What Is Section 133 (6) of the Income Tax Act

Quick Overview

• It gives the powers to the tax authorities to request information from any person, including third parties.
• The act is included in the Income Tax Act, 1961.
• During assessment, inquiry or investigation proceedings, notices may be issued.
• Banks and other financial institutions can be instructed to disclose account information.
• Even in the absence of an assessment pending (subject to approvals), the notice may be issued.
• Failure to comply can be subject to punishment under the Act.
• Requested information may be in physical form or electronic form.
• It assists in identifying hidden income and unorthodox transactions.

Section 133 (6) of the Income-tax Act is a significant section that gives the income tax authorities the power to request information on taxpayers and third parties in the course of assessment or verification. This part is important in enhancing transparency, deterring evasion of taxes and making financial transactions subject to investigation.

In case you have been given a notice, and are confused about what section 133(6) of the Income Tax Act entails, this comprehensive guide would help you to understand the scope, intent, compliance, repercussions and other provisions under the Income Tax Act, 1961.

What Is Section 133(6) of the Income Tax Act?

Meaning and Scope of Section 133(6)

Income tax authorities have the powers to require any person, which includes banks, companies or financial institutions, to provide information that is pertinent to any proceeding under the act as mandated by section 133 (6) of the Income Tax Act.

The provision has a broad scope. It enables the authorities to gather:

• Financial details
• Bank account statements
• Transaction records
• Investment information
• Details of loans and deposits

Importantly, under section 133(6) of the Income Tax Act 1961, information may be sought not only from the taxpayer but also from third parties connected to the taxpayer’s financial affairs.

Purpose of Section 133(6)

The primary objectives include:

• Checking the income reported on tax returns.
• Probing into possible tax evasion.
• Collecting third-party data.
• Proper compliance with the tax laws.
• Enhancement of assessment and reassessment procedures.

The provision serves as a fact-finding mechanism of the Income Tax Department.

Importance of Section 133(6) of Income Tax Act

Clause 133(6) of income tax act plays a significant role in ensuring tax discipline in the nation. It makes sure that the authorities get access to credible and autonomous sources of financial information.

Its importance lies in:

• Increasing transparency in financial reporting.
• Cross-verification of disclosure by taxpayers.
• Identifying unreported bank accounts.
• Researching high-value transactions.
• Avoiding money laundering and tax evasion.

In the absence of such a provision, tax authorities would have a problem in authenticating information presented by taxpayers.

Authorities Empowered Under Section 133(6)

This section empowers a number of income tax authorities to issue notices.

Income Tax Officer

This power is usually exercised by the Assessing Officer (AO) to establish the claims shown in the return of income.

Assessing Officer

This power is usually exercised by the Assessing Officer (AO) to establish the claims shown in the return of income.

Joint Commissioner and Higher Authorities

More senior officials like Joint Commissioners and Commissioners can also make notices. In the case of no proceedings pending, some authorities might impose a prior approval before the power is exercised.

Who Can Be Asked to Provide Information Under Section 133(6)?

The scope of the section does not restrict itself to the assessee.

Taxpayers

Individual taxpayers, firms, LLPs, and companies may be requested to provide information that is related to their tax affairs.

Banks and Financial Institutions

Banks are often given notices that are requesting:

• Account statements
• KYC details
• Transaction summaries

They are legally obligated to comply.

Companies and Third Parties

Companies that have business dealings with the taxpayer may be required to provide:

• Payment details
• Contract copies
• Invoices

Other Persons Holding Relevant Information

Any person who holds relevant information connected to the inquiry can be served a notice.
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Types of Information That Can Be Requested Under Section 133(6)

The range of information that may be requested is extensive.

Bank Statements and Account Details

Authorities may seek:

• Savings and current account statements
• Fixed deposit details
• Foreign account information

Transaction and Investment Records

Details related to:

• Mutual fund investments
• Share transactions
• Property purchases
• High-value financial transactions

Books of Accounts and Documents

Businesses may be asked to produce:

• Ledger accounts
• Cash books
• Sales and purchase registers
• Financial statements

Details of Loans, Deposits, and Shareholdings

Information regarding:

• Loans taken or given
• Share capital contributions
• Deposits received
• Shareholding patterns

Conditions for Exercising Powers Under Section 133(6)

The authorities of section 133(6) of income tax act should be performed:

• In the interest of any proceedings under the Act.
• In connection with inquiry or investigation
• Where permission has been obtained (where necessary) beforehand (where no proceedings are pending).

The requested information should be pertinent and required to be tax purposes.

Time Limit Under Section 133(6) of Income Tax Act

The section itself does not stipulate any particular statutory time frame within which a notice should be issued. However:

• The notice shall state the time frame within which information shall be provided.
• Time restrictions usually take the scope of between 7 to 30 days, depending on the type of information sought.
• Where there is a valid request, extensions can be allowed.

Amendments to Section 133(6) of Income Tax Act

Through the years, the powers of the tax authorities have been increased through the amendments. A major modification made it clear that information may be requested in the absence of proceeding being taken, provided there are prescribed approvals.

This amendment enhanced the investigative powers of the department.
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How a Notice Under Section 133(6) Is Issued

A notice is generally issued:

• Through the Income Tax Department’s e-filing portal
• By registered post
• Through official electronic communication.

The notice will clearly mention:

• The authority issuing it
• Details of information required
• Relevant financial year
• Deadline for submission

How to Respond to a Notice Under Section 133(6) of Income Tax Act

In case you are given a notice, it is necessary to take action carefully and promptly.

Understanding the Information Requested

Read the notice thoroughly to identify:

• The specific documents required
• The financial year involved
• The purpose of the inquiry

Time Frame for Submission

Make sure that the answer is delivered before the deadline indicated in the notice. In case you need more time, you can apply for an extension.

Mode of Submission (Online or Offline)

The majority of the notices are answered via the e-filing portal of the income tax. Physical submission might be necessary in certain instances.

Record the acknowledgment of submission properly to be used later.

Consequences of Non-Compliance With Section 133(6) Notice

Ignoring a notice under section 133 (6) of income tax act can lead to:

• Monetary penalties
• Further scrutiny
• Best judgment assessment
• Prosecution in serious cases

Non-compliance may also create suspicion regarding concealment of income.

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Penalty for Non-Compliance Under Section 133(6)

Applicable Penalty Provisions

Failure to comply may attract a penalty under Section 272A(2)(c) of the Income-tax Act, which provides for a monetary penalty per day of default, subject to prescribed limits.

Situations Where Penalty May Be Waived

Penalty may be waived if:

• There was reasonable cause for non-compliance
• Delay was unintentional
• Genuine hardship is demonstrated

Each case is examined on its facts.

Key Case Laws Related to Section 133(6) of Income Tax Act

Courts have clarified that:

• Authorities can seek information from banks even if no assessment is pending (with proper approval).
• The power must not be exercised arbitrarily.
• The information sought must be relevant to tax proceedings.

Judicial decisions have upheld the wide scope of the provision while emphasizing safeguards against misuse.

Difference Between Section 133(6) and Section 142(1)

Basis	Section 133(6)	Section 142(1)
Purpose	To call for information from any person (including third parties) for inquiry or investigation.	To require the taxpayer (assessee) to furnish a return of income, accounts, or specific documents for assessment.
Nature of Power	Investigative and fact-finding in nature.	Procedural and assessment-oriented.
Applicability	Taxpayer and third parties such as banks, financial institutions, companies, or any person holding relevant information.	Primarily the assessee (taxpayer).
Stage of Proceedings	Can be used during inquiry, investigation, or even when no proceeding is pending (subject to approval).	Used after initiation of assessment proceedings or when a return has not been filed.
Requirement of Pending Proceedings	Not always necessary; information can be sought even without pending assessment (with proper approval).	Generally issued during assessment or reassessment proceedings.
Scope	Wide investigative power covering financial, transactional, and third-party records.	Focused on ensuring proper filing of return and submission of documents relevant to assessment.
Type of Information Requested	Bank statements, transaction details, investment records, third-party confirmations, loan details, etc.	Return of income, books of accounts, audit reports, statements of assets/liabilities, and other documents directly related to computation of income.
Target Audience	Any person who may possess relevant information.	Only the taxpayer concerned.
Objective	To verify information, detect undisclosed income, and gather evidence.	To enable the Assessing Officer to complete assessment properly.
Non-Compliance Consequences	May attract penalty under Section 272A(2)(c) and further investigation.	May lead to best judgment assessment under Section 144 and penalties.

Common Mistakes to Avoid While Responding to Section 133(6) Notice

• Ignoring the notice
• Providing incomplete information
• Missing submission deadlines
• Submitting unsigned or unauthenticated documents
• Failing to retain proof of submission

Professional advice may be helpful in complex cases.
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Conclusion: Understanding the Scope of Section 133(6) of Income Tax Act

The Section 133 6 Of Income Tax Act is a powerful investigative tool granted to income tax authorities under the Income-tax Act, 1961. It allows them to collect relevant financial information from taxpayers and third parties to ensure accurate tax assessments and prevent evasion.

Understanding what is section 133(6) of income tax act is essential for every taxpayer and financial institution. Timely and proper compliance not only avoids penalties but also ensures smooth tax proceedings.

FAQs

What is Section 133(6) of Income Tax Act?

It is a provision that empowers income tax authorities to call for information from taxpayers and third parties during inquiry, investigation, or assessment proceedings.

Who can issue a notice under Section 133(6)?

Income Tax Officers, Assessing Officers, Joint Commissioners, and other authorized officials can issue such notices.

Is Section 133(6) applicable only to taxpayers?

No. Banks, financial institutions, companies, and other third parties may also receive notices.

What happens if I ignore a Section 133(6) notice?

Non-compliance can result in penalties, further scrutiny, and adverse assessment orders.

Can banks share information without the taxpayer’s consent?

Yes. Under section 133(6) of the income-tax act 1961, banks are legally required to provide information when requested by authorized tax authorities.

Why is Section 133(6) of Income Tax Act important?

It ensures transparency, helps verify tax declarations, prevents evasion, and strengthens the integrity of the tax system.