Enhanced Income Tax Authority Survey Powers: Key Changes and Implications

Introduction

The powers of the Income Tax Authority to conduct surveys have evolved significantly with the enactment of the Income Tax Bill, 2025, along with amendments made in the Finance Acts of 2022, 2024, and 2025. This article aims to provide a clear and informative overview of these powers, detailing the essential facts, recent amendments, and the introduction of digital survey provisions.

Existing Provisions and Their Relevance

Survey Entry Powers

• Authority: Income Tax authorities are permitted to enter business, professional, or charitable premises within their jurisdiction to examine books, verify cash or stock, and record statements. However, they are not allowed to seize cash or valuables during surveys.

Timing

• Business Premises: Entry for surveys is permitted during regular business hours.
• Other Locations: Surveys may be conducted between sunrise and sunset.

Impounding Documents

• Books and documents can be confiscated, provided there are written justifications. The initial impoundment can last 15 days unless an extension is granted by higher authorities.

TDS/TCS Surveys

• For surveys focused on TDS/TCS compliance, officers are restricted to reviewing books and documents—not cash or stock.

Surveys at Events

• Surveys can take place during events or functions to gather information regarding the scale and nature of expenditures.

Recent Amendments (2022–2025)

1. Authority and Approvals

   • Authorization Requirements: Surveys can now only be authorized by officers who are not below the rank of Joint Director or Joint Commissioner, with prior approval from higher authorities as designated by the CBDT.

2. Digital & Virtual Survey Powers (Income Tax Bill, 2025)

   • Access to Digital Spaces: Beginning FY 2026-27, tax officers may access emails, social media, cloud storage, online banking, and other digital platforms if tax evasion is suspected. Officers can bypass passwords or security measures to gain access.
   • Definition of Virtual Digital Space: This term encompasses a wide array of digital records and platforms.
   • Legislation: These powers are outlined in Section 253 (Power of Survey) of the new Bill, which replaces Section 133A.

3. Reassessment Linkage

   • Survey Information Usage: Information uncovered during a survey, as per Section 133A(5) during events/functions, can now be considered "deemed information" for initiating reassessment under Sections 148 and 148A.

4. Non-Adjustment of Losses

   • Treatment of Undisclosed Income: Losses or unabsorbed depreciation cannot be set off against any undisclosed income identified during a survey or search, ensuring full tax liability is fulfilled.

5. Procedural Streamlining & Compliance

   • Stricter Guidelines: Authorization processes and approvals are becoming more stringent, with surveys required to follow documented procedures under higher-level supervision.

Outdated and Incorrect Provisions

• Advance Notice: There is no mandate for a 24-hour written notice ahead of a survey.
• Residential Premises: Surveys may not occur at purely residential premises unless relevant business records or assets are maintained there.
• Faceless Survey Scheme: Although faceless assessments exist, there is currently no established faceless survey scheme as of May 2025.

Additional Considerations

Privacy & Safeguards

• The expansion of survey powers into digital spaces has raised privacy and data security issues. There is a legislative emphasis on ensuring proper oversight and clear procedural safeguards.

Statement Usage as Evidence

• Statements collected during surveys can be utilized in future legal proceedings if they are given voluntarily.

Contesting Surveys

• Surveys that are unauthorized or improperly conducted may be subject to challenge in court.

Conclusion

Overall, the powers of the Income Tax Authority for conducting surveys have been revised significantly by the recent legislative changes. Stakeholders should remain informed of these developments to ensure compliance and understand their rights within the survey process.