The Income Tax Department treats tax compliance with utmost seriousness and is known for taking swift action against defaulters. For instance, in July 2023 alone, over 1 lakh notices were sent to individuals suspected of income misreporting or underreporting in their returns. Section 133(6) of the Income Tax Act allows the department to issue such notices to any taxpayer whose filings raise suspicion.
If you’ve recently received one of these notices, this guide will help you understand everything related to Section 133(6), including:
- Overview of Section 133(6)
- Applicable time frame
- Important case laws
- Authorized officials
- Responding to the notice
- Applicable penalties
What is Section 133(6) of the Income Tax Act?
Section 133(6) grants specific authorities within the income tax department the right to request information or documentation from taxpayers as part of investigations or assessments. This includes Income Tax Officers and other designated personnel who can issue such notices.
These notices may be directed toward individuals suspected of underreporting income, concealing income sources, or wrongly claiming deductions or exemptions. Notices can also stem from incomplete tax filings, active investigations, or failure to submit income tax returns.
Notably, these notices are not limited to taxpayers alone—any person who may possess relevant information about a taxpayer’s financial dealings can be asked to provide details. Compliance with such notices is mandatory, and individuals are expected to cooperate fully with the department.
Failure to respond can result in penalties imposed by the Assessing Officer handling the case.
Time Limit under Section 133(6)
Section 133(6) does not specify a strict time limit for issuing notices. The department holds the authority to request information or documents at any stage of a tax enquiry or proceeding.
If you’ve been served a notice regarding discrepancies in your filings, it’s essential to respond without delay. Make sure to submit all requested evidence or documentation within the time frame provided in the notice.
Key Case Laws Illustrating Section 133(6)
To better understand the application of Section 133(6), here are a couple of illustrative case examples:
Case 1:
Mr. A made a purchase of goods worth ₹10 lakh from Mr. B but failed to disclose this transaction in his tax return.
If the department flags this case for detailed scrutiny, Mr. A may receive a notice under Section 133(6) asking for details. He will be required to provide the invoice and, if necessary, update his return accordingly.
Case 2:
Mr. X, an Indian citizen until FY 2020, moved to the USA for work but continued to earn income in India through various investments. However, he didn’t file any income tax return for that period.
In this case, the department can issue a notice under Section 133(6), requesting details such as bank statements and demat account activity. Mr. X must comply within 20 days, failing which penalties may apply.
Who Is Authorized to Issue Notices Under Section 133(6)?
The following officials are empowered to issue notices under Section 133(6) in connection with tax proceedings or inquiries:
- Assessing Officer (AO)
- Deputy Commissioner (Appeals)
- Joint Commissioner
- Joint Commissioner (Appeals)
- Director General or Chief Commissioner
For cases involving non-residents or jurisdictions with DTAA (Double Taxation Avoidance Agreement), this authority is extended to officials ranked above Assistant Director or Assistant Commissioner.
How to Respond to Notices Under Section 133(6)?
When responding to a notice under Section 133(6), timeliness and clarity are crucial. You must furnish all required details and evidence as specified by the concerned officer.
Example:
If you’ve claimed HRA and are served a notice related to discrepancies, you’ll need to submit your salary slips and rent receipts. Similarly, for a claim like Leave Travel Allowance (LTA), you should share invoices, hotel bookings, and travel tickets.
Submission Methods:
- Offline: Visit your local Income Tax office and submit the documents in person.
- Online: Upload your response through the official income tax e-filing portal.
If you’re unsure about how to prepare your response, consulting a professional—like a tax consultant or chartered accountant—is advisable.
Helpful Tips for Filing a Response to Section 133(6) Notices
- Read the notice thoroughly to understand the issue at hand.
- Review your bank records and identify all sources of income.
- Be truthful and avoid misrepresenting facts.
- If you’re unable to respond within the stipulated time, contact the department to request an extension.
- If a tax professional handles your returns, include their name and contact details in your response.
Penalties Under Section 133(6) of the Income Tax Act
If you do not respond to a notice issued under Section 133(6), or if your response is found to be incomplete or unsatisfactory, you could face serious consequences:
- Issuance of Notice Under Section 148:
The Assessing Officer (AO) may treat your original return as invalid and issue a fresh notice under Section 148, requiring you to refile your return and explain any inconsistencies or unreported income. - Revised Return Requirement:
The Income Tax Department might instruct you to file a revised return, declare any additional income, or retract deductions/exemptions that lack valid documentation. - Penalty Under Section 272A(2):
Non-compliance can attract penalties under Section 272A(2) of the Income Tax Act. This includes a fine of ₹100 per day from the due date until compliance is completed. The longer the delay, the higher the penalty. - Severe Penalties for Misreporting:
If the enquiry reveals underreporting of income or unjustified claims for deductions, the consequences can be more severe:
- Interest at 12% per annum may be charged.
- A penalty of up to 200% of the tax evaded can be imposed.
- In extreme cases, criminal prosecution may result in imprisonment.
- Interest at 12% per annum may be charged.
Frequently Asked Questions (FAQs) on Section 133(6)
Q1. What should I do if I receive a notice under Section 133(6)?
A: You should read the notice carefully, gather all required documents, and respond promptly. It’s advisable to consult a tax advisor for guidance.
Q2. Is there a time limit to respond to the notice?
A: Yes, the notice will mention a specific deadline. You must submit your response within that period to avoid penalties.
Q3. Can I respond to the notice online?
A: Yes, responses can be submitted through the Income Tax Department’s official e-filing portal. Alternatively, you can also visit the local Income Tax Office.
Q4. What happens if I ignore the notice?
A: Ignoring the notice can lead to further notices under Section 148, penalties under Section 272A(2), and possibly prosecution in cases of serious violations.
Q5. Who can issue a notice under Section 133(6)?
A: Notices under this section can be issued by various income tax authorities, including the Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, Director General, or Chief Commissioner.
Q6. What kind of documents are generally required?
A: Commonly requested documents include salary slips, rent receipts, bank statements, investment proofs, and travel records depending on the reason for the notice.
