever it is pos-

sible to do so, and after recording his reasons for doing so, transfer

any case from one or more of the following officers subordinate to

him, namely: —

(a) any Income-tax Officer or Income-tax Officers;

(b) any Income-tax Officer or Income-tax Officers having

concurrent jurisdiction with the Inspecting Assistant Commis-

sioner,

to any other Income-tax Officer or Income-tax Officers (whether with

or without concurrent jurisdiction with the Inspecting Assistant Com-

missioner) also subordinate to him and the Board may similarly

transfer any case from—

(i) any Income-tax Officer or Income-tax Officers, or

(ii) any Income-tax Officer or Income-tax Officers having

concurrent jurisdiction with the Inspecting Assistant Commis-

sioner,

to any other Income-tax Officer or Income-tax Officers (whether with

or without concurrent jurisdiction with the Inspecting Assistant

Commissioner):

Provided that nothing in this sub-section shall be deemed to

require any such opportunity to be given where the transfer is from

any Income-tax Officer or Income-tax Officers

(whether with or

without concurrent jurisdiction with the Inspecting Assistant Com-

missioner) to any other Income-tax Officer or Income-tft^f Officers

Amend-

ment ot

section

127,

SEC. J]

THE GAZETTE OF INDIA EXTRAORDINARY

287

(whether with or without concurrent jurisdiction with the Inspect-

ing Assistant Commissioner) and the offices of all such officers are

situated in the same city, locality or place:

Provided further that—

(a) where any case has been transferred from any Income-

tax Officer or Income-tax Officers to two or more Income-tax

Officers, the Income-tax Officers to whom the case is so trans-

ferred shall have concurrent jurisdiction over such case and shall

perform their functions in accordance with such general or spe-

cial orders in writing as the Board or the Commissioner or the

Inspecting Assistant Commissioner authorised by the Commis-

sioner in this behalf, may make for the purpose of facilitating

the performance of such functions;

(b) where any case has been transferred from any Income-

tax Officer or Income-tax Officers (whether with or without con-

current jurisdiction with the Inspecting Assistant Commissioner),

to two or more Income-tax Officers with concurrent jurisdiction

with the Inspecting Assistant Commissioner, the officers (includ-

ing the Inspecting Assistant Commissioner) to whom t*re case is

so transferred shall have concurrent jurisdiction over such case

and shall perform their functions in accordance with such gene-

ral or special orders in writing as the Board or the Commissioner

may make for the purpose of facilitating the performance of such

functions, and the Income-tax Officers shall perform their func-

tions also in accordance with such orders or directions as the

Inspecting Assistant Commissioner may make under sub-section

(2) of section 124 or, as the case may be, under sub-section (2)

of section 125A.".

33. In section 130A of the Income-tax Act, after clause

(b), the

following clause shall be inserted, namely: —

"(c) in a case, where two or more Income-tax Officers have con-

current jurisdiction over such assessee in relation to any function,

be the Income-tax Officers empowered to perform such function by

the Board or, as the case may be, the Income-tax Officers to whom

such function has been assigned by an order of the Commissioner

or by an order or a direction of the Inspecting Assistant Commis-

sioner under sub-section (2) of section 124 or, as the case may be,

under sub-section (2) of section 125A.".

34. In section 131 of the Income-tax Act,—

(i) after sub-section (1), the following sub-section shall be in-

serted, namely: —

"(1A)

If the Assistant Director of Inspection has reason to

suspect that any income has been concealed, or is likely to be

concealed, by any person or class of persons, within his juris-

diction, then, for the purpose of making any enquiry or investi-

gation relating thereto, it shall be competent for him to exercise

the powers conferred under sub-section (7) on the Income-tax

authorities referred 1.0 in that sub-section, notwithstanding that

no proceedings with respect to such person or class of persons

are pending before him or any other Tncome-tax authority.":

288

THE GAZETTE OF INDTA EXTRAORDINARY

[PART II—

(ii) in sub-section (3),—•

(a) in the opening paragraph, after the word, brackets and

figure "sub-section (1)"', the words, brackets, figure and letter

"or sub-section (1A)" shall be inserted;

(b) in the proviso, for the words "an Income-tax Officer",

the words "an Income-tax Officer or an Assistant Director of

Inspection" shall be substituted.

35. In section 132 of the Income-tax Act,->-

(a) in sub-section (1),—

(i) in the opening paragraph, for the words

"Where

the

Director of Inspection or the Commissioner,", the following shall

be substituted, namely: —

"Where the Director of Inspection or the Commissioner

or any such Deputy Director of Inspection

Inspecting

Assistant Commissioner as may be empowered in this behalf

by the Board,";

(ii) in clause (c), for the words "which has not been disclos-

ed', the words "which has not been, or would not be, disclosed"

shall be substituted;

(in) for the portion beginning with the words

"he may

authorise" and ending with the brackets and words " (herein-

after referred to as the authorised officer) to—", the following

shall be substituted, namely: —

"then —

(A) the Director of Inspection or the Commissioner,

as the case may be, may authorise any Deputy Director

of Inspection, Inspecting Assistant Commissioner, Assist-

ant Director of Inspection or Income-tax Officer; or

(B) such Deputy Director of Inspection or Inspect'

ing Assistant Commissioner, as the case may be,

may

authorise any Assistant Director

of Inspection or in-

come-tax Officer,

(the officer so authorised in all cases being hereinafter

re-

ferred to as the authorised officer) to—";

(iv) in clause (i), for the words "building or place",

the

words "building, place, vessel, vehicle or aircraft" shall be sub-

stituted;

(v) after clause (ii), the following clause shall be Inserted,

namely: —

"(iia) search any person who has got out of, or Is about

to get into, or is in, the building, place, vessel, vehicle or

aircraft, if the authorised officer has reason to suspect that

such person has secreted about his person any such books

of account, other documents, money, bullion, jewellery

other valuable article or thing;";

(in) the following proviso shall be inserted at the end,

namely:—

"Provided that where any building, place, vessel, vehi-

cle or aircraft referred to in clause (i) is within the area of

Amend-

ment of

section

132.

SEc. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

289

jurisdiction of any Commissioner, but such

Commissioner

has no jurisdiction over the person referred to in clause (a)

or clause (b) or clause (c), then, notwithstanding anything

contained in section 121, it shall be competent for him

exercise ths powers under this sub-suction in all cases where

he has reason to believe that any delay in getting the autho-

risation from the Commissioner having jurisdiction over

such person may be prejudicial to

the interests of the re-

venue.";

(b) after sub-section (1), the following sub-section shall be in-

serted, namely: —

" (1A) Where any Commissioner, in consequence of informa-

tion in his possession, has reason to suspect that any books of

account, other documents, money, bullion, jewellery

or other

valuable article or thing in respect of which an officer has been

authorised by the Director of Inspection or any other Commis-

sioner or any such Deputy Director ol Inspection or Inspecting

Assistant Commissioner as may be empowered in this behalf by

the Board to take action under clauses (i) to (v) of sub-s«ction

(1) are or is kept in any building, place, vessel, vehicle or air-

craft not mentioned in the authorisation under sub-section (1),

such Commissioner may, notwithstanding anything contained in

section 121, authorise the said officer to take action under any

of the clauses aforesaid in respect of such building, place, ves-

sel, vehicle or aircraft.";

brackets

and

figure

"sub-section (1)", the words, brackets, figure and letter "or sub-

section (1A)" shall be inserted;

(d) aftejr sub-section (4), the following sub-section shall be in-

serted, namely:—

" (4A) Where

any

books of

account,

other

documents,

money, bullion, jewellery or other valuable article or thing are

or is found in the possession or control of any person in the

course of a search, it may be presumed—

(i) that such books of account, other documents, money,

bullion, jewellery or other valuable article or thing belong

or belongs to such person;

(ii) that the contents of such books of account and other

documents are true; and

(iii) that the signature and every other part of such

books of account and other documents which purport to be

in the handwriting of any particular person or which may

reasonably be assumed to have been sighed by, or to be in

the handwriting of, any particular person, are in that per-

son's handwriting, and in the case of a document stamped,

executed or attested, that it was duly stamped and executed

or attested by the person by whom it purports to have been

90 executed or attested.";

iyo

THE GAZETTE OF INDIA. EXTRAORDINARY

[PART U—

(e) in sub-section (5),—

(i) for the opening paragraph, the following shall be sub-

stituted, namely:—•

"Where any money, bullion, jewellery or other valuable

article or thing (hereafter in this section and in sections

132A and 132B referred to as the assets) is seized under

sub-section (1) or sub-section (1.A), the Income-tax Officer,

after affording a reasonable opportunity to the person

concerned of being heard and making such enquiry as

may be prescribed, shall, within ninety days of the seizure,

make an order, with the previous approval of the Inspecting

Assistant Commissioner,—";

(ii) after clause (ii), the following clause shall be inserted)

namely: —

" (iia) determining the amount of interest payable and

the amount of penalty imposable in accordance with the!

provisions of the Indian Income-tax Act, 1922 or this Act, as

ii the order had been the order of regular assessment;";

(iii) for the words, brackets and figures "clauses (ii) and

(iii)", at both the places where they occur, the words, brackets,

figures and letter "clauses (ii), (iia) and (in)" shall be sub-

stituted;

(iv) in the first proviso, after the words "the financial year

in which the assets were seized", the words "and may also

determine the interest or penalty, if any, payable or imposable

accordingly" shall be inserted;

(f) in aub-section (6), for the word, figures and letter "section

132A", the word, figures and letter "section 132B" shall be sub-

stituted;

(g) In sub-section (8), after the word, brackets and figure "sub-

section (1)", the words, brackets, figure and letter "or sub-section

(1A)" shall be inserted;

(h) in aub-section (9), after the word, brackets and figurt

"sub-section (1)", the words, brackets, figure and letter "or sub-

section (1A)" shall be inserted;

(1) after sub-section (9), the following sub-aection shall be in-

serted, namely: —

"(9A) Where the authorised officer has no jurisdiction over

the person referred to in clause (a) or clause (b) or clause (c)

of sub-section (1), the books of account or other documents or

assets seized under that subsection shall be handed over by the

authorised officer to the Income-tax Officer having jurisdiction

over such person within a period of fifteen days of such seizure

and thereupon the powers exercisable by the authorised officer

under sub-section (8) or sub-section (9) shall be exercisabla by

such Income-tax Officer.";

il of 1622.

SEC. 1J

THE GAZETTE OF INDIA EXTRAORDINARY

20.1

(j) in sub-section (Id), after the word,

brackets and

figure

"sub-section (1)", the woi\h;, brackets, figure and

letter "or sub-

section (1A)" shall be inserted;

(k) for sub-section (13),

the

following sub-section shall

substituted, namely: —

" (13) The provisions of the Code of Criminal Procedure,

1973, relating to searches and seizure shall apply, so far as may

be, to searches and seizure under

sub-section

(1) or sub-

section

(1A).";

(I) in sub-section (24), in clause (i), for the words "such build-

ing or place", the words "any building, place, vessel, vehicle or air-

craft" shall be substituted.

3C. Section 132A of the Income-tax Act shall be re-numbered

section 132B thereof, and—

(1) before that section as so re-numbered, the following section

shall be inserted, namely: —

'132A. (2) Where the Director of Inspection or the Com-

missioner, in consequence of information in his possession, has

reason to believe that—

(a) any person to whom a summons under sub-section

(1) of section 37 of the Indian Income-tax Act, 1922 or

under sub-section (1) of section 131 of this Act, or a notice

under sub-section

(4) of section 22 of the Indian Income-

tax Act, 1922 or under sub-section (1) of section 142 of this

Act was issued to produce, or cause to be produced, any

books of account or other documents has omitted or failed

to produce, or cause to be produced, such books of account

or othei¹ documents, as required by such summons or notice

and the said books of account or other documents have been

taken into custody by any officer or authority under any

other law for the time being In force, or

(b) any books of account or other documents will be

useful for, or relevant to, any proceeding under the Indian

Income-tax Act, 1922 or under this Act and any person to

whom a summons or notice as aforesaid has been or might

be issued will not, or would not, produce or cause to be

produced, such books of account or other documents on the

return of such books of account or other documents by any

officer

authority by

whom or which such

books of

account or other documents have been taken into custody

under any other law for the time being In force, or

(G) any assets represent either wholly or partly income

or property which has not been, or would not have been,

disclosed for the purposes of the Indian Income-tax Act,

1922 or this Act by any person from whose possession or

control such assets have been taken into custody by any

officer or authority under any other law for the time being

In force,

Amend,

merit of

section

132A.

Powers to

requisi-

tion

books of

account,

etc.

11 of 1932.

11 of 1922.

961 L.S.—4

292

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

then, the Director of Inspection or the Commissioner may

authorise any Deputy Director of Inspection, Inspecting Assis-

tant Commissioner, Assistant Director of Inspection or Income-

tax Officer [hereafter in this section and in sub-section (2) of

section 278D referred to as the requisitioning officer] to require

the officer or authority referred to in clause (a) or clause (b)

or clause (c), as the case may be, to deliver such boots of ac-

count, other documents or assets to the requisitioning officer.

(2) On a requisition being made under sub-section (1), the

officer or authority referred to in clause (a) or clause (b) or

clause (c), as the case may be, of that sub-section shall deliver

the books of account, other documents or assets to the requisi-

tioning officer either forthwith or when such officer cr autho-

rity is of the opinion that it is no longer necessary to retain

the same in his or its custody.

(3) Where any books of account, other documents or assets

have been delivered to the requisitioning officer, the provisions

of sub-sections (4A) to (24) (both inclusive) of section 132 and

section 132B shall, so far as may be, apply as if such books of

account, other documents or assets had been seized under sub-

section (1) of section 132 by the requisitioning officer from the

custody of the person referred to in clause (a) or clause (b) or

clause (c), as the case may be, of sub-section (1) of this section

and as if for the words "the authorised officer" occurring in any

of the aforesaid sub-sections (4A) to (14), the

words

"the

requisitioning officer" were substituted.';

(ii) in section 132B as so re-numbered, in sub-section (1), in

clause (i), after the word "relates", the brackets and words "(inclu-

ding any penalty levied or interest payable in connection with such

assessment or re-assessment)" shall be inserted.

37. For section 133A of the Income-tax Act, the following section

shall be substituted, namely:-—

'133A. (1) Notwithstanding anything contained in any

other

provision of this Act, an Income-tax authority may enter—

(a) tmy place within the limits of the area assigned to him,

(b) any place occupied by any person in respect of whom

he exercises jurisdiction,

at which a business or profession is carried on, whether such place

be the principal place or not of such business or profession, and

require any proprietor, employee or any other person who may at

that time and place be attending In any manner to, or helping In,

the carrying on of such business or profession—

(i) to afford him the necessary facility to inspect such books

of account or other documents as he may require and which

may be available at such pise*,

Substi-

tution of

new

section

for

section

133A.

Foww of

survey.

SEC. lj

THE GAZETTE OF INDIA EXTRAORDINARY

293

(li) to afford him the necessary facility to check or verify

the cash, stock or other valuable article or thing which may be

found therein, and

(in) to furnish such information as he may require as to

any matter which may be useful for, or relevant to, any pro-

ceeding under this Act.

Explanation.—For the purposes of this sub-section, a

place

where a business or profession is carried on shall also include any

other place, whether any business or profession is carried on there-

in or not, in which the person carrying on the business or profession

states that any o£ his books of account or other documents or any

part of his cash or stock or other valuable article or thing relating

to his business or profession are or is kept.

(2) An Income-tax authority may enter any place of business

or profession referred to in sub-section (1) only during the hours

at which such place is open for the conduct of business or profession

and, in the case of any other place, only after sunrise and before

sunset.

(3) An Income-tax authority acting under this section may,—

(i) if he so deems necessary, place marks of identification

on the books of account or other documents inspected by him

and make or cause to be made extracts or copies therefrom,

(it) make an inventory of any cash, stock or other valuable

article or thing checked or verified by him,

(iii) record the statement of any person which may be use-

ful for, or relevant to, any proceeding under this Act.

(4) An Income-tax authority acting under this section shall, on

no account, remove or cause to be removed from the place wherein

he has entered, any books of account or other documents or any

cash, stock or other valuable article or thing.

(5) Where, having regard to the nature and scale of expenditure

incurred by an assessee, in connection with any function, ceremony

or event, the Income-tax authority Is of the opinion that it is neces-

sary or expedient so to do, he may, at any time after such function,

ceremony or event, require the assessee by whom such expenditure

has been incurred or any person who, in the opinion of the Income-

tax authority, is likely to possess information as respects the ex-

penditure incurred, to furnish such information as he may require

as to any matter which may be useful for, or relevant to, any pro-

ceeding under this Act and may have the statements of the assesseo

or any other person recorded and any statement so recorded may

thereafter be used in evidence in any proceeding under this Act.

(6") If a person under this section is required to afford facility

to the Income-tax authority to inspect books of account or other

documents or to check or verify any cash, stock or other valuable

article or thing or to furnish any information or to have his state-

ment recorded either refuses or evades to do so, the Income-tax

294

T H E GAZETTE OF INDIA EXTRAORDINARY

[PART ji—

authority shall have all the powers under sub-sections (1) and (2)

oJ: section 131 for enforcing compliance with the requirement made.

Explanation.—In this section,-—

(a) "Income-tax authority" means an Inspecting Assistant

Commissioner, an Assistant Director of Inspection or an Income-

tax Officer, and for the purposes of clause (i) of sub-section (1),

clause (t) of sub-section (3) and sub-section (5), includes an

Inspector of Income-tax, if so authorised by the Income-tax

Officer;

(b) "proceeding" means any proceeding under this Act in

respect of any year which may be pending on the date on which

the powers under this section are exercised or which may have

been completed on or before such date and includes also all

proceedings under this Act which may be commenced after such

date in respect of any year.'.

S8, In section 139 of the Income-tax Act,—

(i) in sub-section (2), for the words "serve a notice upon him",

the words "issue a notice to him and serve the same upon him"

shall be substituted;

(il) for sub-section (6^, the following sub-sections shall be

substituted, namely: —

" (6) The prescribed form of the returns referred to in sub-

sections (1), (2) and (3) shall, in such cases as may be pres-

cribed, require the assessee to furnish the particulars of income

exempt from tax, assets of the prescribed nature and value and

belonging to him, expenditure exceeding the prescribed limits

incurred by him under prescribed heads and such other out-

goings as may be prescribed.

(6A) Without prejudice to the provisions of sub-section (6),

the prescribed form of the returns referred to in sub-sections

(1), (2) and (3) shall, in the case of an assessee engaged in any

business or profession, also require him to furnish particulars

of the location and style of the principal place where he carries

on the business or profession and all the branches thereof, the

names and addresses of his partners, if any, in such business

or profession and, if he is a member of an association or body

of individuals, the names of the other members of the associa-

tion or the body of individuals and the extent of the share of

the assessee and the shares of all such partners or the members,

as the case may be, in the profits of the business or profession

and any branches thereof.",

Amend-

ment of

section

139.

SEC. 11

THE GAZETTt: OF INDIA EXTkAORDINARV

295

39. After section 139 of the Income-tax Act, the following section shall J

e inserted, namely: —

]

'139A. (1) Every person, if his total income or the total income I

of any other person in respect of which he is assessable under this^l

Act during any accounting year exceeded

the maximum

amount j

which is no\ chargeable to income-tax and he has not been allotted

any permanent account number, shall, within such time as may be

prescribed, apply to the Income-tax Officer

for

the allotment of a

permanent account number.

(2) Notwithstanding anything contained in sub-section (I), every

person not falling under that sub-section, but carrying on any busi-

ness whose total sales, turnover or gross receipts are or is likely to

exceed fifty thousand rupees in any accounting year and who has not

been allotted any permanent account number, shall, within such time

as may be prescribed, apply to the Income-tax Officer for the allot-

ment of a permanent account number.

(3) The Income-tax Officer may also allot to any other person

by whom tax is payable, a permanent account number.

(4) All permanent account numbers allotted to assessees before

the commencement of the Taxation Laws (Amendment)

Act, 1975

shall, with effect from such date as the Board may, by notification in

the Official Gazette, specify, be deemed to have been allotted to them

under the provisions of this section.

(5) Where a permanent account number has been allotted or is

deemed to have been allotted to any person under this section, he

shall—

(a) quote such number in all his returns to, or correspon-

dence with, any Income-tax authority;

(b) quote such number in all challans for the payment of

any sum due under this Act;

transactions as may be prescribed by the Board in the interests

of the revenue, and entered into by him;

(d) Intimate the Income-tax Officer any change in his address

or in the name and nature of his business.

(6) The Board may make rules providing for—

(a) the form and the manner in which an application may

be made for the allotment of a permanent account number and

the particulars which such application shall contain;

(b) the categories of transactions in relation to which per-

manent account numbers shall be quoted by the persona to whom

such numbers have been allotted, in the documents pertaining

to such transactions.

Explanation.—In

this section,—

(a) "accounting year" means,—

(i) in relation to a person maintaining accounts, the year

ending on the day on which such accounts are or'are to h,

closed and balanced;

Insertion

olnew

section

1S9A.

Perma-

nent

account

numbers.

i<}6

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(ii) in relation to any other person, che financial year;

(b) "permanent account number" means a number which

the Income-tax Officer may allot to any person for the purpose

of indentification.'.

40. In section 140 of the Income-tax Act, for clauses (c) and (d), the

following clauses shall be substituted, namely: —

" (c) in the case of a company, by the managing director thereof,

or where for any unavoidable reason such managing director is not

able to sign and verify the return, or where there is no managing

director, by any director thereof;

(cc) in the case of a firm, by the managing partner thereof, or

where for any unavoidable reason such managing partner is not able

to sign and verify the return, or where there is no managing partner

as such, by any partner thereof, not being a minor;

(d) in the case of a local authority, by the principal officer

thereof;".

Amend-

ment of

section

140.

41. In section 140A of the Income-tax Act,—

(i) for sub-section (1), the following sub-section shall be substi-

tuted, namely: —

"(1) Where any tax is payable on the basis of any return

required to be furnished under section 139 or section 148, after

taking into account the amount of tax, if any, already paid under

any provision of this Act, the assessee shall be liable to pay such

tax before furnishing the return and the return shall be accom-

panied by proof of payment of such tax.";

(ii) for sub-section (3), the following sub-section shall be sub-

stituted, namely: —

" (3) If any assessee fails to pay the tax or any part thereof

in accordance with the provisions of sub-section (1), the Income-

tax Officer may direct that a sum equal to two per cent, of such

tax or part thereof, as the case may be, shall be recovered from

him by way of penalty for every month during which the default

continues:

Provided that before levying any such penalty, the assessee

shall be given a reasonable opportunity of being heard.".

Amend-

ment of

section

140A,

42. In section 141A of the Income-tax Act, for sub-section (2), the fol-

lowing sub-section shall be substituted, namely: —

" (1) Where a return has been furnished under section 139 and

the assessee claims that the tax paid or deemed to have been paid

under the provisions of Chapter XVII-B, or Chapter XVII-C, exceeds

the tax payable on the basis of the return and the accounts and

documents accompanying it, the Income-tax Officer, if he Is of the

opinion that the regular assessment of the assessee is not likely to

be made within six months frojm the date of furnishing o.f the retjurn,

shall make in a summary manner within the said six months a pro-

visional assessment of the sum refundable to the assaseee, after

Amend-

ment of

section

141A.

SEC. 1]

THE GAZETTE OH INDIA EXTRAORDINARY

297

making such adjustments to the income or loss declared in the return

as are required to be made under sub-section (2) with reference to

such return, accounts and documents, and for the purposes of the

adjustments referred to in clause (iv) of sub-section (2), also with

reference to the records of the assessments, if any, of past years.".

43, In sectipn 142 of the Income-tax Act,—

(i) in sub-section (1), for the words, brackets and figures "or

upon whom a notice has been served under sub-section (2) of section

139", the words, brackets and figures "or to whom a notice has been

issued under sub-section (2) of section 139" shall be substituted;

(ii) after sub-section (2), the following sub-sections shall be

inserted, namely: —

" (gA) If, at any stage of the proceedings before him, the

Income-tax Officer, having regard to the nature and complexity

of the accounts of the assessee and the interests of the revenue,

is of the opinion that it is necessary so to do, he may, with the

previous approval of the Commissioner, direct the assessee to

get the accounts audited by an accountant, as defined in the

Explanation below sub-section (2) of section 288, nominated by

the Commissioner in this behalf and to furnish a report of such

audit in the prescribed form duly signed and verified by such

accountant and setting forth such particulars as may be pres-

cribed and such other particulars as the Income-tax Officer may

require.

(2B) The provisions of sub-section (2A) shall have effect

notwithstanding that the accounts of the assessee have been

audited under any other law for the time being in force or

otherwise.

(2C) Every report under sub-section (2A) shall be furnish-

ed by the assessee to the Income-tax Officer within such period

as may be specified by the Income-tax Officer:

Provided that the Income-tax Officer may, on an applica-

tion made in this behalf by the assessee and for any good and

sufficient reason, extend the said period by such further period

or periods as he thinks fit; so, however, that the aggregate of the

period originally fixed and th« period or periods so extended shall

not, in any case, exceed one hundred and eighty days from the

date on which the direction under sub-section (2A) is received

by the assessee.

(JJD) The expenses of, and incidental to, any audit under

sub-section (2A) (including the remuneration of the accountant)

shall be determined by the Commissioner (which determination

shall be final) and paid by the assessee and in default of such

payment, shall be recoverable from the assessee in the manner

provided in Chapter XVTI-D for the recovery of arrears of tax."-

(in) in sub-section (3), after the words, brackets and figure

"under sub-section (2)'\ the words, brackets, figure and letter "or

any audit under sub-section (2A)" shall be inserted.

Amend,

ment of

section

Ml.

29g

THK GAZETTK OF INDIA KXTKAORDlNARY

IPARI^Jl—

44. In section 144 of the Income-tax Act, in clause (b), after the

words, brackets and figures "sub-section (1) of section 142", the words,

brackets, figure and letter "or fails to comply with a direction issued

under sub-section (2A) of that section" shall be inserted.

Amend-

ment of

section

144.

45. After section 144 of the Income-tax Act, the following sections

shall be inserted, namely: —

Insertion

of new

sections

144A and

144B.

"144A. (1) An Inspecting Assistant Commissioner may, on his

own motion or on a reference being made to him by the Income-tax

Officer or on the application of an assessee, call for and examine the

record of any proceeding In which an assessment is pending ana,

if he considers that, having regard to the nature of the case or the

amount involved or for any other reason, it is necessary or expedient

so to do, he may issue such directions as he thinks fit for the

guidance of the Income-tax Officer to enable him to complete the

assessment and such directions shall be binding on the Income-tax

Officer:

Provided that no directions which are prejudicial to the assessee

shall be issued before an opportunity is given to the assessee to be

heard.

Explanation.- -For the purposes of this sub-section, no direction

as to the lines on which an investigation connected with the assess-

ment should be made, shall be deemed to be a direction prejudicial

to the assessee.

(2) The provisions of this section shall be in addition to, and not

in derogation of, the provisions contained in sub-section (3) of section

119.

Power

of In-

specting

Assistant

Commis-

sioner

to issue

directions

in cer-

tain

cases.

144B. (2) Notwithstanding anything contained in this Act, where,

in an assessment to be made under sub-section (3) of section 143, the

Income-tax Officer proposes to make any variation in the income or

loss returned which is prejudicial to the assessee and the amount of

such variation exceeds the amount fixed by the Board under sub-

section (6), the Income-tax Officer shall, in the first instance, forward

a draft of the proposed order of assessment (hereafter in this section

referred to as the draft order) to the assessee.

(2) On receipt of the draft order, the assessee may forward his

objections, if any, to such variation to the Income-tax Officer within

seven days of the receipt by him of the draft order or within such

further period not exceeding fifteen days as the Income-tax Officer

may allow on an application made to him in this behalf.

(3) If no objections are received within the period or the extend-

ed period aforesaid, or the assessee intimates to the Income-tax Offi-

cer the acceptance of the variation, the Income-tax Officer shall com-

plete the assessment on the basis of the draft order.

(4) If any objections are received, the Income-tax Officer shall

forward the draft order together with the objections to the Inspec-

ting Assistant Commissioner and the Inspecting Assistant Commis-

sioner shall, after considering the draft order and the objections and

Reference

to Inspect-

ing

Assistant

Commis-

sioner in

certain

cases.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

299

after going through (wherever necessary) the records' relating to

the draft order, issue, in respect of the matters covered by the objec-

tions, such directions as he thinks fit for the guidance of the Income-

tax Officer to enable him to,complete the assessment:

Provided that no directions which are prejudicial to the assessee

shall be issued under this sub-section before an opportunity is given

to the assessee to be heard.

(5) Every direction issued by the Inspecting Assistant Commis-

sioner under sub-section (4) shall be binding on the Income-tax

Officer.

(6) For the purposes of sub-section (1), the Board may, having

regard to the proper and efficient management of the work of assess-

ment, by order, fix, from time to time, such amount as it deems fit:

Provided that different amounts may be fixed for different areas:

Provided further that the amount fixed under this sub-section

shall, in no case, be less than twenty-five thousand rupees.

(7) Nothing in this section shall apply to a case where an Ins-

pecting Assistant Commissioner exercises the powers or performs the

functions of an Income-tax Officer in pursuance of an order made

under section 125 or section 125A.". '

46. Section 146 of the Income-tax Act shall be re-numbered as sub-

section (2) thereof, and after that sub-section as so re-numbered, the

following sub-section shall be inserted, namely: —

"(2) Every application made under sub-section (2) shall be dis-

posed of within ninety days from the date of receipt thereof by the

Income-tax Officer:

Provided that in computing the period of ninety days aforesaid,

any delay in disposing of the application which is attributable to

the assessee shall be excluded.".

Amend-

ment of

section

J46.

47. In section 153 of the Income-tax Act, for Explanation 1, the

following Explanation shall be substituted, namely: —

"Explanation 1.—In computing the period of limitation for the

purposes of this section—

(i) the time taken in re-opening the whole or any part of

the proceeding or in giving an opportunity to the assessee to be

re-heard under the proviso to section 129, or

(ii) the period during which the assessment proceeding is

stayed by an order or injunction of any court, or

(iii) the period commencing from the date on which the

Income-tax

Officer directs

the assessee to get

his accounts

audited under sub-section

(2A) of section 142 and ending with

the date on which the assessee furnishes a report of such audit

under that sub-section, or

(iv) the period (not exceeding one hundred and eighty days)

commencing from

the date on which the Income-tax

Officer

forwards the draft order under sub-section (1) of section 144E

to the assessee and ending with the date on which the Income-

tax Officer receives the directions from the Inspecting Assistant

Amend-

ment ol

section

153.

3^oo

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Commissioner under sub-section (4) of that section, or, in a case

where no objections to the draft order are received from the

assessee, a period of thirty days, or

(«) in a case where an application made before the Income-

tax Settlement Commission under section 245C is rejected by it

or is not allowed to be proceeded with by it, the period com-

mencing from the date on which such application is made and

ending with the date on which the order under sub-section (1)

of section 245D ia received by the Commissioner under sub-

section (2) of that section,

shall be excluded.".

48. In sub-section (I) of section 154 of the Income-tax Act, clause

(bb) shall be omitted.

Amend-

ment of

section

154.

49. In section 176 of the Income-tax Act, after sub-section (3), the

following sub-section shall be inserted, namely: —

" (3A) Where any business is discontinued in any year, any sum

received after the discontinuance shall be deemed to be the in:ome

of the recipient and charged to tax accordingly in the year

of receipt, if such sum would have been included in the total

income of the person who carried on the business had such sum been

received before such discontinuance.".

Amend*

ment of.

section

178.

50. For the existing sub-heading "M-Private company in liquidation"

before section 179 of the Income-tax Act, the sub-heading "M-Private

companies" shall be substituted and that section shall be re-numbered

as sub-section (1) thereof and,—

(a) in sub-section (1) as so re-numbered, for the portion begin-

ning with the word "Notwithstanding" and ending with the words

"any previous year", the following shall be substituted, namely: —

"Notwithstanding anything contained in the Companies Act,

1956, where any tax due from a private company in respect of

any Income of any previous year or from any other company

in respect of any income of any previous year during which

such other company was a private company";

(b) after sub-section (1) as so re-numbered, the following sub-

section uhall be inserted, namely: —

"(2) Where a private company is converted into a public

company and the tax assessed in respect of any income of any

previous year during which such company was a private com-

pany cannot be recovered, then, nothing contained in sub-

section (1) shall apply to any person who was a director of. such

private company in relation to any tax due in respect of any

income of such private company assessable for any assessment

year commencing before the 1st day of April, 1962.".

I of 1958.

Amend-

ment of

section

179.

51. In section 1&5 of the Income-tax Act, in sub-section (1), for the

Explanation, the following Explanation shall be substituted, namely: —

"Explanation.—For the purposes of this section and section 186,

a firm shall not be regarded as a genuine firm if any partner of the

firm was, in relation to the whole or any pairt of his share in the

Amend-

ment ol

section

185.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

301

income or property of the firm, at any time during the previous

year, a benamidar—•

(a) of any other partner to whom the first-mentioned part-

ner does not stand in the relationship of a spouse or miner

child, or

(b) of any person, not being a partner of the firm, and any

of the other partners knew or had reason to believe that the

first-mentioned partner was such benamidar and such know-

ledge or belief had not been communicated by such other partner

to the Income-tax Officer in the prescribed manner.".

52. In section 189 of the Income-tax Act, in sub-section

(J), the

following Explanation shall be inserted, namely: —

"Explanation.—The amount of tax referred to in this sub-section

shall also include that part of the share of each partner in the

income of the firm before its discontinuance or dissolution which

the firm could have retained under sub-section (4) of section 182

but which has not been so retained.".

Amend-

ment of

section

189.

53. In sub-section (1) of section 221 of the Income-tax Act, after the

second proviso, the following Explanation shall be inserted, namely: —

"Explanation.—For the removal of doubt, it is hereby declared

that an assessee shall not cease to be liable to any penalty under

this sub-section merely by reason of the fact that before the levy oi

such penalty he has paid the tax.".

Amend-

ment ol

section

221.

54. In sub-section (I) of section 222 of the Income-tax Act, the

following Explanation shall be inserted at the end, namely: —

"Explanation.—For the purposes of this sub-section, the aasessee's

movable or immovable property shall include any property which

has been transferred, directly or indirectly on or after the 1st day

of June, 1973, by the assessee to his spquse or minor child or son's

wife or son's minor child, otherwise than for adequate consideration,

and which is held by, or stands in the name of, any of the persons

aforesaid; and so far as the movable or immovable property so

transferredl tp his minor child or his son*s minor child Is concerned,

it shall, even after the date of attainment of majority by such minor

child or son's minor child, as the case may be, continue to be

included in the assessee's movable or immovable property for

recovering any arrears due from the assessee in respect of any period

prior to such date.".

Amend-

ment oi

section

222.

55. In section 223 of the Income-tax Act, for sub-section (2), the

following sub-section shall be substituted, namely: —

"(2) Where an assessee has property within the jurisdiction of

more than one Tax Recovery Officer and the Tax Recovery Officer

to whom a certificate is sent by an Income-tax Officer—

(a) is not able to recover the entire amount by the sale of

the property, movable or immovable, within his jurisdiction, or

(b) is of the opinion that,.for the purpose of expediting or

securing the recovery of the whole or any part of the amount

under this Chapter, it is necessary so to do.

Amend-

ment of

section

223,

3^O2

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

he may send the certificate or, where only a part of the amount Is

to be recovered, a copy of the certificate certified in the prescribed

manner and specifying

the amount to be recovered to, a Tax Re-

covery Officer within whose jurisdiction the assessee resides or has

property, and thereupon that Tax Recovery Officer

shall also pro-

ceed to recover the amount under this Chapter as if the certificate

or the copy thereof had been the certificate sent to him

the

income-tax Officer.".

56. In section 244 of the Income-tax Act, after sub-section (i), the

following sub-section shall be inserted, namely: —

"(2.A) Where the whole or any part of the refund referred to

in sub-section (1) is due to the assessee, as a result of any amount

having been paid by him after

the 31st day of March, 1975, in

pursuance of any order of. assessment or penalty and such amount

or any part thereof having been found in appeal or other proceeding

under this Act to be in excess of the amount which such assessee

is liable to pay as tax or penalty, as the case may be, under this Act,

the Central Government shall pay to such assessee simple Interest

a i. the rate specified in sub-section (1) on the amount so found to

be in excess from the date on which such amount was paid to the

date on which the refund is granted:

Provided that, where the amount so found to be in excess was

paid in instalments, such interest shall be payable on the amount of

each such instalment or any part of such instalment, which was in

excels, from the date on which such instalment was paid to the date

on which the refund is granted:

Provided further that no interest under this sub-section shall

be payable for a period of one month from the date of the passing

of the order in appeal or other proceeding:

Provided also that where any interest is payable to an assessee

. under this sub-section, no interest under sub-section (1) shall

payable to him in respect of the amount so found to be in excess.".

Amend-

ment of

section

241.

57. After Chapter XIX of the Income-tax Act, the following Chapter

shall be inserted, namely: —

Innertion

of new

Chapter

XIXA.

'CHAPTER XIXA

SETTLEMENT OF CASES

24&A. In this Chapter, unless the context otherwise requires,—

(a) "case" means any proceeding under the Indian Income-

tax Act, 1922, or under this Act for or in connection with the

assessment or

re-assessment of any person in

respect of any

year or years which

may be pending

before an

Income-tax

authority on the date on which an application undetr sub-section

(1) of section 245C is made;

(b) "Income-tax authority" means a Director of Inspection,

a Commissioner, an Appellate Assistant Commissicner, an Ins-

pecting Assistant Commissioner or an Income-tax Officer.

11 of 1922.

Defini,

tiona.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINABY

303

245B. (2) The Central Government shall constitute a commis-

sion to be called the Income-tax Settlement Commission (hereafter

in this Chapter referred to as "the Settlement Commission") for the

settlement of cases under this Chapter.

(2) The Settlement Commission shall consist of a Chairman

and two other members and shall function within the Department

of the Central Government dealing with direct taxes.

(3) The Chairman and other members of the Settlement Com-

mission shall be appointed by the Central Government from amongst

persons of integrity and outstanding ability, having special know-

ledge of, and experience in, problems relating to direct taxes and

business accounts:

Provided that, where a member of the Board is appointed as the

Chairman or as a member of the Settlement Commission, he shall

cease to be a member of the Board:

Provided further that, until the members are appointed under

this sub-section, it shall be competent for the Central Government

to require, from time to time, any two members of the Board to

serve as members of the Settlement Commission for such period as

the Central Government thinks fit, in addition to thejr duties as

members of the Board.

Income,

tax

Settle-

ment

Commis-

sion.

245C. (1) An assessee may, at any stage of a case relating to him,

make an application in such form and in such manner and containing

such particulars as may be prescribed to the Settlement Commission

to have the case settled and any such application shall be disposed

of in the manner hereinafter provided.

(2) Every application made under sub-section

(1) shall be

accompanied by such fees as may be prescribed.

(3) An application made under sub-section (1) shall not be

allowed to be withdrawn by the applicant.

Applica-

tion for

settle-

ment of

cases.

245D. (1) On receipt of an application under section 245C, the

Settlement Commission shall call for a report from the Commissioner

and on the basis of the materials contained in such report and having

regard to the nature and circumstances of the case or the complexity

of the Investigation involved therein, the Settlement Commission

may, by order, allow the application to be proceeded with or reject

the application:

Provided that an application shall not be rejected under this

sub-section unless an opportunity has been given to the applicant

of being heard:

Provided further that an application shall not be proceeded with

under this sub-section if the Commissioner objects to the application

being proceeded with on the ground that concealment of particulars

of income on the part of the applicant or perpetration of fraud by

him for evading any tax or other sum chargeable

or imposable

under the Indian Income-tax Act, 1922, or under this Act, has been

established or is likely to be established by any Income-tax authority,

in relation to the case.

(2) A copy of every order under sub-section (1) shall be sent

to the applicant, and to +hp Commissioner.

Proce-

dure on

receipt

of an

appli-

cation

under

section

245C.

11 of 1922.

3 0 4

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(3) Where an application is allowed to be proceeded with under

sub-section (1), the Settlement Commission may call for the relevant

records from the Commissioner and after examination of such records,

if the Settlement Commission Is of the opinion that any further en-

quiry or investigation in the matter Is necessary, it may direct the

Commissioner to make or cause to be made such further enquiry or

investigation and furnish a report on the matters covered by the

application and any other matter relating to the case.

(4) After examination of the records and the report of the Com-

missioner, received under sub-section (1), and the report, if any, of

the Commissioner received under sub-section (3), and after giving

an opportunity to the applicant and to the Commissioner to be heard,

either in person or through a representative duly authorised in this

behalf, and after examining such further evidence as may be placed

before it or obtained by it, the Settlement Commission may, in

accordance with the provisions of this Act, pass such order as it thinks

fit on the matters covered by the application and any other matter

relating to the case not covered by the application, but referred to

in the report of the Commissioner under sub-section (1) or sub-

section (3).

(5) The materials brought on record before the Settlement Com-

mission shall be considered by all the members thereof before pass-

ing any order under sub-section (4) and, in the case of a difference

of opinion among the members, the opinion of the majority shall

prevail and such order shall be expressed in terms of the views oi

the majority.

(6) Every order passed under sub-section (4) shall provide foi

the terms of settlement including any demand by way of tax, penalty

or interest, the manner in which any sum due under the settlemen'

shall be paid and all other matters to make the settlement effective

and shall also provide that the settlement shall be void if it is subse-

quently found by the Settlement Commission that it has been obtain-

ed by fraud or misrepresentation of facts.

(7) Where a settlement becomes void as provided under sub-

section (6), the proceedings with respect to the matters covered bj

the settlement shall be deemed to have been revived from the stag*

at which the application was allowed to be proceeded with t»y the

Settlement Commission and the Income-tax authority

concerned

may, notwithstanding anything contained in any other provisioi

of this Act, complete such proceedings at any time before the ex

piry of two years from the end of the financial year in which th

settlement became void.

245E. If the Settlement Commission is of the opinion (the reasons

for such opinion to be recorded by it in writing) that, for the proper

disposal of the case pending before it, it is necessary or expedient

to reopen any proceeding connected with the case but which has

been completed under the Indian Income-tax Act, 1922, or under this

Act by any Income-tax authority before the application under sec-

tion 245C was made, it may, with the concurrence of the applicant,

reopen such proceeding and pass such order thereon as it thinks

fit, as if the case in relation to which the application for settlement

had been made by the applicant under that section covered auch

proceeding also:

11 of 1922.

Power

of Settle-

ment

Commis-

sion to

reopen

complet-

ed pro-

ceedings.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

305

Provided that no proceeding shall be reopened by the Settlement

Commission under this section after the expiry of a period of eight

years from the end of the assessment year to which such proceeding

relates.

245F. (1) In addition to the powers conferred on the Settlement

Commission under this Chapter, it shall have all the powers which

,are vested in an Income-tax authority under this Act.

(2) Where an application made under section 245C has been

allowed to be proceeded with under section 245D, the Settlement

Commission shall, until an order is passed under sub-section (4) of

section 245D, have, subject to the provisions of sub-section (3) of

that section, exclusive jurisdiction to exercise the powers and per-

form the functions of an Income-tax authority under this Act in

relation to the case.

Powers

and

procedure

Settle-

ment

Com-

mission.

(3) Notwithstanding anything contained in sub-section (2) and

in the absence of any express direction to the contrary by the Set-

tlement Commission, nothing contained In this section shall affect

the operation of any other provision of this Act requiring the applicant

to pay tax on the basis of self-assessment or by way of advance tax

in relation to the matters before the Settlement Commission.

(4) For the removal of doubt, it is hereby declared that, in the

absence of any express direction by the Settlement Commission to

the contrary, nothing in this Chapter shall affect the operation of

the provisions of this Act in so far as they relate to any matters other

than those before the Settlement Commission. .

(5) The Settlement Commission shall, subject to the provisions

of this Chapter, have power to regulate its own procedure (including

"the fixation of places and times of its meetings) and may act not-

withstanding that all the members of the Settlement Commission

are not present at any of its meetings.

245G, No person shall be entitled to inspect, or obtain copies of,

any reports made by any Income-tax authority to the Settlement

Commission; but the Settlement Commission may, in its discretion,

furnish copies thereof to any such person on an application made to

it in this behalf and on payment of the prescribed fee:

Provided that, for the purpose of enabling any person whose case

is under consideration to rebut any evidence brought on record

against him in any such report, the Settlement Commission shall, on

an application made in this behalf, and on payment of the prescribed

fee by such person, furnish him with a certified copy of any such

report or part thereof relevant for the purpose.

Inspection,

etc., of re-

ports.

245H. (1) The Settlement Commission may, if it is satisfied that

any person who made the application for settlement under section

"245C has co-operated with the Settlement Commission in the proceed-

ings before it and has made a full and true disclosure of his income

and the manner in which such income has been derived, grant to such

person, subject to such conditions as it may think fit to impose, im-

munity from prosecution for any offence under this Act or under the

Power of

Settle-

ment

Com-

mission

to grant

immunity

from

3o6

THE GAZETTE OF INDIA EXTRAORDINARY

[PARr II—

Indian Penal Code or under any other Central Act for the time being

in force and also from the imposition of any penalty under this Act,

with respect to the case covered by the settlement.

(2) An immunity granted to a person under sub-section (1)

may, at any time, be withdrawn by the Settlement Commission, If it

is satisfied that such person has not complied with the conditions

subject to which the immunity was granted or that such person had,

in the course of the settlement proceedings, concealed any parti-

culars material to the settlement or had given false evidence, and

thereupon such person may be tried for the offence with respect to

which the immunity was granted or for any other offence of which

he appears to have been guilty in connection with the settlement

and shall also become liable to the imposition of any penalty under

this Act to which such person would have been liable, had not such

immunity been granted.

43 of I860.

pro-

secution

and

penalty.

2451. Every order of settlement passed under sub-section (4) of

section 245D shall be conclusive as to the matters stated therein and

no matter covered by such order shall, save as otherwise provided

in this Chapter, be reopened in any proceeding under this Act or

under any other law for the time being in force.

Order of

settle-

ment to

be con-

clusive.

245J. Any sum specified in an order of settlement passed under

sub-section (4) of section 24{JD may, subject to such conditions, If

any, as may be specified therein, be recovered, and any penalty for

default In making payment of such sum may be imposed and re-

covered in accordance with the provisions of Chapter XVII, by the

Income-tax Officer having jurisdiction over the person who made the

application for settlement under section 245C.

Recovery

of sums

due under

order

of settle^

ment.

245K. Where,—

(i) an order of settlement passed under sub-section (4) of

section 245D provides for the imposition of a penalty on the per-

son who made the application under section 245C for settlement,

on the ground of concealment of particulars of his income; or

(ii) after the passing of an order of settlement under the

said sub-section (4) in relation to a case, such person is convicted

of any offence under Chapter XXII in relation to that case,

then, he shall not be entitled to apply for settlement under section

245C in relation to any other matter.

Bar on

subse-

quent

appli-

cation

for settle-

ment in

certain

cases.

245L. Any proceeding under this Chapter before the Settlement

Commission shall be deemed to be a judicial proceeding within the

meaning of sections 193 and 228, and for the purposes of section 196,

of the Indian Penal Code.

4B of 1860.

Proceed-

ings

before

Settle-

ment

Com-

misiion

to be

judicial

proceed-

ing.

SEC-HHH><n

THE,QAZUJJM, OF, INDIA, WfTEAQKPINARX,

^o7

245M. (i) Notwithstanding. ..anvthintf contained, in: .this Ghaiater.

any assessee who has filed an appeal to tne Appellate Tribunal under

Ik:rfal*ffl;&Gtgv*gdrtria

n appeal

from the Appellate Tribunal, be entitled yttor^fltoan'.iapiiliQatiAn to

the Settlement Commission to have his case settled under this Chap-

;

',.•:

;

•

;

odi o.t jjiiiJj.l-rt bni-;rn..i> To

Provided that no such assessee sh^i^r-Be'^>leritltto^Itti^:'^:m^;gKe an ap-

TjbrrfiiicJifem &..* C»*e rjKher,er, ft\e JncjQTOflT^nQplpe&hiwPipreferred

oii;b acfieainMKieB-iSwfciiSWJtiwa,,-M,).-.fifrSBfilWft353cPfiawt,Tl^e

,flr4^ ,to which

(2) Any assessee referred

to in sub-sectiqnj^i^ntajr-jinake an

application to the Appellate Tribunal for permission to withdraw

-x'

tfes'«pp8al."'

<'•)

Ion iv^irffii⁷ ^'^c*^iD-^t^{o f} .an..anplicfltipn .under sub-seetiw..(2), -the Ap-

pellate Tribunal shall granjtipe,rmigig^oiji;tc(,jM^hdraw the ,apneal.

g.tl ,!>•>;•;;'/(*)(: TJ(J«bnYthd»-TWthdrawflL'bf^ftth^-Bppeal<,->tfc

V.<"< •i«JMi^tWateiy>befOfy sWch-'Withdi-atwal' shall; id

Chapter, be deemed to be a proceeding pend

tax authority.

(5) An application

to. tfie Settlement.Xnmmjssiofi under this

section shall be made within a period of thirty days from the date

ifWH-Ktf^ichnttio^Cr^rtrefiitliB Alppella.te iTribnariallpdrrmitting the with-

d.])aiWflliofnthei appeal isloomcnirnieatdflt'tq/the>ife(ss0dsafei't

(ty-' Att^IJarJp'lieattWh^/linade'ⁱto 'the"SbttMne¥rt' Cdmmifelsltfei

under

this section shall be deemed to be an application made under sub-

secti6h> <fl')^i}Ht- Sefttott 2*15^ and the''provisions 'MHhh' Chapter ''[ex-

cept sub-section (7) of section 245D] shall apply accordingly.

(7) Where an application

madelt^iithfe-.SettieftnHniauCcAlinission

under this section is not entertained by the Settlement Commission,

,(ilt,"the,H,,iAba adsa&see isiuail,not ;be.deeaacd«tD Ijave .withdrawn rbhe appeal

,-fi-amithe- A.-ppallfcteiiEibiiiinall.aimd the provisions-,cdnta(m£dr,itl .section

253, section 254 and section 255 shall, so far ,asrmi»yt..H>e, appl^Efccord-

ingly.'.

filed (>(<•

appeals

to the

Appellate

Tribunal

entitled

to make

appli-

cation*

to the

Settle-

ment

Com-

mission.

r,M(i5&.iIn)rte!EtlionT246iof -aaatlftcarne-tAlu: Aot, in .elausen^vwi

(•i) after sub-clause

(in),

the

following

sub-clause shall

inserted, namely: —

" (iiia) section 271A, or";

< i»

(ii) after .sub-clause (w),.the following sub-clause, shall be in-

serted: namelv: —

(iud)" section 272^,.qr"

Amend-

ment of

section.

246,

3^o8

THE GAZETTE OF INDIA EXTRAORDINARY

[PART ft—

59. In section 249 of the Income-tax Act,—

(1) In sub-section (2), for clause (b), the following clause shall

be substituted, namely: —

"(fa) where the appeal relates to any assessment or penalty,

the date of service of the notice of demand relating to the

assessment or penalty:

Provided that, where an application has been made under

section 146 for reopening an assessment, the period from the date

on which the application is made to the date on which the order

pa!ssed on the application is served on the assessee shall be ex-

cluded, or";

(ii) after subjection (3), the following sub-section shall be

inserted, namely: —

*(4) No appeal under this Chapter shall be admitted unless

at the time of filing of the appeal,—

(a) where a return has been filed by the assessee, the

assessee has paid the tax due on the income returned by

him; or

(b) where no return has been filed by the assessee, the

assessee has paid an amount equal to the amount of advance

tax which was payable by him;

Provided that, on an application made by the appellant in

this behalf, the Appellate Assistant

Commissioner may, for

any good and sufficient reason to be recorded in writing, exempt

him from the operation of the provisions of this sub-section.".

Amend-

ment of

section

249.

60. In section 253 of the Income-tax Act, in sub-section (1),—

(i) in clause (a), for the words and figures "or section 271",

the words, figures and letters ", section 271, section 271A or section

272A" shall be substituted;

(ii) in clause (b), for the words, brackets and figures "sub-

section (2) of section 274", the word, figures and letter "section 272A"

shall be substituted;

(Mi) in clause (c), after the words and figures "under section

263", where they occur fojr the first time, the words, figures and

letter "or under section 272A" shall be inserted.

Amend-

ment of

section

253.

61. In section 271 of the Income-tax Act,—

(i) in sub-section (2),—

(a) in clause (b), after the words, brackets and figures "sub-

section (2) of section 143", the words, brackets, figures and letter

"or fails to comply with a direction issued under sub-sectto*

(2A) of section 142" shall be inserted;

Amend-

ment o*

section

271.

SEC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

(b) for clause (i) (excluding the Explanation thereto), the

following clause shall be substituted, namely:—

" (i) In the cases referred to in clausa (a) ,—

(a) in the case of a person referred to in sub-section

(4A) of section 139, where the total income in respect

of which he is assessable as a representative assessee

does noit exceed the maximum amount which is not

chargeable to income-tax, a sum not exceeding one per

cent, of the total income computed under this Act with-

out giving effect to the provisions of sections 11 and 12,

for each year or part thereof during which the default

continued;

(b) in any other case, in addition to the amount of

the tax, if any, payable by him, a sum equal to two per

cent, of the assessed tax for every month during which

the default continued;";

clause (Hi) and the Explanation, the following

clause and Explanations shall be substituted, namely:—

'(Hi) in the cases referred to in clause (c), in addition

to any tax payable by him, a sum which shall not be less than,

but which shall not exceed twice, the amount of tax sought

to be evaded by reason of the concealment of particulars of

his income or the furnishing

of inaccurate particulars of

sucth income:

Provided that, if in a case falling under clause (c), the

amount of income (as determined by the Income-tax Officer

on assessment) in respect of which the particulars have been

concealed or inaccurate particulars have been furnished ex-

ceeds a sum of twenty-five thousand rupees, the Income-tax

Officer shall not issue any direction for payment by way of

penalty without the previous approval of the Inspecting

Assistant Commissioner.

Explanation L—Where in respect of any facts material

to the computation of the total income of any person under

this Act,—

(A) such person fails to offer an explanation or

offers an explanation which is found by the Income-tax

Officer or the Appellate Assistant Commissioner to be

false, or

(B) such person offers an explanation which he is

not able to substantiate,

then, the amount added or disallowed In computing the total

income of such person as a result thereof shall, for the pui>

poses of clause (c) of this sub-section, be deemed to repre-

sent the income in respect of which particulars have been

concealed:

llfl'

THE GAZETTE OF INDIA HXTRAft^DiNARY'

rPAut'H—'

Provider ffiatNothing toMified in, ffiis^v ' Explanation

hall apply to a* case referred to In cMise ?B) in respect ol

^7(j^*atM^^M tfe^i^^N^ja^? #?^sl$"^of the rejection

f any explanation offered by such person, if such

expla-

&tWr?>iF$#Hi ^ S ^ f i M '#&> iti&sftteiskng to the same and

m2fM^[ityhWⁱc9m$ita#i3h

W'tim tbtat*tfiiome have been

t f t a e i ! f l $ y

fciM. '•^(; •••'• •' ^ .'?'v'iw l u

tolm. fc^*¹;™ ^ gp^.^/^receipt'^depo"

»i& Wzmmfvhi fe>7vn8&^L^{which had been}

id^4f.ift..if0^^in^rrth? incorne^ o ^ f ^ u c W in computing

he loss'in the assessment¹ of such j?iS?fl5Vi | ° ^{r a n}^ earlier

issessment year or years but in respect 01 which no penalty

lftde£ <ttat«^"<itti .wtelhterfctobJtaetttti OJdld been levied, that

^P^rnite%iffl^icds^L($ai^,X)i^dUd«ftb(iil4n such earlier

^s^fffiShtYyeffi- 1.«tlr*^liim5iek^re«^dtog.*ttSi» year in which

he receipt, deposit, cAat&QJfl^e^riifiBtftfeiWtt appears

(such

sarlier assessment year hereafter in this Explanation refer-

lid *^S^tf^st^eteffin^^esB^i^aiicllPls(oiufflcient

feVHntit^tttefelflte* fl4>JiSfiSBt«rolSyii»i«»a rfws«i^u«6j,osit or

)utEoing or value of such investment (such, ^mount or value

\matfe¥%ⁿbft& W$dUtlfa^smj:$i W as the utilised

jmounu

snail be weatea '-as tns^n¥cqrxje^ m the assessee.

Darliculars .01 which Ma oeen conceareji or Inaccurate parti-

iq.io inqmlzo'jh<X} udi ±o fiUZk&z iVa, neDfive ou OJ

,. ,.

Jwlara. of wnlcn naa been iurnrstfea TOT tne rlrgi preceding

fear; and where fne amount SO aaQetT or .iafeatrcted m the

irst preceding year is not sufflcien^^1It8⁰£ov⁽e?'^LJ?he

utilised

imount that part of the amount ,so added or deducted in

[Bio igEtou SmirBl.oafip B miijjjsnf babivojiS

J-

ihe Jiear., irnrneqiaten!. preceding THE nfsr pieceaing year

tjVBfotii snj JvaT DOlumiovjf) EI;T ariiODnx ip.laJJdccu j

iyjtichiis. sumcien.trxo,cover sucn .part 01 the utlrlsed amount

ae is nt>t sfl covered .snail m treaxea to perffie income of th«

^aes^efi,^particylars,pi whiqh nad Dcen coTTcealea or maccu-

cate 'BVrticulars!.Q'i'^Jwriich"^a^^vieeri ffir^fihw^ftir the year

jno?,iT£q hoi r.oiFyjnb vnu iiyaqi Ion Jlfiria i3DjnO

utuneaiatelv Rrecedinfi tne nrst preceaing year and. so on,

r,vX Ttf TTrircnftrcfB .iptjfvrj-ifl

snf jifonfiw vJiBnao,

antil the entire utilised amount AS covered By pie amounts

30 added or deducted in sucn earlier asseS&neniryears.

, Explanation 3.—Whereanv person who has not previ-

M^^^V^^fe^yfi^aaa^tK Act, 1922, r

SffiSw t^FfltyMsf^itWMmmemu^,

to furnish

within the period specified in sub-clause«^tkf^x$i clause (a)

^u&s^tifln &) jHf^ec^j^S ^ j g ^ o f his income which

tttriisyjeqWBS* & jfoWiArHflteqSgJifiB M§d^{n r e 9 p e c t}^{of a n y}

«*aa«flsffle3t s^lRfi^m^^f^W ¹^ $?fom}^st

d a v of A p n l-

1974,

and, until the expiry 01 the per^gdj^jgfesaid, no notice

has been issued to him under

sub-section (2) of section

139i4ir£B#dt|ieft 1*8 ^nBothBo3iKpnlotta3<a)fflcer or the Appel-

late Assistant

ComasfeffiibTB&dtffi »tft»ftfed Jofchat in respect

of such assessment year such person has taxable income,

itmfVWLdti frewoHcstfalip finrbtdtej^pawew^fPlnSkPse (c) of

thlierfBiite^BWifol^ufeei dheemesbstoq HsMS Wi^Jftft^^{t h e} P^rti-

m$9h <& ,W»-fi«e«rfi»a tntiJ ftssp^C)t ^Cijgftpljoag^g^¹¹⁶¹^

year,

rS^i«fe»adrfQgl-4*ift6 AxisAfz3perfiP%rdV3flisb8t ftid¥^turn^{o f M s}

income at any time after the expiry of^gofififiipcl aforesaid

111 pursuance of a notice under section 148.

SEC. 1] '

THE GAZETTE OF INDIA' EXTRAORDINARY' 311M

i»-m .».-,-! wriSfxptHntitiht ^ F c V the purjldSes of¹ clause¹ '^i)!¹ of'this

•^tsafi!a3Wi<ter/'¹ttiy expression nhe^; amount'^rsbu'gm*- ttf'be

evaded",—

KnoiJ^jv>a ^niwolfoi /ulJ

(a) in. any case where the amount of,income In. res-,

pect of which particulars have been concealed or inac-

curate particulars have been furnished exceeds the total

income assessed, means the tax that would have been

chargeable on the income in^e^^c^ of wtycfy particulars

have been concealed or inaccurate particulars have been

furnished had such income been the total income;

Kⁿa^T.wK^{n« of <,v$V}ⁿ^u^{a n y c a}^f

t o w m c i l ^V^nauon

3^ applies,

-loqqA na 10 - $ W W ^

^ ^ ^{e tOtal inpOttle}^aSSf^^^;

•,,,

-fTToD .limJaiHKA ^rfo^'^-ooyvothsr-case; iwan^ther,differencei between

inowoq ;:"((( i^b.9);^^; 1 oft thei tptal income, assessed and th©,^a^ that

would have been chargeable b$di.ⁱsflchj,jJto^f,,jincome

been reduced by the amount of income in respect

of which particulars have been concealed or inaccurate

sa-utot :)HJ m ^rt%ulfe^f(hAVe''be'en^;:ftirhiyteea/V

tniiJaieefe^iSwiiilir'n^⁰¹¹ -^''

following ^ub-S^ioi} sBfall be

(IOl)'l->.^J.i'.l

'.V ' > i I U I

. " i t ' i i j ' v j a

,K!ll»iJ:-.^Jjp

•.•Ji;J»

wulfu

"(IA) Where any penalty is imposable by virtUenRff!-Expla-

nation 2 to sub-section (1), proceedings for the imposition of

ono o|SBek)?Sn$& ^ ^ i n i t i ^ t e ^ r . ripfm^^i^

^ a t , ^ v pro-

ceedings under this Act in the course of whicft.mich penalty bro-

ceedings could have been initiated under sub-section (1) have

been completed."-

" I K 'in'suL-secfeon^J(3y," aftei*'^aU'^e ' (c)¹, tffi'-faiUv^ clause

and proviso shall be inserted, namely: —

zimmiaiaiz

*io amijJi;i :>t__ . .

. .

' ^

(

•

;

(

(1) and the penalty imposed under clause

(m) of. that sub-

section, read with Explanation 3 thereto, shall'not exceed! in tha

aggregate twice the amount of the tax sought to be evaded:

noil-.wz ni oJ bajislvi

rfoua lo Eu^9 ^vW G% ^t^ ^o^%W^M ^{e d}: ⁱ^^y ^se (f^ «:: ^§pe (b)

shall apjgy;|l|gj%tca^ (refprred.4o.iⁿ,su^jb-clause (a) of clause (i)

of sub-section (1).";

62. After section 271 of the Income-tax Act, the following section shall

tfPiii&rf«#,^J^r&f$r»i J>v

noj ot fSKAe 'V^hfUfotriWej^CB _ *p,:(th^ proyisjon^ of,

^f^t^n^^ll,

If any j^BWntt/tWtteaft^^^n^^^a^p^^ail^^o .^e^' anfl .jgydn^ain

any such books of account and other document's as required by

previous year or to retain such books of abcoyht and^otnef documents

for the period specified in the said rules, thil'ncorne-tax^dlteier o^the

ni fm^^^^^^m^^\?^W%'!^i-^

T^J**⁵⁰¹¹^shaU

Insertion

of new-

section

271A.

Failure

to keep,

maintain

or re-

tain

books

of ac-

count,

docu-

ments,

etc.

312

THE GAZETTE OF INDIA EXTRAORDINARY

(PKRT ft—

tax, if any, which would have been avoided if the income returned

by such person had been accepted as the correct income.".

63. After section 272 of the Income-tax Act, the following sections

shall be inserted, namely: —

"272A. (1) If a person,—

(a) being legally bound to state the truth of any matter

touching the subject of his assessment, refuses to answer any

question demanded of him by an Income-tax Officer or an Appel-

late Assistant Commissioner or an Inspecting Assistant Com-

missioner or a Commissioner in the exercise of his powers

under this Act; or

(b) refuses to sign any statement made by him in the course

of any proceeding under this Act which an Income-tax Officer or

an Appellate Assistant Commissioner or an Inspecting Assistant

Commissioner or a Commissioner may legally require him to

sign,

he shall pay, by way of penalty, a sum which may extend to one

thousand rupees.

(2) If a person, without reasonable cause or excuse, falls,—

(a) to furnish in due time any of the returns or statements

mentioned in section 133, section 206, section 285, section 285B or

section 286; or

(b) to allow Inspection of any register referred to In section

134 or of any entry in such register or to allow copies of such

(d) to deduct and pay tax as required by sub-section (2) of

Bection 226,

he shall pay, by way of penalty, a sum which may extend to ten

rupees for every day during which the failure continues.

(3) Any penalty imposable under sub-section (1) or sub-section

(2) shall be imposed,—

(o) In a case where the contravention, failure or default In

respect of which such penalty is imposable occurs in the course

©f any proceeding before the Commissioner or the Appellate

Insertion

of new

lections

272A and

272B.

Penalty

for fail-

ure to

answer

questions,

aign

•tate-

ments,

allow

inspec-

tions,

ttc.

SEC 1]

THE GAZETTE OF INDIA EXTRAORDINARY

313

Assistant Commissioner, by the Commissioner or, as the case

may be, the Appellate Assistant Commissioner; and

(b) In any other case, by the Inspecting Assistant Commis-

sioner.

(4) No order under this section shall be passed by any officer

referred to in sub-section (3) unless the person on whom the penalty

Is proposed to be imposed is given an opportunity of being heard in

the matter by such officer.

272B. (!) If a person, without reasonable cause, fails to comply

with the provisions of section 139A, he shall, on an order passed by

the Income-tax Officer, pay, by way of penalty, a sum which may

extend to five hundred rupees.

(2) No order under sub-section (1) shall be passed unless the

person on whom the penalty is proposed to be imposed is given an

opportunity of being heard in the matter.".

64. After section 273 of the Income-tax Act, the following section

shall be inserted, namely:—

"273A. (1) Notwithstanding anything contained In this Act, the

Commissioner may, In his discretion, whether on his own motion or

otherwise,—

(1) reduce or waive the amount of penalty imposed or im-

posable on a person under clause (i) of sub-section (1) of sec-

tion 271 for failure, without reasonable cause, to furnish

the

return of total income which he was required to furnish under

sub-section (1) of section 139; or

(If) reduce or waive the amount of penalty Imposed or

imposable on a person under clause (Hi) of sub-section (1) of

section 271; or

(Hi) reduce or waive the amount of interest paid or payable

under sub-section (8) of section 139 or section 215 or section 217

or the penalty imposed or imposable under section 273,

if he is satisfied that sucH person—

(<i) in the case referred to in clause (i), has, prior to the

issue of a notice to him under sub-section (2) of section 139,

voluntarily and in good faith made full and true disclosure of

his income;

(b) in the case referred to in clause (ii), has, prior to the

detection by the Income-tax Officer, of the concealment of parti-

culars of income or of the Inaccuracy of particulars furnished in

respect of such income, voluntarily and in good faith, made full

and true disclosure of such particulars;

issue of a notice to him under sub-section (2) of section 139, or

where no such notice has been issued and the period for the

Issue of such notice has expired, prior to the issue of notice to

him under section 148, voluntarily and in good faith made full

and true disclosure of his income and has paid the tax on th«

Income si disclosed.

Penalty

for

failure

to com-

ply with

the pro-

visions at

section

139A.

Insertion

of new

section

273A.

Power

to reduce

or waive

penalty,

etc., in

certain

cases.

^W.PAKMTP/qp/^W^.fiXT^ftW;^^

WwVar

•J$ also ^s.ifi.all the cages Tarred to ijvc^u^ey! j ^ t e j ^ X ^{a n d} (^c).

co-ope^at.^ :jn(t^ny £nguiry,.xejatieg t o , ^ , f l ^ e s ^ e r ^ ofj&i Income

and has either paid or made satisfactory arrangements for the p*y-

ffi^ntb'f'aiiy "tax or interest payable in coriseijiience of an order

passed under this Act in respect of the relevant assessmMVyear.

, •^tWl«n(i*icw(.r-nflOT-!tjhe^urposee

of>tUis]svife^ee>ti#jiofia>«infflJmghall

he.deenifld ito hiayrci[made, full (aaiJ'teue(4Jsis}ft9wrfilQillB4ai8f«5Bfe'.Pr of

the particulars relating thereto in any c^pe'(WhflBft;ih^je?f«ffistt*t»iW:ome

assessed.over the inpome returned is of such a nature as not(to attract

ftie'rJroH/isWof clause (c) of sub-se'ctibn W til Vec^m**M":

'•(S) "NGtWitMtondlng' atty*hiog .tOHtalned^t4n^*Wt)J«eiS«tt4»n.'m))—

(a) if in a case the penalty imposed or imposaDie unaer

'Wahse >(fy 6i iilb'-sefciiton"(]!) >Ofisi(*ctle)!i^;"27'1 -''«r «>Wbe<-)minimum

Hp(ehAtty'^tifttposAb*e uttder' Action^!BW>1orrH)h^'pd;Wv*K>t <S8B*Ktment

year, or, where sueh^l<3¹iStilo3tJre >rfelWes *6"mbite tHawbtsa'assess-

ment year,, the aggregate of the penalty imposed or imposable

un^rder%e sa'id blause Or 6tth'e' 'miriirnurh VenaWV'i'mpbsaMie trKdor

the said section for those years, exceed:*'d'^urn-Wfrft^ tTioukaife

rupees, or

j(b)M in.arcr^if^H.WglVHid^cAaiuw (§\,ffi^m^m^)

section 271, the amount of income in respect of whicJ^h^fiWnalty

Is imposed or imposable for the relevant assessment year,

or,

^wlttr'e' sutJft"dRici6'su^e"t'el'ate^rs^ilt6^>m'6i'e than¹'fee¹ a^essment year,

(tne"a'^rgga'te amount bf sUch mUbrfie fort tfidde f\*ki%,n exceeds a

]' siitn⁽6l five' hundred thousaii'd'ruj/ees,''

no order reducing or waiving JrLd penfelty ttridi^rt sabt-iwptidn^l) shall

be.lPjwie bji,.thG,Cqmm)ifl¥^ner ^^jceRt.w^.t^nP^vi^^s approval of

[tjienBmd.

(3) Where an order has been made under sub-sec'tion' (1)

taWir'or'kriy ^er^oh; Wh'etHfer 'feuchArtier"r'eTailei¹ 4d^u We or more

ttfeSes'Sirieht'years^ he 'shall' n'bt'be eritMed⁽"t6' 'Sny^Ilr%H8f"uhder this

sectfoii iti relatioW't'o'ariybth^r^assysimeYit'yfeai-'^li^y'ltfrn^'after the

making of such order.

[4) Without pre5\Jdide to' &e' p'owers Vonffer'eli Vlrf him by any

other'prov'iiidn of "th'isAcit; the

;C6Wrri^siolnyr"may^ oV ahu:a1)plication

ma'de'tn thi^ beharf'tiy 'an'¹asfefe^e,^t'a'fid'aft^f"Tei!!Hr^t(9m^ⁱnIs reasons

for so doing, reduce or waive the amount of any "p"Htfa"l¥y payable by

the-assessee under-thls Act ot *tay> <lr icompourid -anyproceeding for

tWe' recovery of any'sDieh •amount,. Jfiie-.is-taiifefied' ttealft—i--.r»

'(i) todo'otherwidfei'^auld cswftse-genUint ibat<Mpp' to

the

assessee, having reg*rd; >to'the -circUmstaacfes. »Jf th«»cfcB»; and

(ii)' the 'asseyfeie nlas'co-o^ated in'aftty enquiry relating to

'the assessment dr afty'proceeding'foVthe¹ ^ecdver^'of'Sfiy amount

'dWe from¹ 'him.

• (5)¹ BVe^y order made Hinder-*this *fetti««!>ishall'fte"nn»l-bnd shall

not be oaMeti'dntO'-<^iJ*stion.by.atiy(aoUi.j?t-ori!artyci*theribirthority.".

SEC. 1J

THE GAZETTE OF INDIA EXTRAORDINARY

3 l⁵

«5. In wctlon 274 of the Income-tax Act, sub-section

(2)

shall be

onaitted,

66. In section 275 of the Income-tax Act, for

the Explanation, the

following Explanation shall be substituted, namely: —

"Explanation.—In computing the period of limitation for

the

purposes of this section,—

(i) the time taken in giving an opportunity to the assessee

to be re-heard under the proviso to section 129;

(ii) any period during which the immunity granted under

section 245H remained in force; and

(in) any period

during

which

a proceeding

under this

Chapter for the levy of penalty is stayed by an order or injunc-

tion of any court,

shall be excluded.".

Amend-

ment of

section

274.

Amend-

ment of

section

275.

fi7. Section 276 of the Income-tax Act shall be omitted.

Omission

of section

276.

68. For sections 276B and 276C of the Income-tax Act, the following

ections shall be substituted, namely: —

"276B. If a person, without reasonable cause or excuse, fails to

deduct or after deducting, fails to pay the tax as required by or under

the provisions of sub-section (9) of section 80E or Chapter XVII-B,

he shall be punishable,—

(i) in a case where the amount of tax which he has failed

to deduct or pay exceeds one hundred thousand rupees,

with

rigorous imprisonment for a term which shall not be less

than

six months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for

term which shall not be less than three months but which may

extend to three years and with fine.

Substitution

of new

sections

for

sections

276B and

276C.

Failure

to deduct

or pay

tax.

276C. (1) If a person wilfully attempts in any manner whatsoever

to evade any tax, penalty or interest chargeable or imposable under

this Act, he shall, without prejudice to any penalty that may be im-

posable on him under any other provision of this Act, be punishable,—

(i) in a case where the amount sought to be evaded exceeds

one hundred thousand rupees, with rigorous imprisonment for a

term which shall not be less than six months but which may

extend to seven years and with fine;

(il) in any other case, with rigorous imprisonment

for a

term which shall not be less than three months but which may

extend to three years and with fine.

(2) If a person wilfully attempts in any manner whatsoever to

evade the payment of

any tax, penalty or interest

under

thia

Wilful

attempt

to evade

tax, etc.

316

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Act, he shall, without prejudice to any penalty that may be imposable

on him under any other provision of this Act, be punishable with

rigorous imprisonment for a term which shall not be less than three

months but which may extend to three years and shall, in the dis-

cretion of the court, also be liable to fine.

Explanation.—For the purposes of this section, a wilful attempt

to evade any tax, penalty or interest chargeable or imposable under

this Act or the payment thereof shall include a case where any

person—

(i) has in his possession or control any books of account or

other documents (being books of account or other documents re-

levant to any proceeding under this Act) containing a false entry

or statement; or

(ii) makes or causes to be made any false entry or statement

hi such books of account or other documents; or

(Hi) wilfully omits or causes to be omitted any relevant entry

or statement in such books of account or other documents; or

(iv) causes any other circumstance to exist which will have

the effect of enabling such person to evade any tax, penalty or

interest chargeable or imposable under this Act or the payment

thereof.

276CC. If a person wilfully fails to furnish in due time the return

of income which he is required to furnish under sub-section (2) of

section 139 or by notice given under sub-section (2) of section 139 or

section 148, he shall be punishable,—

(i) in a case where the amount of tax, which would have

been evaded if the failure had not been discovered, exceeds one

hundred thousand rupees, with rigorous imprisonment for a term

which shall nO|t be less than six months but which may extend

to seven years and with fine;

(ii) in any other case, with imprisonment for a term which

shall not be less than three months but which may extend to

three years and with fine:

Provided that a person shall not be proceeded against under

this section for failure to furnish in due time the return of income

under sub-section (1) of section 139—

(i) for any assessment year commencing prior to the 1st

day of April, 1975; or

(ii) for any assessment year commencing on or after the

1st day of April, 1975, if—

(a) the return is furnished by him before the expiry

of the assessment year; or

(b) the tax payable by him on the total income deter-

mined on regular assessment, as reduced by the advance

tax, if any, paid, and any tax deducted at source, does

not exceed three thousand rupees.".

Failure

to fur-

nish

returns

of in-

come.

69. In section 276D of the Income-tax Act, after the words

"such

accounts and documents as are referred to in the notice", the words,

brackets, figure and letter "or wiliully fails to comply with a direction

issued to him under sub-section (2A) of that section" shall be inserted,

Amend-

ment of

section

Z76D.

SEC. 1]

THE GAZETTE OF INDIA liXTRAORDINARY

g I 7

70. For sections 277 and 278 of the Income-tax Act, the following sec-

ions shall be substituted, namely: —

'277. If a person makes a statement in any verification under thi3

Act or under any rule made thereunder, or delivers an account or

statement which is false, and which he either knows or believes to be

false, or does not believe to be true, he shall be punishable,—

(i) in a case where the amount of tax, which would have

been evaded if the statement or account had been accepted as

true, exceeds one hundred thousand rupees, with rigorous im-

prisonment for a term which shall not be less than six months

but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term

which shall not be less than three months but which may extend

to' three years and with fine.

Substitu-

tion of

new sec-

tions for

sections

277 and

278.

Falae

state-

ment

in veri-

fication,

etc.

278. If a person abets or induces in any manner another person

to make and deliver an account or a statement or declaration relat-

ing to any income chargeable to tax which Is false and which he either

knows to be false or does not believe to be true or to commit an

offence under sub-section (1) of section 276C, he shall be punish-

able,—

(i) in a case where the amount of tax, penalty or interest

which would have been evaded, if the declaration, account or

statement had been accepted as true, or which Is wilfully attempt-

ed to be evaded, exceeds one hundred thousand rupees, with rigo-

rous imprisonment for a term which shall not be less than six

months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term

which shall not be less than three months but which may extend

to three years and with fine.

Abetment

of false

return,

etc.

278A. If any person convicted of an offence under section 276B

or sub-section (1) of section 276C or section 276CC or section 277 or

section 278 is again convicted of an offence under any of the afore-

said provisions, he shall be punishable for the second and for every

subsequent offence with rigorous imprisonment for B" term which

shall not be less than six months but which may extend to seven

years and with fine.

278B. (1) Where an offence under this Act has been committed

by a company, every person who, at the time the offence was com-

mitted,, was in charge of, and was responsible to, the company for the

conduct of the business of the company as well as the company shall

be deemed to be guilty of the offence and shall be liable to be pro-

ceeded against and punished accordingly.

Provided that nothing contained in this sub-section shall render

any such person liable to any punishment if he proves that the

offence was committed without his knowledge or that he had exer-

cised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where

an offence under this Act has been committed by a company and it is

Punish-

ment for

second

and

subse-

quent

offences.

Offences

companies

318

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

proved that the offence has been committed with the consent or con-

nivance of, or is attributable to any neglect on the part of, any direc-

tor, manager, secretary or other officer of the company, such director,

manager, secretary or other officer shall also be deemed to be guilty of

that offence and shall be liable to be proceeded against and punished

accordingly.

Explanation.—For the purposes of this section,—

(a) "company" means a body corporate, and includes—

(i) a firm, and

(ii) an association of persons or a body of individuals

whether incorporated or not; and

(b) "director", in relation to—

(i) a firm, means a partner in the firm;

(ii) any association of persons or a body of individuals,

means any member controlling the affairs thereof.

278C. (1) Where an offence under this Act has been committed

by a Hindu undivided family, the Karta thereof shall be deemed to

be guilty of the offence and shall be liable to be proceeded against

and punished accordingly:

Provided that nothing contained in this sub-section shall render

the Karta liable to any punishment if he proves that the offence wai

committed without his knowledge or that he had exercised all due

diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained In sub-flection (1), where

an offence under this Act has been committed by a Hindu undivided

family and it is proved that the offence has been committed with the

consent or connivance of, or is attributable to any neglect on the part

of, any member of the Hindu undivided family, such member shall

also be deemed to be guilty of that offence and shall be liable to be

proceeded against and punished accordingly.

Offences

by Hindu

undivi-

ded fami-

lies.

278D. (1) Where during the course of any search made under

section 132, any money, bullion, jewellery or other valuable article or

thing (hereafter in this section referred to as the assets) or any books

of account or other documents has or have been found in the posses-

sion or control of any person and such assets or books of account or

other documents are tendered by the prosecution In evidence against

such person or against such person and the person referred to in sec-

tion 278 for an offence under this Act, the provisions of sub-section

(4A) of section 132 shall, so far as may be, apply in relation to such

assets or books of account or other documents.

(?) Where any assets or books of account or other * documents

taken into custody, from the possession or control of any person, by

the officer or authority referred to In clause (a) or clause (b) or

clause (c), as the case may be, of sub-section (I) of section 182A are

delivered to the requisitioning officer under sub-section (2) of that

section and such assets, books of account or other documents are ten-

dered by the prosecution in evidence against such person or against

such person and the person referred to in section 278 for an offence

under this Act, the provisions of sub-section (4A) of section 132

shall, so far as may be, apply in relation to such assets or books ef

account or other documents.',

Presump-

tion as

to assets,

books of

account,

etc.,

In certain

•cages.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

319

71. In section 279 of the Income-tax Act,—

(i) for sub-sections (1) and (1A), the following

sub-sections

shall be substituted, namely:^

"(1) A person shall not be proceeded against for an offence

under section 275A,. section 276A, section 276B, section 276C,

section 276CC, section 276D, section 277, section 278 or section

278A except at the instance of the Cbmmissioner.

(1A) A person shall not be proceeded against for an offence

under section 276C or section 277 in relation to the assessment

for an assessment year in respect of which the penalty imposed

or imposable on him under clause (iii) of sub-seciion U) of sec-

tion 271 has been reduced or waived by an order under section

273A.";

(ii) in sub-section (3), for the words, brackets, figures and

letter "under sub-section (4A) of section 271", the words, figures and

letter "under section 273A" shall be substituted.

Amend-

ment of

section

279.

72. After section 279 of the Income-tax Act, the following section

shall be inserted, namely: —

Insertion

of new-

section

279A.

"279A. Notwithstanding anything contained

tlie Code of

Criminal Procedure, 1973, an offence punishable under section 276B

or section 276C or section 276CC or section 277 or section 278 shall

be deemed to be non-cognizable within the meaning of that Code.".

73. For section 281 of the Income-tax Act, the following section shall

be substituted, namely: —

Certain

offences

to be

non-

cogni-

zable.

Substitu-

tion pf

new sec-

tion for

section

281.

2 of 1974.

'281. (1) Where, during the pendency of any proceeding under

this Act or after the completion thereof, but before the service of

notice under rule 2 of the Second Schedule, any assessee creates a

charge on, or parts with the possession (by way of Bale, mortgage,

gift, exchange or any other mode of transfer whatsoever) of. any

of his assets in favour of any other person, such charge or transfer

shall be void as against any claim in respect of any tax or any other

sum payable by the assessee as a result of the completion

the

said proceeding or otherwise:

Provided that, such charge or transfer shall not be void if it is

made—

(i) for adequate consideration and without notice

the

pendency of such proceeding or, as the case may be, without

notice of such ;ax or other sum payable by the assessee; or

(ii) with the previous permission of the Inconu'-tax Officer.

Certain

transfer!

to be

void.

3^2O

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(2) This section applies to cases where the amount of tax or other

sum payable or likely to be payable exceeds five thousand rupees and

the assets charged or transferred exceed ten thousand rupees in value.

Eocplanation.—In this section, "assets" means land, building,

machinery, plant, shares, securities and fixed deposits in banks, to

the extent to which any of the assets aforesaid does not form part

of the stock in trade of the business of the assessee.'.

74. After section 281A of the Income-tax Act, the following section

shall be inserted, namely: —

Insertion

of new

section

J81B.

"281B. (i) Where, during the pendency of any proceeding lor the

assessment of any income or for the assessment or re-assessment of

any income which has escaped assessment, the Income-tax Officer is

of the opinion that for the purpose of protecting the interests of the

revenue it is necessary so to do, he may, with the previous approval

of the Commissioner, by order in writing, attach provisionally any

property belonging to the assessee in the manner provided in the

Second Schedule.

(2) Every such provisional attachment shall cease to have effect

after the expiry of a period of six months from the date of the order

made under sub-section (1):

Provided that the Commissioner may, for reasons to be recorded

in writing, extend the aforesaid period by such further period er

periods as he thinks fit, so however, that the total period of exten-

sion shall not in any case exceed two years.".

Provi-

sional

attach-

ment to

protect

revenue

in cer-

tain

cases.

75. In section 285A of the Income-tax Act, In sub-section (I), for the

words "for the construction of a building for, or the supply of goods or

services in connection therewith to, any other person, the value of

which exceeds fifty thousand rupees", the following shall be substituted,

namely: —

"with another person for carrying out any work or for Hie supply

of goods or services in connection therewith, the value of which work

or supply or both exceeds fifty thousand rupees".

Amend-

ment of

section

28!WL

T£. After section 285A of the Income-tax Act, the following section

shall be inserted, namely: —

Insertion

of new

section

285B.

"285B. Any person carrying on the production of a ainematograph

film during the whole or any part of any financial year shall, in

respect of the period during which such production is carried on

by him in such financial year, prepare and deliver or cause to be

delivered to the Income-tax Officer, within thirty days from the

end of such financial year or within thirty days from the date of the

completion of the production of the film, whichever is earlier, a

statement in the prescribed form containing particulars of all pay-

ments at over five thousand rupees in the aggregate made by him

or due from him! to each such parson as Is engaged by him In such

production as employee or otherwise.".

Submis-

sion of

State-

ments by-

producers

of cinema-

tograph

films.

SEC. 11

THE GAZETTE OF INDIA EXTRAORDINARY

jii

77. In section 287 of the income-tax Act,— '

(i) in sub-section (1), after the word "proceedings", the words

"or prosecutions" shall be inserted;

(ii) for sub-section (2), the following sub-section shall be sub-

stituted, namely: —

"(2) No publication under this section shall be made in rela-

tion to any penalty imposed under this Act until the time for

presenting an appeal to the Appellate Assistant Commissioner

has expired without an appeal having b*en presented or the

appeal, if presented, has been disposed of.".

Amend-

ment ot

(lection

287.

78. After section 292 of the Income-tax Act, the following sections

shall be inserted, namely: —

Insertion

of new

sections

292A and

292B.

"292A. Nothing contained in section 360 of the Code of Criminal

Procedure, 1973, or in the Probation of Offenders Act, 1958, shall

apply to a person convicted of an offence under this Act unless that

person is under eighteen years of age.

292B. No return of income, assessment, notice, summons or other

proceeding furnished or made or issued or taken or purported to

have been furnished or made or issued or taken *u pursuance of any

of the-provisions of this Act shall be invalid or shall be deemed to

be invalid merely by reason of any mistake, defect or omission in

such return of income, assessment, notice, summons or other pro-

ceeding If such return of income, assessment, notice, summons or

other proceeding is in substance and effect in conformity with or

according to the intent and purpose of this Act.".

Section

360 oi

the Code

oi Crimi-

nal Pro-

cedure

1973 and

the

Proba-

tion of

Offenders

Act,

1938

not to

apply.

Return

income,

etc., not

to bo

invalid

certain

grounds.

t ol 1974.

20 of 1968,

79. In sub-section (2) of section 295 of the Income-tax Act,—

(1) after clause (dd), the following clause shall be inserted,

namely:—

"(dda) the matters specified in sub-sections (2) and (3) of

section 44AA;";

(ii) after clause (e), the following clauses shall be inserted,

namely: —

u(ee) the conditions or limitations subject to which any

payment of rent made by an assessee shall be deducted under

section 80GG;

(eea) the cases, the nature and value of assets, the limits

and heads of expenditure and the outgoings, which are requir-

ed to be prescribed under sub-section (6) of section 139;

Amend-

ment ijf

section

293.

322

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(eeb) the time within which any person may apply {or the

allotment of a permanent account number, the form and the

manner in which such application may be made and the parti-

culars which such application shall contain and the transactions

with respect to winch permanent account numbers shall be

quoted on documents relating to such transactions under section

139A;

(eec) the form of the report of audit and the particulars

which such report shall contain under sub-sectiom (2A) of sec-

tion 142;";

(Hi) after clause (mm), the following clause shall be inserted,

namely: —

" (mma) the form in which the statement under section

285B shall be delivered to the Income-tax Officer;".

80. For section 296 of the Income-tax Act, the following section shall

be substituted, namely: —

Substi-

tution

of new

»ectlon

tor sec-

tion 206.

"296. The Central Government shall cause every rule made under

this Act and every notification issued under sub-clause (iv) of clause

(23C) of section 10 to be laid as soon as may be after the rule is made

or the notification is issued before eaeh House of Parliament while

it is in session for a total period of thirty days, which may be com-

prised in one session or in two or more successive sessions, and, if

before the expiry of the session immediately following the session

or the successive sessions aforesaid, both Houses agree in making

any modification in the rule or notification or both Houses agree that

the rule or notification should not be made or issued, that rule or

notification shall thereafter have effect, only in such modified form

or be of no effect, as the case may be; so, however, that any such

modification or annulment shall be without prejudice to the validity

of anything previously done under that rule or notification.".

Rules

and

certain

notifica-

tions

to be

placed

before

Parlia-

ment.

81. In the Second Schedule to the Income-tax Act,—

(i) rule 19A shall be re-numbered as sub-rule (2) thereof, and

before that sub-rule as so re-numbered, the following sub-rule shall

be inserted, namely: —

"(1) A Tax Recovery Officer, being a Gazetted Officer of the

Central Government who is authorised to exercise the powers

of a Tax Recovery Officer under this Act, may entrust any of

his functions as Tax Recovery Officer to any other officer lower

than him in rank (not being lower in rank than an Inspector

of Income-tax) and such officer shall, in relation to the functions

so entrusted to him, be deemed to be a Tax Recovery Officer:

Provided that where the Tax Recovery Officer is an Income-

tax Officer any entrustment under this sub-rule shall be made

only with the approval of the Inspecting Assistant Commis-

sioner.";

Amend-

ment of

Second

Schedule.

SEC- !]

THE GAZETTE OF INDIA EXTRAORDINARY

, 2 3

(ii) in rule 53, in clause (c), the word "and" occurring at the

end shall be omitted, and after that clause, the following clause shall

be inserted, namely: —

"(cc) the reserve price, if any, below which the property

may not be sold; and";

(iii) to rule 56, the following proviso shall be added, namely: —

"Provided that no sale under this rule shall be made if the

amount bid by the highest bidder is less than the reserve price,

if any, specified under clause (cc) of rule 53.";

(iv) rule 59 shall be re-numbered as sub-rule (2) thereof, and

before that sub-rule as so re-numbered, the following sub-rule shall

be inserted, namely: —

"(1) Where the sale of a property, for which a reserve price

has been specified under clause (cc) of rule 53, has been post-

poned for want of a bid of an amount not less than such reserve

price, it shall be lawful for an Income-tax Officer, if so autho-

rised by the Commissioner in this behalf, to bid for the property

on behalf of the Central Government at any subsequent sale.";

(v) in Part III, after rule 68, the following rule shall be inserted,

namely: —

"68A. (1) Without prejudice to the provisions contained in

this Part, an Income-tax Officer, duly authorised by the Commia-

sioner in this behalf, may accept in satisfaction of the whole or

any part of the amount due from the defaulter the property, the

sale of which has been postponed for the reason mentioned in

sub-rule (1) of rule 59, at such price as may be agreed upon

between the Income-tax Officer and the defaulter.

(2) Where any property is accepted under sub-rule CD, the

defaulter shall deliver possession of such property to the Income-

tax Officer and on the date the possession of the property is

delivered to the Income-tax Officer, the property shall vest in

the Central Government and the Central

Government

shall,

where necessary, intimate the concerned Registering

Officer

appointed under the Registration Act, 1908, accordingly.

(3) Where the price of the property agreed upon under sub-

rule (1) exceeds the amount due from the defaulter, such excess

shall be paid by the Income-tax Officer to the defaulter within

a period of three months from the date of delivery of possession

of the property and where the Income-tax Officer fails to pay

such excess within the period aforesaid, the Central Government

shall, for the period commencing on the expiry of such period

and ending with the date of payment of the amount remaining

unpaid, pay simple

interest

at twelve per cent, per annum

to the defaulter on such amount.";

(vi) in rule 73,—

(i) after sub-rule (3), the following sub-rule shall be in-

serted, namely:— ,

" (3A) A warrant of arrest issued by a Tax Recovery

Officer under sub-rule (2) or sub-rule (3) may also be ex«-

Accep-

tanoe of

property

in satis-

faction

at amount

due from

the de-

faulter.

16 of 19U8,

324

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

cuted by any other Tax Recovery Officer

within

whose

jurisdiction the defaulter may for the time being be found.";

(ii) in sub-rule (4),—

(a) for the words, brackets and figures "sub-rule (2) or

sub-rule (3)", the words "this rule" shall be substituted,

and after the words "Tax Recovery Officer", the words

"issuing the warrant" shall be inserted;

(b) after the proviso, the following Explanation shall be

inserted, namely: —

"Explanation.—For the purposes of this rule, where

the defaulter is a Hindu undivided family, the Kana

thereof shall be deemed to be the defaulter.".

CHAPTER III

AMENDMENTS TO THE WEALTH-TAX ACT, 1957

82. In section 4 of the Wealth-tax Act, 1957 (hereafter in this Chapter

referred to as the Wealth-tax Act),—

(i) in clause (a) of sub-section (1),—

(a) in sub-clause (in), after the words "by the individual",

the words ", directly or indirectly," shall be Inserted;

(b) in sub-clause (iv), the word "or" shall be inserted at the

end and after that sub-clause, the following sub-clause shall be

inserted, namely: —

"(v) by the son's wife, or the son's minor child, of such

individual, to whom such assets have been transferred by

the individual, directly or indirectly, on or after the 1st day

of June, 1973, otherwise than for adequate consideration,";

(ii) in sub-section (1A),—

(a) in clause (b), the words ", in so far as it is attributable

to the interest of the individual in the property of the family,"

shall be omitted;

(b) for clause (c), the following clause shall be substituted,

namely: —

" (c) where the converted property has been the subject-

matter of a partition (whether partial or total) amongst the

members of the family, the converted property or any part

thereof which is received by the spouse or minor child of the

individual on such partition shall be deemed to be assets

transferred indirectly by the individual to the spouse or

minor child and the provisions of sub-section (I) shall, so

far as may be, apply accordingly:";

27 of 1967.

Amend-

ment of

section 4.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

325

{Hi) after sub-section (5), the following sub-section shall he

inserted, namely: —

"(5A) Where a gift of money from one person to another

is made by means of entries in the books of account maintained

by the person making the gift or by an individual or a Hindu

undivided family or a firm or an association of persons or body

of individuals with whom or which he has business or other re-

lationship, the value of such gift shall be liable to be included in

computing the net wealth of the person making the gift unless he

proves to the satisfaction of the Wealth-tax Officer that the

money has actually been delivered to the other person at the

time the entries were made.";

(iv) in the Explanation,—

(a) after clause (a), the following clause shall be inserted,

namely:-—

'(aa) the expression "child" include* a stsp-child and

an adopted child;';

(b) in clause (b), the word "and" shall be inserted at the

end;

be omitted;

(d) clause (d) shall be omitted.

83. In sub-section (1) of section 5 of the Wealth-tax Act, in clause (u),

for the proviso, the following proviso shall be substituted, namely: —

"Provided that they are held by him in his own right as the

inventor or author of such patent or copyright, as the case may be,

and have not been assigned to, or acquired by, him under a contract

or by way of inheritance or otherwise;".

Amend-*

ment of

section 5.

84. In section 8 of the Wealth-tax Act, in the proviso, for tha portion

beginning with the words "and perform such functions" and ending with

the words "work to be performed", the following shall be substituted,

namely: —

"and shall perform their functions in respect of such individual,

Hindu undivided family or company, as the case may be, in accord-

ance with such general or special orders in writing as the Com-

missioner or the Inspecting Assistant Commissioner authorised by

the Commissioner in this behalf may make for the purpose of facili-

tating the performance of suck functions".

Amend-

ment of

section 8.

85. After section 8A of the Wealth-tax Act, the following section shall

be inserted, namely: —

"8AA. (1) The Commissioner may, by general or special order in

writing, direct that all or any of the powers or functions conferred on

or assigned to the Wealth-tax Officer or Wealth-tax Officers by or

under this Act in respect of any area, or cases or olasses of cases, or

persons or classes of persons shall be exercised or performed concur-

rently by the Inspecting Assistant Commissioner.

Insertion

of new

section

8AA.

Concur-

rent juris-

diction of

Inspecting

Assistant.

326

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(2) Where under sub-section (1), an Inspecting Assistant Com-

missioner exercises concurrent jurisdiction with one or more Wealth-

tax Officers in respect of any area, cases or classes of cases, or per-

sons or classes of persons, the Wealth-tax Officer

or Wealth-tax

Officers shall exercise the powers and perform, the functions under

this Act in relation thereto as the Inspecting Assistant Commissioner

may direct.

(3) Without prejudice to the generality of the provisions con-

tained in sub-section (2) of section 13, every Wealth-tax Officer shall

also observe and follow such instructions as may be issued to him

for his guidance by the Inspecting Assistant Commissioner within

whose jurisdiction he performs his functions in relation to any parti-

cular proceeding or the initiation of any proceeding under this Act:

Provided that no instructions which are prejudicial to the asses-

see shall be issued before an opportunity is given by the Inspecting

Assistant Commissioner to the assessee to be heard.

Explanation.—For the purposes of this sub-section, no instruction

as to the lines on which an investigation connected with the assess-

ment should be made shall be deemed to be an instruction prejudi-

cial to the assessee.

(4) Where an order is made under sub-section

(1) and the

Inspecting Assistant Commissioner exercises the powers or performs

the functions of a Wealth-tax Officer in respect of any case or person

or proceeding, references in this Act or in any rule made thereunder

to the Wealth-tax Officer and the Appellate Assistant Commissioner

shall be construed as references to the Inspecting Assistant Commis-

sioner and the Commissioner respectively and, accordingly,—

(i) any provision of this Act requiring approval or sanction

of the Inspecting Assistant Commissioner shall not apply;

(ii) any appeal which would otherwise have lain to the

Appellate Assistant Commissioner shall lie to the Commissioner;

(Hi) any appeal which would have lain from an order of the

Appellate Assistant Commissioner

to the Appellate

Tribunal

shall lie from the order of the Commissioner.".

Com-

missioner

and

Wealth-

tax

Officer.

86. In section 8B of the Wealth-tax Act, for sub-section (1), the fol-

lowing sub-section shall be substituted, namely: —

" (1) The Commissioner may, after giving the assessee a reason-

able opportunity of being heard in the matter, wherever it is pos-

sible to do so, and after recording his reasons for doing so, transfer

any case from one or more of the following officers subordinate to

him, namely: —

(a) any Wealth-tax Officer or Wealth-tax Officers;

(b) any Wealth-tax Officer or Wealth-tax Officers having

concurrent jurisdiction with the Inspecting Assistant Commis-

sioner,

to any other Wealth-tax Officer or Wealth-tax Officers (whether with

or without concurrent jurisdiction with the Inspecting Assistant

Amend-

ment of

section

8B.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

327

Commissioner) also subordinate to him and the Board any similarly

transfer any case from—

(i) any Wealth-tax Officer or Wealth-tax Officers, or

(ii) any Wealth-tax Officer or Wealth-tax Officers having

concurrent jurisdiction with the Inspecting Assistant Commis-

sioner,

to any other Wealth-tax Officer or Wealth-tax Officers (whether with

or without concurrent jurisdiction with the Inspecting Assistant Com-

missioner) :

Provided that nothing in this sub-section shall be deemed to re-

quire any such opportunity to be given where a transfer is from

any Wealth-tax Officer or Wealth-tax Officers (whether with or with-

out concurrent jurisdiction with the Inspecting Assistant Commis-

sioner) to any other Wealth-tax Officer or Wealth-tax Officers (whe-

ther with or without concurrent jurisdiction with the Inspecting

Assistant Commissioner) and the offices of all such officers are

situated in the same city, locality or place:

Provided further that—

(a) where any case has been transferred from any Wealth-

tax Officer or Wealth-tax Officers to two or more Wealth-tax

Officers, the Wealth-tax Officers to whom the case is so trans-

ferred shall have concurrent jurisdiction over such case and shall

perform their functions in accordance with such general or special

orders in writing as the Board or the Commissioner or the

Inspecting Assistant Commissioner authorised by the Commis-

sioner in this behalf, may make for the purpose of facilitating

the performance of such functions;

(b) where any case has been transferred from any Wealth-

tax Officer or Wealth-tax Officers (whether with or without con-

current jurisdiction with the Inspecting Assistant Commissioner)

to two or more Wealth-tax Officers with concurrent jurisdiction

with the Inspecting Assistant Commissioner, the officers (includ-

ing the Inspecting Assistant Commissioner) to whom the case is

so transferred shall have concurrent jurisdiction over such case

and shall perform their functions in accordance with such general

or special orders in writing as the Board or the Commissioner

may make for the purpose of facilitating the performance of such

functions and the Wealth-tax Officers shall perform their func-

tions also in accordance with such orders or directions as the

Inspecting Assistant Commissioner may make under section 8 or,

as the case may be, under sub-section (2) of section 8AA.".

87. In section 11B of the Wealth-tax Act, after clause (b), the follow-

ing clause shall be inserted, namely: —

"(c) in a case where two or more Wealth-tax Officers have con-

current jurisdiction over such assessee in respect of such function,

be the Wealth-tax Officers empowered to perform such function by

the Board or, as the case may be, the Wealth-tax Officers to whom

Amend-

ment of

section

HB.

328

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

such function has been assigned by an order of the Commissioner

or by an order or a direction of the Inspecting Assistant Commis-

sioner under section 8 or, as the case may be, under sub-section (2)

of section SAA.".

88. In section ISA of the Wealth-tax Act, for clause (c), the following

clause shall be substituted, namely: —•

" (c) in the case of a company, by the managing director there-

of, or where for any unavoidable reason such managing director is

not able to sign and verify the return or where there is no manag-

ing director, by any director thereof.".

Amend-

ment of

section

15A.

89. In section 15B of the Wealth-tax Act,—

(i) for sub-section (1), the following sub-section shall be substi-

tuted, namely: —

"(1) Where any tax is payable on the basis of any return

required to be furnished under section 14 or section 15 or section

17, after taking into account the amount of tax, if any, already

paid under any provision of this Act, the assessee shall be liable

to pay such tax before furnishing the return and the return shall

be accompanied by proof of payment of such tax.";

(ii) for sub-section (3), the following sub-section shall be substi-

tuted, namely: —

" (3) If any assessee fails to pay the tax or any part thereof

in accordance with the provisions of sub-section (1), the Wealth-

tax Officer may direct that a sum equal to two per cent, of such

tax or part thereof, as the case may be, shall be recovered from

him by way of penalty for every month during which the default

continues:

Provided that before levying any such penalty, the assessee

shall be given a reasonable opportunity of being heard.".

Amend-

ment of

section

I5B.

§0. After section 17 of the Wealth-tax Act, the following section shall

be inserted, namely: —

Insertion

of new

section

1TA.

"17A. (1) No order of assessment shall be made under section 16

at any time after the expiration of a period of—

(a) four years commencing on and from the 1 st day of April,

1975 or one year from the date of the filing of a return or a revised

return under section 15, whichever is later, where the assess-

ment year is an assessment year commencing before that date;

(b) four years from the end of the assessment year in which

the net wealth was first assessable, or one year from the date

of the filing of a return or a revised return under section 15,

whichever is later, where the assessment year is an assessment

year commencing on or after the 1st day of April, 1975.

Time-

limit for

comple-

tion of

assess-

ment

and re-

asiesa-

ment.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

329

(2) No order of assessment or re-assessment shall be made under

section 17,—

(a) where any proceeding for an assessment or re-assessment

is pending on the 1st day of April, 1975, at any time after the

expiration of a period of four years commencing on and from

that date;

(b) where the assessment or re-assessment is to be made in

a case falling within clause (a) of sub-section (1) of section 17

for which a notice has been served under that sub-section on or

after the 1st day of April, 1975, at any time after the expiration

of a period of four years from the end of the assessment year in

which such notice was served;

a case falling within clause (b) of sub-section (1) of section 17

for which a notice has been served under that sub-section on or

after the 1st day of April, 1975, after the expiration of a period

of—

(i) four years from the end of the assessment year in

which the net wealth was first assessable, or

(ii) one year

from

the date of service of such notice,

whichever period expires later.

(3) Notwithstanding anything contained in sub-sections

(1)

and (2), an order of fresh assessment in pursuance of an order passed

on or after the 1st day of April, 1975, under sectLon 23, section 24 or

section 25, setting aside or cancelling an assessment, may be made at

any time before the expiry of four years from the end of the financial

year in which the order under section 23 or section 24 is received by

the Commissioner or, as the case may be, the order under section 25

is passed by the Commissioner.

(4) The provisions of sub-sections (I) and (2) shall not apply

to the assessment or re-assessment made on the assessee or any

other person in consequence of,

or to give effect to, any finding or

direction contained in an order under section 23, section 24, section 25,

section 27 or section 29 or in an order of any court in a proceeding

otherwise than by way of appeal or reference under this Act, and

such assessment or re-assessment, may, subject to the provisions of

sub-section (3), be completed at any time.

Explanation 1.—In computing the period of limitation for

the

purposes of this section—•

(i) the time taken in re-opening the whole or any part of

the proceeding or in giving an opportunity to the assessee to be

re-heard under the proviso to section 39, or

(ii) the period during which the assessment proceeding is

stayed by an order or injunction of any court, or

(Hi) in a case where an application made before the Wealth-

tax Settlement Commission under section 22C is rejected by it

or is not allowed to be proceeded with by it, the period commenc-

ing from the date on which such application is made and ending

330

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

with the date on which the order under sub-section (1) of section

22D is received by the Commissioner under sub-section (2) of

that section,

shall be excluded.

.Explanation 2.—Where, by an order referred to in sub-section (4),

any asset is excluded from the net wealth of one person and held

to be the asset of another person, then, an assessment in respect of

such asset on such other person shall, for the purposes of sub-section

(2) of section 17 and this section, be deemed to be one made in conse-

quence of, or to give effect to, any finding or direction contained in

the said order, provided such other person was given an opportunity

of being heard before the said order was passed.".

91. In section 18 of the* Wealth-tax Act,—

(i) in sub-section (1), for clauses (i), (ii), (Hi) and the Ex-

planations, the following clauses and Explanations shall be substitut-

ed, namely: —

'(i) in the cases referred to in clause (a), in addition to the

amount of wealth-tax, if any, payable by him, a sum equal to

two per cent, of the assessed tax for every month during which

the default continued.

Explanation.—In this clause, "assessed tax" means the wealth-

tax chargeable under the provisions of this Act;

(ii) in the cases referred to in clause (b), in addition to the

amount of wealth-tax payable by him, a sum which shall not be

less than ten per cent., but which shall not exceed fifty per cent,

of the amount of the wealth-tax, if any, which would have been

avoided if the net wealth! returned by such person had been

accepted as the correct net wealth;

(in) in the cases referred to in clause (c), in addition to

any wealth-tax payable by him, a sum which shall not be less

than, but which shall not exceed five times, the amount of tax

sought to be evaded by reason of the concealment of particulars

of any assets or the furnishing of inaccurate particulars in respect

of any assets or debts.

Explanation 1.—For the purposes of clause (Hi) of this sub-

section, the expression "the amount of tax sought to be evad-

ed"—

(a) in a case to which Explanation 3 applies, means the

tax on the net wealth assessed;

(b) in any other case, means the difference between the

tax on the net wealth assessed and the tax that would have

been chargeable had the net wealth assessed been reduced

by the amount which represents the value of any assets in

respect of which particulars have been concealed or in-

accurate particulars have been furnished and of any debts

in respect of which inaccurate particulars have been

furnished.

Amend-

ment of

section

18.

SEC. 11

THE GAZETTE OF INDIA EXTRAORDINARY

331

Explanation 2.—Where in respect

of any facts material to

the computation of the net wealth

of any person under this

Act,—

(A) such person fails to offer an explanation or offers an

explanation which is found by the Wealth-tax Officer or the

Appellate Assistant Commissioner to be false, or

(B) such person offers an explanation which he is not

able to substantiate,

then, the amount added or disallowed in computing the net

wealth of such person as a result thereof shall, for the purposes

of clause (c) of this sub-section, be deemed to represent the

value of the assets in respect of which particulars have been

concealed:

Provided that nothing contained in this Explanation

shall

apply to a case referred to in clause (B) in respect of any amount

added or disallowed as a result of the rejection of any explana-

tion offered by such person, if such explanation is bona fide and

all the facts relating to the same and material to the computation

of his net wealth have been disclosed by him.

Explanation 3.—Where any person who has not previously

been assessed under this Act fails, without reasonable cause, to

furnish within the period specified in clause (a) or, as the case

may be, clause (b) of sub-section (1) of section 17A a return of

his net wealth which he is required to furnish under section 14

in respect of any assessment year and, until the expiry of either

of the periods applicable to him, no notice had been issued to

him under sub-section (2) of section 14 or sub-section (2) of

section 17 and the Wealth-tax Officer or the Appellate Assistant

Commissioner is satisfied that in respect of such assessment year

such person has assessable net wealth, then, such person shall,

for the purposes of clause (c) of this sub-section, be deemed to

have concealed the particulars of his assets or furnished in-

accurate particulars of any assets or debts in respect of such

assessment year, notwithstanding that such person furnishes

i~eturn of his net wealth at any time after thei expiry of either

of the periods aforesaid

applicable to him in pursuance of a

notice under section 17.

Explanation 4.—Where the value of any asset returned by

any person is less than seventy per cent, of the value of such

asset as determined in an assessment under section 16 or section

17, such person shall be deemed

to have furnished inaccurate

particulars of such asset within the meaning of clause (c) of this

sub-section, unless he proves that the value of the asset as return-

ed by him is the correct value.';

(ii) sub-section (1A) shall be omitted;

(iii> sub-sections (2A) and (2B) shall be omitted;

(iv) for sub-section (3), the following sub-sections shall be sub-

stituted, namely:---

"(3) Notwithstanding anything contained

in clause (in) of

sub-section (1), if, in a case falling under clause (c) of that sub-

section, the amount (as determined by the Wealth-tax Officer on

assessment) in respect of which penalty is imposable under clause

332

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Wealth-tax Officer shall not issue any direction under sub-sec-

tion (1) for payment by way of penalty without

the previous

approval of the Inspecting Assistant Commissioner.

(3A) Notwithstanding anything contained in this section,

the penalty imposed under clause (Hi) of sub-section (1) read

with Explanation 3 to that sub-section and the penalty imposed

under clause (i) of that sub-section shall

not exceed, in the

aggregate, five times the amount of the tax sought to be evaded.";

(v) for the Eocplanation below sub-section (5), the following Ex-

planation shall be substituted, namely: —

"Eocplanation.—In computing the period of limitation for the

purposes of this section,—

(i) any period during

which

the

immunity

granted

under section 22H remained in force;

(ii) the time taken in giving an

opportunity

the

assessee to be re-heard under the proviso to section 39; and

(Hi) any period during which a proceeding under this

section for the levy of penalty is stayed by an order or in-

junction of any court,

shall be excluded.".

92-. In Chapter IV of the Wealth-tax Act, after section 18, the following

sections shall b© inserted, namely: —

"18A. (1) If a person,—

(a) being legally bound to state the truth

of any matter

touching the subject

of his assessment, refuses to answer any

question demanded of him by a Wealth-tax Officer or an Appel-

late Assistant Commissioner or an Inspecting Assistant Commis-

sioner or a Commissioner, in the exercise of his powers under this

Act; or

(b) refuses to sign any statement made by him in the course

of any proceeding under this Act which a Wealth-tax Officer or

an Appellate Assistant Commissioner or an Inspecting Assistant

Commissioner or a Commissioner may legally require him to sign,

he shall pay, by way of penalty, a sum which may extend to one

theusand rupees.

(2) If a person, without reasonable cause, fails to furnish in due

time such statement or information

which such person is bound

to furnish to the Wealth-tax Officer under section 38, he shall pay,

by way of penalty, a sum which may extend to ten rupees for every

day during which the failure continues.

(3) No order shall be made under this section except by an

Appellate Assistant Commissioner or in Inspecting Assistant Com-

missioner or a Commissioner, and where a contravention, failure or

default for which any penalty is imposable under this section occurs

in the course of any proceeding before a Wealth-tax Officer, the

Wealth-tax Officer shall refer the cast; to the Inspecting Assistant

Commissioner for passing such orders as he deems fit

Insertion

of new

sections

18A and

18B.

Penalty

for

(allure to

aniwer

questiona,

sign

state-

ments,

allow

inspec-

tions, etc.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

333

(4) No order under this section shall be passed by any officer

referred to in sub-section (3), unless the person on whom the penal-

ty is proposed to be imposed is g.ven an opportunity of being heard

in the matter by such officer.

18B. (I) Notwithstanding anything contained in this Act, the

Commissioner may, in his discretion, whether on his own motion or

otherwise,—

(i) reduce or waive the amount of penalty imposed or im-

posable on a person under clause (i) of sub-section (1) of sec-

tion 18 for failure without reasonable cause to furnish the return

of net wealth which such person was required to furnish under

sub-section (2) of section 14; or

(ii) reduce or waive the amount of penalty imposed or im-

posable on a person under clause (in) of sub-section (1) of

section 18,

if he ds satisfied that such person,—

(a) in the case referred to in clause (i), has, prior tQ the

issue of a notice to him under sub-section (2) of section 14,

voluntarily and in good faith, made full and true disclosure of

hte net wealth, and

(fa) In the case referred to in clause (ii), has, prior to the

detection by the Wealth-tax Officer, of the concealment of parti-

culars of assets or of the inaccuracy of particulars furnished in

respect of any asset or debt in respect of which the penalty i«

tmposable, voluntarily and in good faith made full and true dis-

closure of such particulars,

andi also has co(-operated in any inquiry relating to the assessment

of his net wealth and has either paid or made satisfactory arrange-

ments for the payment of any tax or interest payable in consequence

of an order passed under this Act in respect of the relevant assess-

ment year.

Explanation^—For the purposes of

this sub-section, a person

shall be deemed to have made full and true disclosure of the parti-

culars! of his assets or debts in any case where the excess of not

wealth assessed over the net wealth returned is of such a nature

as not to attract the provisions of clause (c) of sub-section (1) of

section 18.

(2) Notwithstanding anything contained in sub-section (1), if

in a case falling under clause (c) of sub-section (1) of section 18,

the net wealth in respect of which the penalty is imposed or impos-

able for the relevant assessment year, or, where

such disclosure

relates to more than one assessment year, the net wealth for any one

of the relevant assessment years, exceeds five hundred thousand

rupees, no order reducing or waiving the penalty under sub-section

(1) shall be made by the Commissioner, except with the previous

approval of the Board.

(3) Where an

order has

been made

under

sub-section (1)

in favour of any* person, whether such order relates to one or more

assessment years, he shall not be entitled to any relief Under this

Power to

reduce or

waive

penalty

in certain

cases.

334

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

section in, relation to any other assessment year at any time after

the making of such order.

(4) Without prejudice to the powers conferred on him by any

other provision of this Act, the Commissioner may, on an applica-

tion made in this behalf by an assessee, and after recording his rea-

sons for so doing, reduce or waive the amount of any penalty payable

by the assessee under this Act or stay or compound any proceeding

for the recovery of any such amount, if he is satisfied that—

(i) to do otherwise would cause genuine hardship to the

assessee, having regard to the circumstances of the case, and

(ii) the assessee has co-operated in any inquiry relating

to the assessment of any proceeding for the recovery of any

amount due from him.

(5) Every order made under this section shall k

~mal and shall

not be called into question by any court or any other authority.".

93. After Chapter V of the Wealth-tax Act, the following Chapter

shall be inserted, namely: —

Insertion

of new

Chapter

V.A.

'CHAPTER VA

SETTLEMENT OF CASES

22A. In this Chapter, unless the context otherwise requires,—

(a) "case" means any proceeding under this Act for or in

connection with the assessment or re-assessment of any person

in respect of any year or years which may be pending before

a Wealth-tax authority on the date on which an application

referred to in section 22C is made;

(b) "Wealth-tax authority" means a Director of Inspection, a

Commissioner, an Appellate Assistant Commissioner, an. Inspect-

ing Assistant Commissioner or a Wealth-tax Officer.

22B. (1) The Central Government shall constitute a Commission

to be called the Wealth-tax Settlement Commission (hereafter in

this Chapter referred to as "the Settlement Commission") for the

settlement of cases under this Chapter.

(2) The Settlement Commission shall consist of a Chairman and

two other members and shall function within the Department of the

Central Government dealing with direct taxes.

(3) The Chairman and other members of the Settlement Com-

mission shall be appointed by the Central Government from amongst

persons of integrity and outstanding ability, having special know-

ledge of, and experience in, problems reating to direct taxes and

business accounts:

Provided that, where a member of the Board, is appointed as the

Chairman or as a member of the Settlement Commission, he shall

cease to be a member of the Board:

Defini-

tions.

Wealth-

tax

Settle-

m«nt

Com-

mission.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

335

Provided further that, until the members are appointed under

this sub-section, it shall be competent for the Central Government

to require, from time to time, any two members of the Board to serve

as members of the Settlement Commission for such period as the

Central Government thinks fit, in addition to their duties as mem-

bers of the Board.

22C. (1) An assessee may, at any stage of a case relating to him,

make an application in such form and in such manner and contain-

ing such particulars as may be prescribed to the Settlement Com-

mission to have the case settled and any such application shall be

disposed of in the manner hereinafter provided.

(2) Every application made under sub-section

(1) shall be

accompanied by such fees as may be prescribed.

(3) An application made under sub-section (1) nha.ll not be

allowed to be withdrawn by the applicant.

Applica-

tion for

settle-

ment of

cases.

22D. (I) On receipt of an application under section 22C, th«

Settlement Commission shall call for a report from the Commisuioner

and on the basis of the materials contained in BUch report and having

regard to the nature and circumstances of the case or the complexity

of the investigation involved therein,

the Settlement Commission

may, by order, allow the application to*be proceeded with or reject

the application:

Provided that an application shall not be rejected under this

sub-section unless an opportunity has been given to the applicant of

being heard:

Provided further that an application shall not be proceeded with

under this sub-section if the Commissioner objects to the application

being proceeded with on the ground that concealment of particulars

of the net wealth on the part of the applicant or perpetration of fraud

by him for evading any tax or other sum chargeable or imposable

under this Act has been established or is Hkely to be established by

any Wealth-tax authority, in relation to the case.

(2) A copy of every order under sub-section (1) shall b« «ent

to tho applicant and to the Commissioner.

(3) Where an application is allowed to be proceeded with under

sub-section (1), the Settlement Commission may call for the relevant

records from the Commissioner and after examination of such re-

cords, if the Settlement Commission is of the opinion that any further

enquiry or investigation in the matter is necessary, It may direct the

Commissioner to make or cause to be made such further enquiry or

investigation and furnish a report on the matters covered by the

application and any other matter relating to the case.

(4) After examination of the records and the report of the Com-

missioner received under sub-section (1) and the report, if any, of

the Commissioner received under sub-section (3), and after giving

an opportunity to the applicant and to the Commissioner to be heard,

either in person or through a representative duly authorised in this

behalf, and after examining such further evidence as may be placed

Proce-

dure or

receipt

of an

»PPU-

cation

under

section

22C.

336

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

before it or obtained by it, the Settlement Commission may, In

accordance with the provisions of this Act, pass such order as it

thinks fit on the matters covered by the application and any other

matter relating to the case not covered by the application but refer-

red to in the report of the Commissioner under sub-section (I) or

sub-section (3).

(5) The materials brought on record before the Settlement Com-

mission shall be considered by all the members thereof before pas-

sing any order under sub-section (4) and in the case of a difference

of opinion among the members, the opinion o| the majority shall

prevail and such order shall be expressed in terms of the views of

the majority.

(6) Every order passed under sub-section (4) shall provide for

the terms of settlement including any demand by way of tax, penalty

or interest, the manner in which any sum due under the settlement

shall be paid and all other matters to make the settlement effective

and shall also provide that the settlement ghall be void if it is subse-

quently found by the Settlement Commission that it has been obtain-

ed by fraud or misrepresentation of facts.

(7) Where a settlement becocmes void as provided in sub-sec-

tion (6), the proceedings with respect to the matters covered by the

settlement shall be deemed to have been revived from the stage at

which the application was allowed to be proceeded with by th«

Settlement Commission and the Wealth-tax authority concerned,

may, notwithstanding anything contained in any other provision of

this Act, complete such proceedings at any time before the expiry

of two years from the end of the financial year in which the settle-

ment became void.

22E. If the Settlement Commission is of the opinion (the reasons

for such opinion to be recorded by it in writing) that, for the proper

disposal of the case pending before it, it is necessary or expedient to

re-open any proceeding connected with the case, but which has been

completed under this Act by any Wealth-tax authority before the

application under section 22C was made, it may, with the concurrence

of the applicant, re-open such proceeding and pass such order there-

on as it thinks fit as if the case in relation to which the application

for settlement had been made by the applicant under that section

covered such proceeding also:

Provided that no proceeding shall be re-opened by the Settle-

ment Commission under this section after the expiry of a period of

eight years from the end of the assessment year to which such pro-

ceeding relates.

22F. (1) In addition to the powers conferred on tht Settlement

Comm&sion under this Chapter, it shall have all the powers which

are vested in a Wealth-tax authority under this Act.

(2) Where an application made under section 22C has been al-

lowed to be proceeded with under section 22D, the Settlement Com-

mission shall, until an order is passed under sub-section (4) of sec-

tion 22D, have, subject to the provisions of sub-section (3) of that

section, exclusive jurisdiction to exercise the powers and perform the

functions of a Wealth-tax authority under this Act in relation to the

case.

Power of

settlement

Commis-

sion to re-

open

comple-

ted

proceed-

ings.

Powers

and

proce-

dure of

Settle*

mont

Commis-

sion.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

337

(3) Notwithstanding anything contained in sub-section (2) and

in the absence of any express direction to the contrary by the-Settle-

ment Commission, nothing contained in this section shall affect the

operation of any other provision of this Act requiring the applicant

to pay tax on the basis of self-assessment in relation to the matters

before the Settlement Commission.

(4) For the removal of doubt, it is hereby declared that in the

absence of any express direction by the Settlement Commission to

the contrary, nothing in this Chapter shall affect the operation of the

provisions of this Act in so far as they relate to any matters other

than those before the Settlement Commission.

(5) The Settlement Commission shall, subject to the provisions

of this Chapter, have power to, regulate its own procedure (includ-

ing the fixation of places and times of its meetings) and may act

notwithstanding that all the members of the Settlement Commission

are not present at any of its meetings.

22G. No person shall be entitled to inspect, or obtain copies of,

any reports made by any Wealth-tax authority to the Settlement

Commission; but the Settlement Commission may, in its discretion,

furnish copies thereof to any such person on an application made to

it in this behalf and on payment of. the prescribed fee:

Provided that, for the purpose of enabling any person whose

case is under consideration to rebut any evidence brought on the

record against him in any such report, the Settlement Commission

shall, on an application made in this behalf and on payment of the

prescribed fee by such person, furnish him with a certified copy of

any such report or part thereof relevant for the purpose.

Inspec

tion,

etc., of

reports.

22H. (i) The Settlement Commission may, if it is satisfied that

any person who made the application for settlement under section 22C

has co-operated with the Settlement Commission in the proceedings

before it and has made a full and true disclosure of his net wealth

and the manner in which such wealth has been acquired, grant to

such person, subject to such conditions as it may think fit to impose,

immunity from prosecution for any offence under this Act or under

the Indian Penal Code or under any other Central Act for the time

being in force and also from the imposition of any penalty under this

Act, with respect to the case covered by the settlement.

(2) An immunity granted to a person

under sub-section (I)

may, at any time, be withdrawn by the Settlement Commission, if

it is satisfied that such person has not complied with the conditions

subject to which the immunity was granted or that such person had,

in the course of the settlement proceedings, concealed any particulars

material to the settlement or had given false evidence, and thereupon

such person may be tried for the offence with respect to which the

immunity was granted or for any other offence of which he appears

to have been guilty in connection with the settlement and shall also

become liable to the imposition of any penalty under this Act to

which such person would have been liable, had no such immunity

been granted.

Powers of

Settle-

ment

Com-

mission

grant

immu-

nity from

pro-

secution.

49 oi 1800.

33B

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II —

221. Every order of settlement passed under sub-section (4) of

section 22D shall be conclusive as to the matters stated therein and

no matter covered by such order shall, save as otherwise provided in

this Chapter, be re-opened in any proceeding under this Act or under

any other law for the time being in force.

22J. Any sum specified in an order of settlement passed

under

sub-section (4) of section 22D may, subject to such conditions, if

any, as may be specified therein, be recovered, and any penalty for

default

in making

payment

of such sum may be imposed and

recovered in accordance with the provisions of section 32 by the

Wealth-tax Officer having jurisdiction over the person who made

the application for settlement under section 22C.

22K. Where—

(i) an order of settlement passed under sub-section (4) of

section 22D provides for the imposition

of a penalty on the

person who made the application under section 22C for settle-

ment, on the ground of concealment of particulars of his net

wealth; or

(ii) after the passing of an order of settlement

under

the said sub-section (4) in relation to a case, such

person

is convicted of any offence under Chapter VIII in relation to

that case,

then, he shall not be entitled to apply for settlement under section

22C in relation to any other matter.

22L. Any proceeding under this Chapter before the Settlement

Commission shall be deemed to be a judicial proceeding within the

meaning of sections 193 and 228, and for the purposes of section 196,

of the Indian Penal Code.

45oll80Q.

Order Of

settle-

ment

to^{b e}

conclu-

sive

Recovery

of sums

due

under

order d

iettl«-

ment.

Bar on

subse-

quent

applica-

tion for

settle-

ment in

certain

casei.

Proceed-

ings

before

Settle-

ment

Com-

mission

to b»

Judicial

proceed-

ings.

22M. (1) Notwithstanding anything contained in this Chapter,

any assessee who has filed an appeal to the Appellate Tribunal under

this Act which is pending before it shall, on withdrawing such appeal

from the Appellate Tribunal, be entitled to make an application to

the Settlement Commission to have his case

settled under this

Chapter:

Provided that no such assessee shall be entitled to make

application in a case where the Wealth-tax Officer has preferred an

appeal under sub-section (2) of section 24 against the order to which

the assessee's appeal relates.

Certain

persons

who hove

filed

appeals

to the

Appellate

Tribunal

entitled

to make

appli-

cations

to the

Settle-

ment

Oont-

mlarton.

JSEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

33$

(2) Any assessee referred to in sub-section ^1) may make an

application to the Appeliate Tribunal for permission to withdraw the

appeal.

(3) On receipt of an application under sub-section (2), the Ap-

pellate Tribunal shall grant permission to withdraw the appeal.

(4) Upon the withdrawal of the appeal, the proceeding in appeal

immediately before such withdrawal shall, for the purposes of this

Chapter, be deemed to be a proceeding pending before a Wealth-tax

authority.

(5) An application to the Settlement

Commission under this

section shall be made within a period of thirty days from the date

on which the order of the Appellate Tribunal permitting the with-

drawal of the appeal is communicated to the assessee.

(6) An application made to the Settlement Commission under

this section shall be deemed to be an application made under sub-

section (1) of section 22C and the provisions of this Chapter [except

sub-section (7) of section 22D] shall apply accordingly.

(7) Where an application made to the Settlement Commission

under this section is not entertained by the Settlement Commission,

then, the assessee shall not be deemed to have withdrawn the appeal

from the Appellate Tribunal and the provisions contained in section

24 and section 26 shall, so far as may be, apply accordingly.'.

94. In section 23 of the Wealth-tax Act, after sub-section (2), the

following sub-section shall be inserted, namely: —

"(2A) Where a return has been filed by an assessee, no appeal

under this section shall be admitted unless at the time of filing of

the appeal he has paid the tax due on the net wealth returned by

him:

Provided that, on an application made by the appellant in this

behalf, the Appellate Assistant Commissioner may, for any g6od and

sufficient reason to be recorded in writing, exempt him from the

operation of the provision of this sub-section.".

Amend-

ment of

section 23.

95. In section 24 of the Wealth-tax Act, for sub-section

(2), the

following sub-section shall be substituted, namely: —

"(1) An assessee objecting to an order passed by the Appellate

Assistant Commissioner under section 18 or section ]8A or section 23

or sub-section (2) of section 37, or to an order passed by the Inspecting

Assistant Commissioner under section 18A, may appeal to the Appel-

late Tribunal within sixty days of the date on which the order is

communicated to him.".

Amend-

ment of

section 24.

96. In sub-section (1) of section 26 of the Wealth-tax Act, after the

word and figures "section 18", the words, figures and letter "or section

18A" shall be inserted.

Amend-

ment of

section 2*L

97. In section 34A of the Wealth-tax Act, after sub-section (3), the

following sub-section shall be inserted, namely: —

"(3A) Where the whole or any part of the refund referred to

in aub-section (3) is due to the assessee as a result of any amount

Amend-

ment of

section

34A.

340

THE GAZETTE OF INDIA EXTRAORDINARY

[PART ll—

having been paid by him after the 31st day of March, 1975 in pur-

suance of any order of assessment or penalty and such amount or

any part thereof having been found in appeal or other proceeding

under this Act to be in excess of the amount which such assessee is

liable to pay as tax or penalty, as the case may be, under this Act,

the Central Government shall pay to such assessee simple interest

at the rate specified in sub-section (3) on the amount so found to

be in excess from the date op which such amount was paid to the date

on which the refund is granted:

Provided that, where the amount so found to be in excess was

paid in instalments, such interest shall be payable on the amount

of each such instalment or any part of such instalment, which was

in excess, from the date on which such instalment was paid to the

date on which the refund is granted:

Provided further that no interest under this sab-section shall

be payable for a period of one month from the date of the passing

of the order in appeal or other proceeding:

Provided also that, where any interest is payable to an assessee

under this sub-section, no interest under sub-section (3) shall be

payable to him in respect of the amount so found to be in excess.".

98. For section 34B of the Wealth-tax Act, the following sections

shall be substituted, namely:—

'34B. (1) Where, during the pendency of any proceeding under

this Act or after the completion thereof, but before the service of

notice under rule 2 of the Second Schedule to the Income-tax Act

as made applicable to this Act by section 32, any assessee creates a

charge on, or parts with (by way of sale, mortgage, gift, exchange

or any other mode of transfer whatsoever) the possession of, any of

his assets in favour of any other person, such charge or

transfer

shall be void as against any claim in respect of any tax or any

other sum payable by the assessee as a result of the completion of

the said proceeding or otherwise:

Provided that such charge or transfer shall not be void, ii it is

made—

(i) for adequate consideration and without notice of the

pendency of such proceeding or, as the case may be, without

notice of such tax or other sum payable by the assessee; or

(ii) with the previous permission of the Wealth-tax Officer.

(2) This section applies to cases where the amount of tax

or other sum payable or likely to be payable exceeds five thousand

rupees and the assets charged or transferred

exceed ten thousand

rupees in value.

Explanation.—In this Faction, "assets" means

land, building,

machinery, plant, shares, securities and fixed deposits in banks to

the extent to which any of the assets aforesaid does not form part

of the stock in trade of the business of the assessee.

Substi-

tution of

new sec-

tions

for

section

S4B.

Transfer!

defraud

revenue

to be

void.

SEC. 1]

THK GAZETTE OF INDIA EXTRAORDINARY

341

34C. (1) Where, during the pendency of any proceeding for the

assessment of net wealth or ior the assessment or r-e-assessment of

net wealth which has escaped assessment, the Wealth-tax Officer is

of the opinion that for the purpose o£ protecting the interests of the

revenue it is necessary so to do, he may, with the previous approval

of the Commissioner, by order in writing, attach provisionally any

property belonging to the assessee in the manner provided in the

Second Schedule to the Income-tax Act as made applicable to this

Act by section 32.

(2) Every such provisional attachment

shall

pease to have

effect after the expiry of a period of six months from the date of

the order made under sub-section (1):

Provided that the Commissioner may, for reasons to be recorded

in writing, extend the aforesaid period by such further

period or

periods as ho thinks fit, so however, that the total period of exten-

sion shall not in any case exceed two years.'.

Provi-

sional

attach-

ment to

protect

revenue

certain

ca*es.

99. In sub-section (1) of section 35 of the Wealth-tax Act, clause (c)

shall be omitted,

100. After section 35. of the Wealth-tax Act, the following sections

shall be inserted, namely: —

"35A. (1) If a person wilfully attempts in any manner whatso-

ever to evade any tax, penalty or interest chargeable or imposable

under this Act, he shall, without prejudice to any penalty that may

be imposable

on him under any other provision of this Act, be

punishable,—

(i) In a case where the amount sought to be evaded exceeds

one hundred thousand rupees, with rigorous imprisonment for

a term which shall not be less than six months but which may

extend to seven years and with fine;

(ii) In any othetr case, with rigorous imprisonment for a

term which shall not be less than three months but which may

extend to three years and with fine.

(2) If a person wilfully attempts in any manner whatsoever to

evade

the

payment

any

tax,

penalty

interest

under

this Act, he shall, without prejudice to' any

penalty that may be

imposable on him under any other provision of this Act, be punish-

able with rigorous imprisonment for a term which shall not be less

than three months but which may extend to three years and shall,

in the discretion of the court, also be liable to fine.

Explanation,—For the purposes of this section, a wilful attempt

to evade any tax, penalty or interest chargeable or Imposable under

this Act or the payment thereof shall include a c^se where any

person—

(a) has in Jrs possession or control

any books of account

or other documents (being books of account or other documents

relevant to any proceeding under this Act) containing a false

entry or statement, or

Amend-

ment oi

section

3D.

Insertion

of new

i«ctiona

36A to

35N.

Wilful

attempt

to evade

tax, etc.

342

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(b) makes, or causes to be made, any false entry or state-

ment in such book's of account or other documents, or

entry or statement in such books of account or other documents,

(d) causes any other circumstance to exist which will have

the effect of enabling such person to evade any tax, penalty or

interest chargeable or imposable under this Act or the payment

thereof.

35B. If a person wilfully fails to furnish in due time the return

of his net wealth which he is required to furnish under sub-section

(1) of section 14 or by notice given under sub-section (2) of section

14 or under sub-section (2) of section 17, he shall be punishable,—

(i) in a case where the amount of tax, which would have

been evaded if the failure had not been discovered, exceeds one

hundred thousand rupees, with rigorous imprisonment for a

term which shall not be less than six months but which may

extend to seven years and with fine;

(ii) in any o,ther case, with rigorous imprisonment foe a

term which shall not be less than three months but which may

extend to three years and with fine:

Provided that a person shall not be proceeded

against under

this section for failure to furnish in due time the return of net

wealth under sub-section (1) of section 14—

(i) for any assessment year commencing prior to, the 1st

day of April, 1975; or

(ii) for any assessment year commencing on or after the

1st day of April, 1975, if—

(a) the return is furnished by him before the expiry

of the assessment year; or

(b) the tax payable by him on his net wealth deter-

mined on regular assessment does not exceed three thousand

rupees.

Failure to

furniah

r*turn*

of net

wealth.

35C. If a person wilfully fails to produce, or cause to be pro-

duced, on or before the date specified In any notice under sub-section

(4) of section 18, such accounts, records and documents as are refer-

red to in the notice, he shall be punishable with rigorous imprison-

ment for a term which may extend to one year or with fine equal

to a sum calculated at a rate which shall not be less than four rupees

or more than ten rupees for every day during which the default

continues, or with both.

35D. If a person makes a statement in any verification under

this Act (other than under section 34AB) or under any rule made

thereunder, or delivers an account or statement which is false, and

which he either knows or believes to be false, or does not believe

to be true, he shall be punishable,—

(i) in a case where the amount of tax which would have been

evaded if the statement or account had been accepted as true,

Failure to

produce

uccounta,

recordi,

etc.

False

state-

ment In

verifica-

tion, «tc

made

under

certain

provi-

sions of

the Act.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

343

exceeds one hundred thousand rupees, with rigorous imprison-

ment for a term which shall not be less than six months but

which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a

term which shall not be less than three months but which may

extend to three years and with fine.

35E. If a person makes a statement in a verification mentioned

in sectipn 34AB which is false, and which he either knows or believes

to be false, or does not believe to be true, he shall be punishable

with imprisonment for a term which may extend to six months or

with fine or with both.

35F. If a person abets ox induces in any manner another person

to make and deliver an account, statement or declaration relating

to any net wealth chargeable to tax which is false and which he

either knows to be false or does not believe to be true or to commit

an offence under sub-section (1) of section 35A, he shall be punish-

able,—

(i) in a case where the amount of tax, penalty or interest,

which would have been evaded, if the declaration, account or

statement had been accepted as true, or which is

wilfullj

attempted to be evaded, exceeds one hundred thousand rupees,

with rigorous imprisonment for a term which shall not be less

than six months but which may extend to seven years and with

fine;

(ii) in any other case, with rigorous imprisonment for a

term which shall not be less than three months but which may

extend to three years and with fine.

False

state-

ment in

verifica-

tion

mention-

ed in

section

34AB.

Abetment

of false

return,

etc.

35G. If any person convicted of an offence under sub-section (I)

of section 35A or section 35B or section 35D or section 35F is again

convicted of an offence under any of the aforesaid provisions, he shall

be punishable for the second and for every subsequent offence with

rigorous imprisonment for a term which shall not be less than six

months but which may extend to seven years and with fine.

Punish-

ment for

second

and sub-

sequent

offences.

35H. (1) Where an offence under this Act has been committed

by a Hindu undivided family, the Karta thereof shall be deemed to

be guilty of the offence and shall be liable to be proceeded against

and punished accordingly:

Provided that nothing contained in this sub-section shall render

the Karta liable to any punishment if he proves that the offence was

committed without his knowledge or that he had exercised all due

diligence to prevent the commission of such offence.

(2) Notwithstanding

anything contained In sub-section (1),

where an offence under this Act has been committed by a Hindu

undivided family and it is proved that the offence has been com-

mitted with the consent or connivance of, or is attributable to any

neglect on the part of, any member thereof, such member shell also

be deemed to be guilty of that offence and shall be liable to be pro-

ceeded against and punished accordingly.

Offences

Hindu

undivided

families.

344

THE GAZETTE OF INDIA EXTRAORDINARY

[PART 1I~

351. (I) A person Ehall not be proceeded against for an offence

under this Act except at the instance of the Commissioner.

(2) The Commissioner may, either before or after the institution

of proceedings, compound any offence under this Act.

Prosecu-

tions to be

at the ins-

tance of

Commis-

sioner and

power of

Commis-

sioner to

compound

offences.

35J. Notwithstanding anything contained in the Code of Crimi-

nal Procedure, 1973, an offence punishable under section 35A or

section 35B or section 35D or section 35F shall be deemed to be non-

cognizable within the meaning of'that Code.

35K. (1) A person shall not be proceeded against for an offence

under section 35A or section 35D in relation to the assessment for

an assessment year in respect of which the penalty Imposed or

imposable on him under clause (Hi) of sub-section (1) of section 18

has been reduced or waived by an order under section 18B,

(2) Where any proceeding for prosecution has been taken against

any person under this Act, any statement made or account or other

document produced by such person before any of the wealth-tax

authorities specified in sections 8, 9, 10, 10A and 11 shall not be in-

admissible as evidence for the purpose of such proceedings merely

on the ground that such statement was made or such account or

other document was produced in the belief that the penalty impos-

able would be reduced or waived under section 18B or that the

offence in respect of which such proceeding was taken would be

compounded.

2 of 1974.

Certain

offences

to be

non-cog-

nizable.

Baron

prosecu-

tions and

on inad-

missibi-

Jltyof

evidence

in certain

circum-

stances.

35L. No court inferior to that of a Metropolitan Magistrate or a

Magistrate of the first class shall try any offence under this Act.

35M. Nothing contained in section 360 of the Code of Criminal

Procedure, 1973, or in the Probation of Offenders

Act, 1958, shall

apply to a person convicted of an affence under this Act unless that

person is under eighteen vears of ace.

2 of 1974.

20 of 1958.

Jurisdic-

tion of

qourtfl.

Section

360 of

the Code

of Crimi-

nal Pro-

cedure,

1973

and the

Probation

of Offen-

ders Act,

1958, not

to apply.

35N. (1) Where during the course of any search made under

section 37A, any books of account or other documents, articles or

things including money have been found in the possession or control

of any person and such books of account or other documents are

tendered, or such articles or things including money are relied upon,

by the prosecution in evidence against such person or against such

person and the person referred to in section 35F for an offence under

this Act, the provisions of sub-section (5) of section 37A shall, so

far as may be, apply in relation to such books of account or other

documents articles or things including money.

Presump-

tion as to

books

of ac-

count,

etc,in

certain

cases.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

345

(2) Where—

(i) any books of account or other documents

Taken

into

custody, from the possession or control of any person by any

officer or authority under clause (a) or clause (b) of sub-section

(1) of section 37B, are delivered to the requisitioning officer

under sub-section (2) of that section; or

(ii) any note or inventory of any articles or things includ-

ing money taken into custody, from the possession of any person,

by any officer or authority under clause (c) of sub-section (1)

of section 37B, is furnished to the requisitioning officer under

sub-section (2) of that section,

and such books of account or other documents are tendered, or such

note or inventory is relied upon, by the prosecution in evidence

against such person or against such person and the person referred

to in section 35F for an offence under this Act, the provisions of

sub-section (5) of section 37A shall, so far as may be, apply in rela-

tion to such books of account or other documents or, as the case may

be, the articles or things including money, covered by such note or

inventory.".

tOl. Section 36 of the Wealth-tax Act shall be omitted.

102. For section 37A of the Wealth-tax Act, the following

sections

shall be substituted, namely: —

'37A. (1) Where the Director of Inspection or the Commissioner

or any such Deputy Director of Inspection or Inspecting Assistant

Commissioner as may be empowered in this behalf by the Board,

in consequence of information in his possession, has reason to believe

that—

(a) any person to whom a notice under sub-sec lion (4) of

section 16 or a summons under section 37 was issued to produce,

or cause to be produced, any books of account or other docu-

ments, has omitted or failed to produce, or cause to be produced,

such books of account or other documents as required by such

notice or summons, or

(b) any person to whom a notice or summons as aforesaid

has been or might be issued will not, or would not, produce, 01

cause to be produced, any books of account or other documents

which will be useful for, or relevant to, any proceeding under

this Act, or

cluding money disproportionate to his known assets, particulars

of which will be useful for, or relevant to, any proceeding under

this Act,

then,—

(A) the Director of Inspection or the Commissioner, IL ;^e

case may be, may authorise any Deputy Director of Inspection,

Inspecting Assistant Commissioner, Assistant Director of Inspec-

tion or Wealth-tax Officer, or

Omission

section 38.

Substitu-

tion of

new aec-

tions for

section

37A.

Powar of

and

seizure.

346

THE GAZETTE OF INDIA EXTRAORDINARY

[.PART II —

(B) such Deputy Director of Inspection or Inspecting Assis-

tant Commissioner may authorise any Assistant Director of

Inspection or Wealth-tax Officer,

(the officer so authorised in all cases being hereafter in this section

referred to as the authorised officer) to—

(i) enter and search any building, place, vessel, vehicle or

aircraft where he has reason to suspect that such books of ac-

count or other documents, articles or things including money

are kept;

(li) search any person who has got out of, or is about to get

into, or is In, the building, place, vessel, vehicle or aircraft, if

the authorised officer has reason to suspect that such person has

secreted about his person any such books of account or other

documents, articles or things including money;

(iil) break open the lock of any door, box, locker, safe,

almirah or other receptacle for exercising the powers conferred

by clause (i) where the keys thereof are not available;

(iv) seize any such books of account or other documents;

(u) place marks of Identification on any such books of ac-

count or other documents or make, or cause to be made, extracts

or copies therefrom;

(vi) make a note or an inventory of any articles or things

including money found which, in his opinion, will De usefulfor,

or relevant to, any proceeding under this Act:

Provided that where any building, place, vessel, vehicle or air-

craft referred to in clause (i) is within the area of jurisdiction of

any Commissioner but such Commissioner has no jurisdiction over-

the person referred to in clause (o) or clause (b) or clause (c) (if

this sub-section, then, notwithstanding anything contained in section

10, it shall be competent for him to exercise the powers under this

sub-section in all cases where he has reason to believe that any delay

in getting the authorisation from the Commissioner having jurisdic-

tion over such person may be prejudicial to the interests of the

revenue.

(2) Where any Commissioner, in consequence of Information in

his possession, has reason to suspect that any books of account or

other documents, articles or things including money In respect of

which an officer has been authorised by the Director of Inspection

or any other Commissioner or any such Deputy Director of Inspec-

tion or Inspecting Assistant Commissioner as may be empowered

in this behalf by the Board to take action under clauses (i) to (vi)

of sub-section (1) are kept in any building, place, vessel, vehicle or

aircraft not mentioned in the authorisation under sub-section (1),

such Commissioner may, notwithstanding anything contained in sec-

tion 10, authorise the said officer to take action under any of the

clauses aforesaid in respect of such building, place, vessel, vehicle

or aircraft.

(3) The authorised officer may requisition the services of any

police officer or of any officer of the Central Government, or of both

to assist hhn for all or any of the purposes specified in sub-section

SEC, 1]

THE GAZETTE OF INDIA EXTRAORDINARY

347

(1) or sub-section (2) and it shall be the duty ot every such officer

to comply with such requisition.

(4) The authorised officer may, during the course of the search

or seizure, examine on oath any person who is found to be in posses-

sion or control of any books of account or other documents, articles

or things including money and any statement made by such person

during such examination may thereafter be used in evidence in any

proceeding under this Act,

(5) Where any books of account or other documents, articles or

things including money are found in the possession or control of any

person in the course of a search, it may be presumed that—

(i) such books of account or other documents, articles or

things including money belong to such person;

(ii) the contents of such books of account or other docu-

ments are true; and

(In) the signature and every other part of such books of

account or other documents which purport to be in the hand-

writing of any particular person or which may reasonably be

assumed to have been signed by, or to be in the handwriting of,

any particular person, are in that person's handwriting, and in

the case of a document stamped, executed or attested, that it was

duly stamped and executed or attested by the person by whom

it purports to have been so executed or attested.

(6) The books of account or other documents seized under sub-

section (1) or sub-section (2) shall not be retained by the authorised

officer for a period exceeding one hundred and eighty days from

the date of the seizure unless the reasons for retaining the same are

recorded by him in writing and the approval of the Commissioner

for such retention is obtained:

Provided that the Commissioner shall not authorise the reten-

tion of the books of account or other documents for a period exceed-

ing thirty days after all the proceedings under this Act in respect

of the years for which the books of account or other documents are

relevant are completed.

(7) The person from whose custody any books of account or

other documents are seized under sub-section (I)

or sub-section

(2) may make copies thereof, or take extracts therefrom, in the

presence of the authorised officer or any other person empowered

by him in this behalf at such place and time as the authorised officer

may appoint in this behalf.

(8) Where the authorised officer has no jurisdiction over the

person referred to in clause (a) or clause (fa) or clause (c) of sub-

section (1), the books of account or other documents seized under

that sub-section shall be handed over by the authorised officer to

the Wealth-tax Officer having jurisdiction over such person within

a period of fifteen days of such seizure and thereupon the powers

exercisable by the authorised officer under sub-section (6) or sub-

section (7) shall be exercisable by such Wealth-tax Officer.

(9) If a person legally entitled to the books of account or other

documents seized under sub-section (I) or sub-section (2)

objects

348

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

for any reason to the approval given by the Commissioner under

sub-section (6), he may make an application to the Board stating

therein the reasons for such objection and requesting for the return

of the books of account or other documents.

(10) On receipt of the application

under sub-section (9),

the

Board may, after giving the applicant an opportunity of being heard,

pass such orders thereon as it thinks fit.

{11) The provisions of the Code of Criminal Procedure,

1973

relating to searches shall apply, so far as may be, to searches under

this section.

(12) The Board may make rules in relation

searches

seizure under this section; and in particular and without prejudice

to the generality of the foregoing power, such rules may provide

for the procedure to be followed by the authorised officer—

(i) for obtaining ingress into any building,

place,

vessel,

vehicle or aircraft to be searched where free ingress thereto is

not available;

{ii) for ensuring the safe custody of any books of account

or other documents seized.

2 of 1974.

37B. (1) Where the Director of Inspection or the Commissioner,

in consequence of information in his possession, has reason to believe

that—

(a) any person to whom a notice under sub-section (4) of

section 16 or a summons under section 37 was issued to produce,

or cause to be produced, any books of account or other docu-

ments has omitted or failed to produce, or cause to be produced,

such books of account or other documents as required by such

notice or summons and the said books of account or other docu-

ments have been taken into custody by any officer or authority

under any other law for the time being in force, or

(b) any books of account or other documents will be useful

for, or relevant to, any proceeding under this Act and any per-

son to whom a notice or summons as aforesaid has been or might

be issued will not, or would not, produce or cause to be produc-

ed such books of account or other documents on the return of

such books of account or other documents by any

officer

authority by whom or which such books of account or other

documents have been taken into custody under any other law

for the time being in force, or

to the known assets of any person, particulars of wnich will be

useful for, or relevant to, any proceeding under this Act, have

been taken into custody by any officer or authority, under any

other law for the time being in force, from the possession of such

person,

then, the Director of Inspection or the Commissioner may authorise

any Deputy Director

Inspection, Inspecting Assistant Commis-

sioner. Assistant Director of Inspection or Wealth-tax Officer (here-

Power tt>

requisi-

tion book*

account,

etc.

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

349

after in this section referred to as the requisitioning officer) to re-

quire such officer or authority,—

(i) in a case falling under clause (a) or

clause

(b),

deliver such books of account or other documents to the requi^

sitioning officer;

(ii) in a case falling under clause (c), to furnish a note or

an inventory of such articles or things including money to the

requisitioning officer.

(2) On a requisition being made under sub-section (1),—

(i) in a case falling under clause (a) or clause (b) of that

sub-section, the officer or authority referred to therein

shall

deLver the books of account or other documents to the requisi-

tioning officer either forthwith or when such officer or authority

is of the opinion that it is no longer necessary to retain the same

in his or its custody;

(ii) in a case falling under clause (c), the officer or autho-

rity referred to therein shall furnish the note or inventory to

the requisitioning officer within a reasonable period.

(3) Where any books of account or other documents have been

delivered to the requisitioning officer, the provisions of sub-sections

(5) to (12) (both inclusive) of section 3TA shall, so far as may be,

apply as if such books of account or other documents had been seized

under sub-section (1) of that section by the requisitioning officer

from the custody of the person referred to in clause (a) or clause

(b), as the case may be, of sub-section (1) of this section and as if

for the words "the authorised officer" occurring in any of the afore-

said sub-sections, the words "the requisitioning officer' were sub-

stituted.¹.

103. In section 42A of the Wealth-tax Act,—

(i) in sub-section (1), after the word "proceedings", the words

"or prosecutions" shall be inserted;

(ii) for sub-section (2), the following sub-section shall be sub-

stituted, namely: —

" (2) No publication under this section shall be made in rela-

tion to any penalty imposed under this Act until the time for

presenting an appeal to the Appellate Assistant Commissioner

has expired without an appeal having been presented or

the

appeal, if presented, has been disposed of.".

Amend-

ment of

section

42A.

104. After section 42B of the Wealth-tax Act, the following section

shall be inserted, namely: —

"42C. No return of wealth, assessment, notice, summons or other

proceeding furnished or made or issued or taken or purported to have

been furnished or made or issued or taken in pursuance of any of the

provisions of this Act shall be invalid or shall be deemed to be in-

valid merely by reason of any mistake, defect or omission in such

Insertion

of new

section

42C.

Return of

wealth,

etc., not

to be in-

valid on

certain

grounds.

35o

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

return of wealth, assessment, notice, summons or other proceeding

if such return of wealth, assessment, notice, summons or other pro-

ceeding is in substance and effect in conformity with or according

to the intent and purpose of this Act.".

105. In sub-section (4) of section 46 of the Wealth-tax Act,—

(i) for the words "or in two successive sessions", the words

"or in two or more successive sessions" shall be substituted;

(ii) for the words "in which it is so laid or the session imme-

diately following", the words "immediately following the session or

the successive sessions aforesaid" shall be substituted.

Amend-

ment of

section

46.

CHAPTER IV

AMENDMENTS TO THE GIFT-TAX ACT, 1958

106. In Chapter II of the Gift-tax Act, 1958 (hereafter in this Chapter

referred to as the Gift-tax Act), after section 6, the following section

shall be inserted, namely: —

"6A, Notwithstanding anything contained in this Act, where an

assessee has made taxable gifts during any previous year and has

also made taxable gifts (not being gifts made at any time before the

1st day of June, 1973) during any one or more of the four previous

years immediately preceding such previous year, the gift-tax pay-

able by him for the assessment year relevant to such previous year

(hereafter in this section referred to as the assessment year) shall

be determined in the following manner, namely: —

(a) the value of the taxable gifts made during any one or

more of the four previous years immediately preceding such

previous year shall be aggregated with the value of the taxable

gifts made by the assessee during such previous year and gift-

tax shall be calculated on the aggregate value at the rate or

rates applicable for the assessment year;

(b) from the amount of gift-tax calculated

under clause

(a), there shall be deducted an amount equal to the gift-tax

payable had the value of the taxable gifts made during one or

more of the four previous years immediately preceding

such

previous year been aggregated and tax levied thereon at the

rate or rates applicable for the assessment year, and the balance

shall be the amount of gift-tax payable by the assessee.".

18 of 1958.

Insertion

of new-

section

6A.

Aggrega-

tion of

gilts

made

during a

certain

period.

107. In section 7 of the Gift-tax Act, for the proviso, the following

proviso shall be substituted, namely: —

"Provided that where two or more Income-tax Officers have

jurisdiction or exercise powers under the Income-tax Act in respect

of any person, they shall have /concurrent jurisdiction and shall

perform their functions of a Gift-tax Officer under this Act in res-

pect of such person in accordance with such general or special

Amend-

ment of

section 7,

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

orders in writing as the Commissioner or the Inspecting Assistnnt

Commissioner authorised by the Commissioner in this behalf, may

make for the purpose of facilitating the performance of such func-

tions."*

108. After section 7A of the Gift-tax Act, the following section shall

be inserted, namely: —

"7AA. (1) The Commissioner may, by general or special order

in writing, direct that all or any of the powers or functions conferred

on or assigned to the Gift-tax Officer or Gift-tax

Officers

by or

under this Act in respect of any area, or cases or classes of cases,

or persons or class of persons, shall

be exercised

performed

concurrently by the Inspecting Assistant Commissioner.

(2) Where

under

sub-section

(1), an Inspecting

Assistant

Commissioner exercises concurrent jurisdiction

with one or more

Gift-tax Officers in respect of any area, cases or classes of cases,

persons or classes of persons, the Gift-tax Officer or Gift-tax Officers

shall exercise the powers and perform the functions under this Act

in relation thereto as the Inspecting Assistant Commissioner

may

direct.

(3) Without prejudice to the

generality

the provisions

contained in sub-section (2) of section 12, every Gift-tax Officer shall

also observe and follow such Instructions as may be issued to him

for his guidance by the Inspecting Assistant Commissioner withiu

whose jurisdiction he performs his functions in relation to any

particular proceeding or the initiation of any proceeding under thig

Act:

Provided that no

instructions which are

prejudicial

the

assessee shall be issued before an opportunity is given to the assessee

to be heard.

Explanation.—For the purposes of this sub-section, no instruction

as to the lines

on which an investigation connected

with

the

assessment should be made shall be deemed

to be an instruction

prejudicial to the assessee.

(4) Where an order is made under

sub-section

(1)

and the

Inspecting Assistant Commissioner exercises the powers or performs

the functions of a Gift-tax Officer in respect of any case or person or

proceeding under this Act, references in this Act or in any rule made

thereunder

to the Gift-tax

Officer

and the Appellate

Assistant

Commissioner

shall be construed as references

to the

Inspecting

Assistant Commissioner and the

Commissioner

respectively

and,

accordingly,—

(i) any provision of this Act requiring approval or sanction

of the Inspecting Assistant Commissioner shall not apply;

Insertion

of new-

flection

7AA.

Concur-

rent

jurisdic-

tion of

Inspect-

ing Assis-

tant Com-

missioner

and

Gift-to*

Officer,

Q<2

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(ii) any appeal which would otherwise. have lain to the

Appellate Assistant Commissioner shall lie to the Commissioner;

(in) any appeal which would have lain from an order of the

Appellate Assistant Commissioner to the Appellate Tribunal shall

lie from the order of the Commissioner.".

109. For sub-section (1) of section 7B of the Gift-tax Act, the follow-

ing sub-section shall be substituted, namely: —

"(1) The Commissioner may, after giving the assesses a reason-

able opportunity of being heard In the matter, wherever it Is possi-

ble to do so, and after recording his reasons for doing so, transfer

any case from one or more of the following officers subordinate to

him, namely: —

(a) any Gift-tax Officer or Gift-tax Officers,

(b) any Gift-tax Officer or Gift-tax Officers having con-

current jurisdiction with the Inspecting Assistant Commissioner,

to any other Gift-tax Officer or Gift-tax Officers (whether with or

without concurrent jurisdiction with the Inspecting Assistant Com-

missioner) also subordinate to him and the Board may similarly

transfer any case from—

(i) any Gift-tax Officer or Gift-tax Officers, or

(ii) any Gift-tax Officer or Gift-tax Officers having con-

current jurisdiction with the Inspecting Assistant Commissioner,

to any other Gift-tax Officer or Gift-tax Officers (whether with or with-

out concurrent jurisdiction with the Inspecting Assistant Commis-

sioner) :

Provided that nothing in this sub-section shall be deemed to re-

quire any such opportunity to be given where the transfer Is from

any Gift-tax Officer or Gift-tax Officers to any other Gift-tax Officer

or Gift-tax Officers (whether with or without concurrent jurisdic-

tion with the Inspecting Assistant Commissioner) to any other Gift-

tax Officer ot Gift-tax Officers (whether with or without concurrent

jurisdiction with the Inspecting Assistant Commissioner) and the

offices of all such officers are situated in the same city, locality or

place:

Provided further that,—

(a) where any case has been transferred from any Gift-tax

Officer or Gift-tax Officers to two or more Gift-tax Officers, the

Gift-tax Officers to whom the case is so transferred shall have

concurrent jurisdiction over the case and shall perform their func-

tions in accordance with such general or special orders in writ-

ing as the Board or the Commissioner or the Inspecting Assistant

Commissioner, authorised by the Commissioner in this behalf,

may make for the purpose of facilitating the performance of such

functions,

(b) where any case has been transferred from any Gift-

tax Officer or Gift-tax Officers (whether with or without concur-

rent jurisdiction with the Inspecting Assistant Commissioner)

Amend,

ment of

section

7B.

SEC. 1]

TFtE GAZETTE OF INDIA EXfttAOkDlNARY

353

to two or more Gift-tax Officers with concurrent jurisdiction

with the Inspecting Assistant Commissioner, the officers (inclu-

ding the Inspecting Assistant Commissioner) to whom the case

is so transferred shall have concurrent jurisdiction over such

case and shall perform their functions in accordance with such

general or special orders in writing as the Board or the Commis-

sioner may make for the purpose of facilitating the performance

of such functions and the Gift-tax Officers shall perform their

functions also in accordance with such orders or directions as the

Inspecting Assistant Commissioner may make under section 7 cr,

as the case may be, under sub-section (2) of section 7AA.".

110. In section 11AA of the Gift-tax Act, after clause (b), the follow-

ing clause shall be inserted, namely: —

"(c) in a case where two or more Gift-tax Officers have con-

current jurisdiction over such assessee in respect of such function,

be the Gift-tax Officers empowered to perform such function by the

Board or, as the case may be, the Gift-tax Officers to whom such

function has been assigned by an order of the Commissioner or by an

order or a direction of the Inspecting Assistant Commissioner under

section 7 or, as the caau may be, under sub-section (2) of section

7AA.".

Amend-

ment of

section

UAA.

111. In section I4A of the Gift-tax Act, for clauses (c) and (d), the

following clauses shall be substituted, namely: —

"(c) in the case of a company, by the managing director thereof

or where for any unavoidable reason such managing director is not

able to sign and verify the return or where there is no managing

director, by any director thereof;

(d) in the case of a firm, by the managing partner thereof or

where for any unavoidable reason such managing partner is not

able to sign and verify the return, or where there is no managing

partner as such, by any partner thereof, not being a minor;".

Amend,

merit of

section

14A.

112. After section 16 of the Gift-tax Act, the following section shall

be inserted, namely:—

"16A. (I) No order oi assessment shall be made under section 1$

tit any time after the expiration of a period of—

(a) four years commencing on and from the 1st day of April.

1975 or one year from the date of the filing of a return or a re-

vised return under section 14, whichever is later, where the

assessment year is an assessment year commencing before that

date;

(b) four years from the end of the assessment year in which

filing of a return or a revised return under section 14, whichever

Insertion,

of new

lection

18A.

Time

limit for

comple-

tion of

uses*,

ment

and

re-assess-

ment

354

THE GAZETTE OF INDiA EXTRAORDINARY

[PART U-

is later, where the assessment year is an assessment year com-

mencing on or after the 1st day of April; 1975.

(2) No order of assessment or re-assessment Shall be nlade under

section 16,—

(a) where any proceeding for an assessment dr a re-assess*

ment is pending on the 1st day of April, 1975, at any time after

the expiration of a period of four years commencing on and from

that date;

(b) where the assessment or re-assessment is to be made in

a case falling within clause (a) of sub-section (1) of section 16

for which a notice has been served under that sub-section on or

after the 1st day of April, 1975, at any time after the expiration

of a period of four years from the end of the assessment year in

which the said notice was served;

a case falling within clause (b) of sub-section (2) of section 16

for which a notice has been served under that sub-section on or

after the 1st day of April, 1975, after the expiration of a period

of—

(i) four years from the end of the assessment year in

which the gifts were first assessable, or

(ii) one year from the date of service of such notice,

whichever period expires later.

(3) Notwithstanding anything contained in sub-sections (2) and

(2), an order of fresh assessment in pursuance of an order passed

on or after the 1st day of April, 1975 under section 22, section 23 or

section 24, setting aside or cancelling an assessment, may be made

at, any time before the expiry of four years from the end of the finan-

cial year in which the order under section 22 or section 23 is received

by the Commissioner or, as the case may be, the order under section

24 is passed by the Commissioner.

(4) The provisions of sub-sections (I) and (2) shall not apply to

the assessment or re-assessment made on the assessee in consequence

of, or to give effect to, any finding or direction contained in an order

under section 22, section 23, section 24, section 26 or section 28 or in

an order of any court in a proceeding otherwise than by way of

appeal or reference under this Act and such assessment or re-assess-

ment may, subject to the provisions of sub-section (3), be completed

at any time.

Explanation 1.—In computing the period of limitation for

the

purposes of this section—

(i) the time taken in reopening the whole or any part of the

proceeding or In giving an opportunity to the assessee to be re-

heard under the proviso to section 38, or

(ii) the period during which the assessment proceeding Is

»tay«d by an order or injunction of any court,

shall be excluded,

SEC. I]

THE GAZETTE Oh INDIA bXTRAORDJMARV

355

Explanation 2.—Where, by an order referrecT to in

sub-section

(4), any gift is excluded from the taxable gifts for

an assessment

year in respect of an assessee, then, an assessment of such gift

for

another assessment year shall, for the purposes of sub-section (2) of

section 16 and this section, be deemed to be one made in consequence

of, or to give effect to, any finding or direction contained in the said

order.".

113. In section 17 of the Gift-tax Act,—

(i) in sub-section (/), in clause (i), the words "but not exceed-

ing in the aggregate fifty per cent, of the assessed tax"

shall be

omitted;

(it) in sub-section (3), for the words "the Gift-tax Officer shall

refer the case to the Inspecting Assistant Commissioner who shall,

for the purpose, have all the powers conferred under this section for

the imposition of penalty", the

following shall be

substituted,

namely: —

"the Gift-tax Officer shall not make any order for payment, by

way of penalty, without the previous approval of the Inspecting

Assistant Commissioner".

Amend,

znent of

section

17.

114. After section 17 of the Gift-tax Act, the following section shall

be inserted, namely: —

Insertion

of new-

section

17A.

"17A. (i) If a person,—

(a) being legally bound to state the truth of ,any matter

touching the subject of his assessment, refuses to answer

any

question demanded of him by a Gift-tax Officer or an Appellate

Assistant Commissioner or an Inspecting Assistant Commissioner

or a Commissioner in the exercise of his powers under this Act, or

(b) refuses to sign any

statement

made by him in

the

course of any proceeding under this Act which a GifMax Officer

ox an Appellate Assistant Commissioner or an Inspecting Assis-

tant Commissioner or a Commissioner may legally require

him to sign,

he shall pay, by way of penalty, a sum which may extend to one

thousand rupees.

(2) If a person, witnout reasonable cause or excuse, lairs

furnish within the time specified any statement or information which

such person is bound to furnish to the Gift-tax Officer under sec-

tion 37, he shall pay, by way of penalty, a sum which may extend

to ten rupees for every day during which the failure continues.

(3) No order shall

be made

under

this section

except by

an Appellate Assistant Commissioner or an Inspecting Assistant

Commissioner or a Commissioner, and where a contravention, failure

or default for which any penalty is imposable

under this

section

Penalty

for

failure

to answer

questions,

sign

state.

ments,

etc.

356

THE GAZETTh Oh INDIA EXTRAORDINARY

[JPAUT 11—

occurs in the course of any proceeding before a Gift-tax Officer, the

Gift-tax Officer shall refer the case to the Inspecting Assistant Com-

missioner for passing such orders as he deems fit.

(4) No order under this section shall be passed by any officer

referred to in sub-section (3) unless the person on whom the

penalty is proposed to be imposed is given an opportunity of being

heard in the matter by such officer.".

115. For section 18 of the Gift-tax Act, the following section shall be

;ubstituted, namely: —

"18. If a person making a taxable gift pays into the treasury

within fifteen days of his making the gift any part of the amount

of tax due on the gift calculated at the rates specified in the Sche-

dule or, in a case where the provisions of section 6A are applicable

to a gift, in the manner specified in that section, he shall, at the time

of assessment under section 15, be given credit—

(i) for the amount so paid; and

(ii) for a sum equal to one-ninth of the amount so paid,

so however, that such sum shall in no case exceed one-tenth

of the tax due on the gift.

Explanation.—If a person makes more than one taxable gift in

the course of a previous year, the amount of tax due on any one oi

such gifts shall be the difference between the total amount of tax due

on the aggregate value of all the taxable gifts so far made, including

the taxable gift in respect of which tax has to be paid, calculated

at the rates specified in the Schedule or, as the case may be, in the

manner specified in section 6A, and the total amount of tax on the

aggregate value of all the gifts made during that, year, excluding

the taxable gift in respect of which tax has to be paid, calculated at

the rates specified in the Schedule or, as the case may be, in the

manner specified in section 6A.".

Substitu-

tion of

new

section

for

section

18.

Rebate on

advance

pay-

ments.

ll«. In sub-section (1) of section 23 of the Gift-tax Act —

(i) for the words and figures "under section 17", the words,

figures and letter "under section 17 or section 17A" shall be subs-

tituted;

(ii) for the words, brackets and figures "under sub-section (3)

of section 17", the words, figures and letter "under section 17A"

shall be substituted.

Amend,

ment of

section

23.

117. In sub-section (1) of section 25 of the Gift-tax Act, for the words

and figures "under section 17", the words, figures and letter "under sec-

tion 17 or section 17A" shall be substituted.

Amend,

ment ot

section

29.

SEC. JJ

THE GAZUTTE OF INDIA EXTRAORDINARV

357

118. In section 33A of the Gift-tax Act, after

sub-section (3), the

following sub-section shall be inserted, namely:—

"(3A) Where the whole or any part of the refund referred to in

sub-section (3) is due to an assessee as a result of any amount having

been paid by him after the 31st day of March, 1975, in pursuance of

any order of assessment or penalty and such amount or any part

thereof having been found in appeal or other proceeding under this

Act to be in excess of the amount which such assessee is liable to pay

as tax or penalty, as the case may be, under this Act, the Centra]

Government shall pay to such assessee simple interest at the rate

specified in sub-section (3) on the amount so found to be in excess

from the date op which such amount was paid to the date on which

the refund is granted:

Provided that, where the amount so found to be in excess was

paid in instalments, such interest shall be payable, on the amount

of each such instalment or any part of such instalment, which was in

excess, from the date on which such instalment was paid to the date

on which the refund is granted:

Provided further that no interest under this sub-section shall be

payable for a period of one month from the date of the passing of

the order in appeal or other proceeding:

Provided also that where any interest is payable to an assessee

under this sub-section, no interest under sub-section (3) shall be pay-

able to him in respect of the amount so found to be in excess.".

Amend-

mtutflfl

section

33A.

119. In sub-section (7) of section 35 of the Gift-tax Act,—

(i) in clause (b), the words, brackets and figure "sub-section (2)

or" shall be omitted;

(ii) clause (c) shall be omitted

Amend-

ment of

section

30.

120. After section 35 of the Gift-tax Act) the following sections shall

be inserted, namely: —

Insertion

of new

sections

35A, 35B

and 36C.

'35A. (1) Where an offence under this Act has been committed

by a company, every person who, at the time the offence was com-

mitted, was in charge of and was responsible to, the company for the

conduct of the business of the company, as well as the company,

shall be deemed to be guilty of the offence and shall be liable to be

proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render

any such person liable to any punishment if he proves that

the

offence was committed without his knowledge or that he had exercis-

ed all due diligence to prevent the commission of such offence.

Offences

by cdm-

paniea.

358

THE GAZETTE OF INDIA EXTRAORDINARY

[PART If—

(2) Notwithstanding anything contained in sub-section (1), where

an offence under this Act has been committed by a company and it

is proved that the offence has been committed with the consent or

connivance of, or is attributable to any neglect on the part of, any

director, manager, secretary or other officer of the company, such

director, manager, secretary or other officer shall also be deemed

to be guilty of that offence and shall be liable to be proceeded against

and punished accordingly.

Explanation.—For the purposes of this section,—

(a) "company" means a body corporate, and includes—

(i) a firm, and

(ii) an association of persons or a body of individuals,

whether incorporated or not; and

(b) "director", in relation to—-

(i) a firm, means a partner in the firm,

(ii) an association of persons or a body of individuals,

means any member controlling the affairs thereof.

35B. (1) Where an offence under this Act has been committed

by a Hindu undivided family, the Karta thereof shall be deemed to

be guilty of the offence and shall be liable to be proceeded against

and punished accordingly:

Provided that nothing contained in this sub-section shall render

the Karta liable to any punishment if he proves that the offence was

committed without his knowledge or that he had exercised all due

diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in

sub-section

(1),

where an offence under this Act has been committed by a Hindu un-

divided family and it is proved that the offence has been committed

with the consent or connivance of, or is attributable to any neglect

on the part of, any member of the Hindu undivided family,

such

member shall also be deemed to be guilty of that offence and shall

be liable to be proceeded against and punished accordingly.

Offences

by Hindu

undivided

families.

35C. Nothing contained in section 360 of the Code of Criminal

Procedure, 1973, or in the Probation of Offenders Act, 1958, shall

apply to a person convicted of an offence under this Act unless that

person is under eighteen years of age.'.

2 of 1074.

20 of 1958.

Section

360 of the

Code of

Criminal

Procedure,

1973, and

the Proba-

tion of

Offenders

Act, 1958,

not to

apply.

Amend-

ment of

section

MA.

121. In section 41A of the Gift-tax Act,—

(i) in sub-section (1), after the word "proceedings", the words

"or prosecutions'' shall be inserted;

SEC. 1]

THE GAZETTE OF INDIA EXTRAORDINARY

359

(ii) for sub-section (2), the following sub-section shall be sub-

stituted, namely: —

" (2) No publication under this section shall be made in re-

lation to any penalty imposed under this Act until the time for

presenting an appeal to the Appellate Assistant

Commissioner

has expired without an appeal having been presented

or the

appeal, if presented, has been disposed of.".

122. After section 41B of the GifL- ax Act, the following section shall

h". inserted, namely: —

"41C. No return of gifts, assessment, notice, summons or other

proceeding, furnished or made or issued or taken or

purported to

have been furnished or made or issued or taken In pursuance of any

of the provisions of this Act shall be invalid or shall be deemed to be

invalid merely by reason of any mistake, defect or omission in such

return of gifts,

assessment, notice, summons or other

proceeding,

if such return of gifts, assessment, notice, summons or other

pro-

ceeding is in substance and effect in conformity with or according

to the intent and purpose of this Act".

Insertion

of new

section

41C.

Return

of gifts,

etc.,

not to

be in-

valid

on cer-

tain

grounds.

123. In sub-sectio>n (4) of section 46 of the Gift-tax Act,—

(i) for the words "or In two successive sessions", the words "or

in two or more successive sessions" shall be substituted;

(ii) for the words "in which it is so laid or the session imme-

diately following", the words "immediately following the session or

the successive sessions aforesaid" shall be substituted.

Amend-

ment of

section

46.

CHAPTER V

AMENDMENTS TO THE COMPANIES (PROFITS) SUHTAX ACT, 1964

124. In section 18 of the Companies (Profits) Surtax Act, 1964 [here-

after in this Chapter referred to as the Companies

(Profits)

Surtax

Act],-

(i) after the figures "125", the figures and letter ", 125A" shall be

inserted;

(ii) after the figures and letter "132A", the figures

and letter

", 132B" shall be inserted;

(Hi) after the figures "281", the figures and letter ", 281B" shall

be inserted.

Amend-

ment of

section

18.

1 of 1064.

125. In sub-section (3) of section 25 of the Companies (Profits) Surtax

Act,—

(i) for the words "or in two successive sessions", the words "or

in two or more successive sessions" shall be substituted;

Amend-

ment of

section

211.