Section 133C of ITA, 1961 : Section 133C: Power To Call For Information By Prescribed Income-Tax Authority

Explanation using Example

Imagine that the Income Tax Department has received information indicating that Mr. Sharma, a restaurant owner, may not be reporting all of his income. An income-tax authority, utilizing the powers granted under Section 133C of the Income-tax Act, 1961, issues a notice to Mr. Sharma. The notice requires him to furnish specific financial documents and information, such as bank statements and sales records, by a certain date, and to verify the information as per the instructions provided.

Mr. Sharma complies with the notice and submits the required information. The income-tax authority then processes these documents to verify the accuracy of Mr. Sharma’s reported income. After processing, the outcome, which could indicate discrepancies or affirm the correctness of the reported income, is made available to Mr. Sharma's Assessing Officer for further action, which may include a full audit if discrepancies are found.

Additionally, the Central Board of Direct Taxes (CBDT) may design a centralized scheme for issuing such notices to streamline the process and ensure that the results of the information processing are systematically provided to the relevant Assessing Officers across the country.