CAs, bissnessmen anxious as govt mulls to amend Finance Act

HYDERABAD: The proposed amendment in the Finance Act exempting income tax department from disclosing reasons before the appellate tribunal while conducting raids has got chartered accountants (CA)s and business sections worried.
The amendment would mean that income tax investigation wing will have a complete free hand. Under the new law, reasons for conducting the search can only be disclosed before the high court.
Tax practitioners fear that tax inspectors will have arbitrary powers as a result. “People should have the right to know the reasons why a search has been carried out against him. There have been cases when commissioner of Income Tax (CIT) appeals or the Income Tax Appellate Tribunal (ITAT) asks the investigation wing to disclose the basis of a raid. The proposed amendment does not make the tax department liable to disclose the reasons to either of the authorities,” Amruth Kumar Kota, a chartered accountant said.
As if this is not enough, the amendment has been made effective from 1975 onwards. Sources say that the root cause is a case filed by an assesses in the Supreme Court following a search in 1974.
“Now, tax officials need not disclose any reason for searches conducted” Shankar Sharma , a chartered accountant said. In cases where search conducted by investigation wing fails, the assesses files an appeal complaining of harassment.
Often, the investigation wing is asked to reveal the reasons for conducting the search. “With no accountability in the new law, there is a likelihood that searches may be conducted to harass people” S Harish Kumar, who owns an export firm said.