Notice section 133(6)

 Section 133(6) of the Income Tax Act, 1961 grants the Income Tax Department the power to gather information from third parties for the purpose of tax investigation. This section is primarily used by tax authorities to issue notices to persons (including banks, financial institutions, and others) to obtain details regarding a taxpayer’s income, assets, or transactions.

Key Provisions of Section 133(6) of the Income Tax Act:

1. Power to Collect Information:

   • The section empowers the Assessing Officer (AO) to issue a notice to any person, including a bank, financial institution, or any other individual, to provide information about the taxpayer (either an individual or an entity) that is required for the proper assessment of income.

2. Scope of Information:

   • The notice can demand information related to:
     • Bank accounts
     • Details of financial transactions
     • Investments or income details of a taxpayer
     • Any other information relevant to tax matters that can help assess the income of the person being investigated.

3. Timeframe for Response:

   • The notice requires the person to whom it is issued to respond within a reasonable time (typically 30 days). The exact timeframe may vary depending on the nature of the request.

4. Enforcement:

   • If the person does not comply with the notice or refuses to provide the requested information, the Assessing Officer has the authority to take further action under the Income Tax Act, which could include penalties for non-compliance.

5. Third-party Information:

   • Section 133(6) is often invoked to request third-party information (e.g., from banks, employers, or others) who may have records that can assist the tax authorities in verifying income, deductions, or other relevant details for an individual's tax assessment.

Example Use Cases:

• Banks: The Income Tax department may issue a notice to a bank under Section 133(6) to provide details about an individual’s bank account, deposits, or other transactions, especially if the person is under investigation for tax evasion or failure to disclose income.

• Employers: An employer may be asked to provide details of a particular employee's salary and deductions as part of an investigation into the employee's tax returns.

Purpose:

The purpose of Section 133(6) is to enable the tax authorities to efficiently gather information to ensure that taxpayers are accurately reporting their income and paying the correct amount of taxes. This helps in preventing tax evasion and improving compliance with tax laws.

Penalties:

Failure to comply with the notice issued under Section 133(6) may result in penalties or other enforcement actions. The department can initiate proceedings for contempt of court or impose fines under other relevant provisions.

Conclusion:

Section 133(6) is an important tool for the Income Tax Department to collect information from third parties, which is crucial for tax assessment and investigation. It helps in ensuring that individuals and entities are following tax laws and reporting their income correctly.