1. What is a Section 133(6) Notice?
A Notice under Section 133(6) of the Income-tax Act, 1961 is an important tool used by the Income-tax Department (ITD) to gather information that is relevant or necessary for any inquiry or proceeding under the Act. It is fundamentally an information-seeking notice, not an assessment or scrutiny notice in itself.
The key features of this notice are:
- Broad Power: It empowers the income-tax authority (ranging from an Assessing Officer to a Principal Commissioner) to require any person, including banking companies, stock exchanges, or any other entity, to furnish information, documents, or books of account that are relevant or useful for any ongoing or contemplated inquiry or proceeding.
- Information Gathering: Unlike notices under Section 142(1) or 148, which are typically issued to the assessee whose case is under scrutiny, a Section 133(6) notice can be issued to any third party who holds information relevant to an assessee. It can also be issued to the assessee themselves.
- Contemplated Inquiry: Crucially, this power can be exercised even if no formal proceeding is pending, provided the information is required for a contemplated inquiry. For example, the ITD may seek information from a bank about all high-value cash deposits to identify potential cases for scrutiny later.
Reference: Section 133(6) of the Income-tax Act, 1961.
2. Your Response to the Notice
Receiving a notice can be unsettling, but a Section 133(6) notice requires a calm, factual, and timely response.
A. Scrutinise the Notice
Before preparing the response, carefully examine the notice for:
- Issuing Authority: Ensure the notice is issued by a competent income-tax authority.
- Nature of Information Sought: Clearly understand what specific documents or details are being requested.
- Due Date: Note the deadline for compliance. Non-compliance by the due date can have serious consequences (see Section 3).
B. Prepare the Information
- Gather Requested Documents: Collect all the documents and information specifically requested.
- Factual and Accurate: The response must be factual, accurate, and supported by documentary evidence. Do not speculate or provide unverified information.
- Digital Submission: Most compliance today is managed through the e-filing portal. The response and documents must typically be prepared in the specified digital formats and uploaded through the designated online compliance/e-proceedings tab.
C. Legal Assistance
It is highly recommended to seek the assistance of a Chartered Accountant or a tax professional to review the notice and the draft response. This ensures that the information provided is compliant, legally sound, and does not inadvertently open up new avenues for scrutiny.
3. What Happens If You Don’t Respond to the Notice?
Non-compliance with a Section 133(6) notice is a serious matter and can attract penal provisions under the Income-tax Act.
A. Penalty under Section 272A(2)(c)
Failure to furnish the required information or documents without reasonable cause can attract a penalty under Section 272A(2)(c) of the Act.
- The penalty is Rs 10,000. for each such failure.
- If the failure continues, a further penalty can be levied.
B. Best Judgment Assessment (Indirectly)
If the notice was issued to the assessee directly (and not a third party) as part of an ongoing scrutiny or assessment proceeding, non-compliance could lead the Assessing Officer (AO) to make an assessment to the best of their judgment, often resulting in a higher tax demand.
C. Coercive Measures
In extreme cases of persistent non-cooperation or failure to provide crucial information, the authority may consider more coercive measures, though this is rare for a first-time failure to comply with a Section 133(6) notice.
4. Precautions to be Taken While Responding to 133(6) Notice
The response should be strategic and professional to ensure the matter is concluded efficiently without escalating into a full-blown assessment or scrutiny.
Key Precautions:
- Stick to the Scope: Only provide the information and documents specifically requested in the notice. Do not volunteer extra information, documents, or explanations that were not sought, as this can widen the scope of the inquiry.
- Maintain Consistency: The information provided must be consistent with your books of account, financial statements, and Income-tax Returns (ITRs) already filed. Any discrepancies must be reconciled and explained clearly.
- Clear Indexing and Referencing: When submitting multiple documents, provide a cover letter or an index clearly listing every document and linking it to the relevant requirement in the notice. This aids the officer’s review and establishes a clear audit trail.
- Maintain Proof of Submission: Always retain a copy of the notice, the complete response (including all annexures and documents), and the acknowledgement receipt from the e-filing portal. This is critical proof of compliance.
- Avoid Vague Explanations: If any transaction or entry is complex, provide a concise, clear, and objective explanation, backed by documentary evidence. Avoid vague or ambiguous statements that can be interpreted against you.
A Notice under Section 133(6) is a standard procedure for the Income-tax Department to conduct its duty of gathering information. Treating it with the professionalism and seriousness it deserves, coupled with timely and accurate compliance, is the most effective way to address it. When in doubt, always rely on the expertise of your professional tax advisor.
Disclaimer: The content of this article is for informational purposes only and does not constitute legal or professional advice. Readers should consult with a qualified tax professional before taking any action based on the information provided.
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