Notice of Calling for Information u/s 133(6)

Recently, the Income Tax Department has been sending notices to taxpayers who requested a larger refund in prior fiscal years. The Income Tax Department is issuing notices pursuant to Section 133(6) of the 1961 Income Tax Act.

This document covers

What is 133(6)?
Who can issue the notices u/s 133(6)
Examples of Notice u/s 133(6)
Consequences of not complying with 133(6) of Income Tax Act.

1. What is 133(6)?

Section 133 deals with the Power to call for information by Income Tax Office
U/s 133(6), Income Tax officer can ask any person including a banking company or any officer to furnish information or statement of accounts and affairs which is required to complete any enquiry or proceedings under income tax act.

2. Who can issue the notices u/s 133(6)

The Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner or Joint Commissioner (Appeals) or the commissioner (Appeals) can issue the notices u/s 133(6)
If no proceeding is pending, notice u/s 133(6) shall not be issued by any income tax authority below the rank of principal director or director or principal commissioner or commissioner other than joint director or deputy director or assistant director without the prior approval of the Principal Director or Director or Principal Commissioner or Commissioner

3. Examples of Notice u/s 133(6)

3.1 Resident Example

Mr Paul was salaried employee and he was earning a salary of Rs 15 lakhs per annum and his TDS deducted by employer for FY 2021-22 was Rs 2.5 lakhs. He has filed his income tax return for AY 2022-23 and claimed a refund of Rs 2 lakhs after claiming various deductions and exemptions.

As Mr Paul has claimed more refund (more than 1 lakh), there is a chance that Mr Paul might get notice u/s 133(6) of Income Tax act.

If Mr Paul have all the proofs of deductions/exemptions claimed in income tax return, he needs to prepare a response and submit all the documents to the ITD.

If Mr Paul don’t have all the proofs of deductions/exemptions, he needs to pay the taxes along with penalty and submit the response.

3.2 Non-resident Example

Mr Shishpal is an Indian Citizen and he left to USA in 2017 for employment purpose. He has filed his income tax returns in India till 2017 but from 2018 he never filed the income tax returns in India assuming he is an NRI and not required to file tax returns in India. But he used to send the amount from foreign banks to Indian banks and he have financial interest outside India.

In this case, there is a high chance that Mr Shishpal will get notice u/s 133(6) asking him to submit passport, Foreign bank statements, source of income etc.

Therefore, EZTax advises NRIs to submit income tax returns in India even if they have no taxable income there.

4. Consequences of not complying with 133(6) of Income Tax Act.

The penalty for failing to comply with notices under section 133(6) of the income tax act is $500 per day under section 272A(2). The utmost penalty for each failure or default is Rs 10,000. In addition, interest and other penalties would be assessed for noncompliance.