Guidelines for Conducting Surveys under Section 133A by S. Mohd Mustafa, IRS, JCIT, TPO, Chennai
Conducting surveys under Section 133A requires careful planning and adherence to certain protocols to maintain confidentiality and gather necessary information effectively. Before initiating a survey, ensure the confidentiality of the survey's purpose, obtain necessary approvals, and equip the team with essential tools. During the survey, follow proper procedures for entry, verification of cash and stock, and interactions with key personnel. These guidelines provide a structured approach for conducting surveys under Section 133A.
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HOW TO CONDUCT SURVEYS U/S 133A BY S.MOHD.MUSTAFA, IRS, JCIT, TPO, CHENNAI
BEFORE GOING FOR SURVEY 1. 2. 3. KEEP IDENTITY & OBJECT OF SURVEY CONFIDENTIAL IF DISCUSSION NECESSARY, DO IT WITHOUT REVEALING IDENTITY ENSURE JURISDICTION & CORRECT ADDRESS. MAKE A DISCREET VISIT TO ASSESS STOCK POSITION, ACCOUNTING PRACTICES, KEY PERSONNEL & MANPOWER REQUIREMENT GET AUTHORISATION OR APPROVAL, AS REQUIRED. ENSURE CARRYING OF ID CARDS BY ALL TEAM MEMBERS. CARRY STAMP, SEAL, STATIONERY, FORMS & LAPTOP (IF STATEMENT TO BE RECORDED DIGITALLY) ENSURE ADEQUATE & COMPETENT MANPOWER & VEHICLES ENSURE ALL PREMISES (BRANCHES/GODOWNS) ARE COVERED, IF NECESSARY 4. 5. 6. 7. 8. CONTD
BEFORE GOING FOR SURVEY (contd.) 9. STUDY THE CASE THOROUGHLY & NOTE DOWN ISSUES 10. IF MORE THAN ONE PREMISES TO BE COVERED, PREPARE A BRIEF FOR EACH & LOCATION MAP 11. ENSURE TEAM MEMBERS ARE BRIEFED BEFORE STRIKE TIME. 12. DO NOT TAKE ORIGINAL FILE. CARRY COPIES OF RELEVANT DOCUMENTS. 13. FAMILIARISE WITH RELEVANT PROVISIONS OF ACT/RULES. 14. CLEAR YOUR DOUBTS. DISCUSS WITH CONTROLLING OFFICERS 15. PREPARE CONTINGENCY PLANS FOR UNEXPECTED DEVELOPMENTS (e.g. POLICE ASSISTANCE) 16. DECIDE STRIKE DATE & TIME BY CHECKING AVAILABILITY OF MAIN PERSON 17. GATHER DETAILS OF RESIDENTIAL ADDRESSES OF MAIN PERSONS
COMMENCEMENT OF SURVEY 1. 2. ENSURE ENTRY OF TEAM WITHOUT CAUSING SUSPICION. ENSURE NON-DESTRUCTION/DELETION OF EVIDENCE OF UNACCOUNTED TRANSACTIONS ENTER PLACE OF BUSINESS/PROFESSION ONLY DURING THE HOURS IT IS OPEN FOR BUSINESS/PROFESSION (BUT ONLY AFTER SUNRISE & BEFORE SUNSET IN PLACE OF ACTIVITY FOR CHARITABLE PURPOSE OR TDS/TCS SURVEY) SHOW AUTHORISATION/APPROVAL TO MAIN PERSON AVAILABLE AT THAT TIME GET HIS SIGNATURE (WITH DATE, TIME & STAMP) IN TOKEN OF HAVING SEEN IT. TAKE CHARGE OF CASH BOOKS, INCLUDING MAIN/SUBSIDIARY & ROUGH/FAIR BOOKS AND SLIPS RELATING TO CASH TRANSACTIONS NOT ENTERED IN BOOKS IF BOOKS/CASH/STOCK OF BUSINESS ARE STATED TO BE KEPT IN OTHER PREMISES ALSO, GET IT IN WRITING & SEND A TEAM TO THAT PREMISES. IF CASH/JEWELLERY RELATING TO BUSINESS ARE STATED TO BE KEPT IN LOCKER, GET DETAILS OF LOCKER & CONTENTS IN WRITING & INFORM HIGHER AUTHORITIES. 3. 4. 5. 6. 7. 8.
CASH VERIFICATION 1. COUNT THE CASH FOUND IN THE PREMISES. 2. PREPARE AN INVENTORY OF CASH FOUND 3. GET THE SIGNATURE OF MAIN PERSON ON THE INVENTORY 4. GET THE CASH BOOK POSTED UPTODATE TILL THE TIME OF PREPARATION OF INVENTORY 5. CHECK PAYMENTS & RECEIPTS WITH REFERENCE TO VOUCHERS OR OTHER EVIDENCE 6. FIND OUT DISCREPANCY BETWEEN CASH FOUND & CASH AS PER CASH BOOK AND OBTAIN EXPLANATION OR RECONCILIATION FROM MAIN PERSON. GET HIS SIGNATURE.
STOCK VERIFICATION 1. DECIDE WHETHER THE CASE CALLS FOR VERIFICATION OF STOCK OR OTHER ISSUES. IF STOCK VERIFICATION IS REQUIRED, DECIDE WHETHER AVAILABLE STOCK, NATURE OF COMMODITY, TIME, MANPOWER, ETC, CALLS FOR ENTIRE STOCK (e.g. GOLD) OR SOME FAST MOVING ITEMS OF HIGH TURNOVER (e.g. HARDWARE, VESSELS) IF ASSESSEE IS, AS PER LAW, REQUIRED TO MAINTAIN STOCK REGISTER (e.g. SCHEDULED DRUGS), GET IT UPDATED TILL DATE OF SURVEY IF ASSESSEE IS MAINTAINING STOCKBOOK, GET IT UPDATED. IF HE DENIES, GET IT IN WRITING. CONFRONT WITH 44AB REPORT, IF IT MENTIONS STOCK BOOK. IF THERE IS NO STOCK BOOK, ASK FOR CLOSING STOCK INVENTORY AS ON LATEST 31STMARCH. 2. 3. 4. 5.
STOCK VERIFICATION (CONTD.) 6. IF THERE IS NO INVENTORY & HE ADMITS THAT CL. STOCK VALUE WAS ARRIVED AT BY ADOPTING G.P. RATE OF EARLIER YEARS, RECORD IT. WORK OUT BOOK STOCK VALUE THRO SAME METHOD (BY TAKING PURCHASE & SALES FIGURES FROM 1STAPRIL TO DATE OF SURVEY). IF SUBSTANTIAL DIFFERENCE BETWEEN THE TWO IS SUSPECTED, RESORT TO PHYSICAL STOCK-TAKING OF ALL COMMODITIES WITH VALUE. RECORD HIS EXPLANATION FOR THE DIFFERENCE. VALUE OF EXCESS STOCK IS ASSESSABLE IN THE YEAR OF SURVEY. DEFICIT STOCK MEANS UNACCOUNTED SALES OF YEAR OF SURVEY (ENTIRE VALUE SHOULD BE ADDED- NOT G.P. % ALONE)
STOCK VERIFICATION (CONTD.) 7. IF STOCK BOOK IS PRODUCED, COMPARE OPENING QUANTITY AS ON 1STAPRIL WITH CLOSING STOCK INVENTORY AS ON 31STMARCH. EFFECT OF DIFFERENCE WILL BE FOR EARLIER YEAR. COMPUTE THE VALUE. GET EXPLANATION. 8. IF STOCK BOOK IS PRODUCED BUT NOT INVENTORY, PREPARE INVENTORY AS ON 31ST MARCH & COMPUTE VALUES AS PER METHOD IN 44AB. COMPARE WITH CL. ST. VALUE IN ROI. GET EXPLANATION FOR THE DIFFERENCE.
STOCK VERIFICATION (CONTD.) 9. IF IT IS NOT PRACTICABLE TO PREPARE INVENTORY OF ALL THE ITEMS DURING SURVEY, SELECT FEW FAST MOVING HIGH VALUE GOODS & COMPARE BOOK STOCK (WORKED OUT FROM CL.STOCK INVENTORY & PURCHASES & SALES FROM 1STAPRIL) WITH ACTUALS. IN CASE OF HUGE DIFFERENCE, SELECT FEW MORE ITEMS. RECORD THE EXPLANATION. 10. GET STOCK STATEMENT GIVEN TO BANKS. COMPARE WITH STOCK BOOK. RECORD EXPLANATION FOR DIFFERENCE.
G. P. RATE 10. IN CASE OF NO STOCK BOOK, NO INVENTORY AND NO POSSIBILITY OF STOCK TAKING DUE TO NUMEROUS ITEMS, FOCUS ON G.P. RATE. ASK HIM TO SUBSTANTIATE HIS G.P. RATE. COUNTER HIM BY FINDING OUT HIGHER G.P. RATE OF FAST MOVING HIGH VALUE ITEMS FORMING MAJOR TURNOVER. IF AVAILABLE, COMPARE WITH HIGHER G.P. RATE RETURNED BY SIMILAR TRADERS OF SAME AREA. HE MIGHT AGREE FOR A HIGHER G.P. RATE WHICH WILL HAVE LONG-RANGE BENEFITS.
UNACCOUNTED SALES/REVENUE FOLLOWING EVIDENCES FOUND DURING SURVEY MAY POINT TOWARDS UNACCOUNTED SALES/REVENUE:- 1. EXCESS CASH 2. DEFICIT STOCK 3. UNACCOUNTED BANK ACCOUNTS 4. ESTIMATE SLIPS 5. TWO SETS OF BOOKS 6. TWO SETS OF P&L ACCOUNTS 7. DIFFERENCE IN SALES FIGURE AS PER ACCOUNTING SOFTWARE (TALLY) & AS PER BUSINESS BILLING SOFTWARE. CHECK CAREFULLY WHENEVER TWO DIFFERENT SOFTWARES ARE USED. 8. PRODUCTION REGISTER, RAW MATERIAL ISSUE REGISTER, OVERTIME REGISTER, PIECE-RATE WAGE REGISTER, ORDER BOOK, LOG BOOK, APPOINTMENTS REGISTER (HOSPITALS), GUEST REGISTER (HOTELS), FLAT/PLOT BOOKING REGISTER, PLEDGE REGISTER, CASE DOCKETS (ADVOCATES), PLAN FILES (ARCHITECTS), PROMISSORY NOTES
UNACCOUNTED SALES/REVENUE (CONTD.) 1. WHEN EXCESS CASH IS EXPLAINED AS FROM UNACCOUNTED SALES, UNLESS HE IDENTIFIES, THEN & THERE, UNACCOUNTED SUPPLIERS & IT IS CONFIRMED BY THEIR BOOK STOCK, FULL AMOUNT (NOT G.P. ALONE) TO BE ASSESSED. 2. WHEN DEFICIT STOCK IS EXPLAINED AS FROM UNACCOUNTED SALES, FULL VALUE (NOT G.P. ALONE) TO BE ASSESSED.
UNACCOUNTED SALES/REVENUE (CONTD.) 3. IF CASH DEPOSITS IN UNACCOUNTED BANK A/C IS EXPLAINED AS FROM UNACCOUNTED SALES, UNLESS HE IDENTIFIES, THEN & THERE, UNACCOUNTED SUPPLIERS & IT IS CONFIRMED BY THEIR BOOK STOCK, PEAK CREDIT (NOT G.P. ALONE) TO BE ASSESSED, PROVIDED A.O. DOES NOT HAVE ANY INFO. ABOUT HIS USING THE DEBITS FOR OTHER PURPOSES.
UNACCOUNTED SALES/REVENUE (CONTD.) 4. TWO SETS OF BOOKS OF A/C OR P&L A/C WILL NORMALLY GIVE SUPPRESSION IN PROFIT. 5. DIFFERENCE BETWEEN SALES RECORDED IN TALLY & BILLING PACKAGES WILL NORMALLY GIVE SUPPRESSION (& RATE OF SUPPRESSION) IN SALES. IF G.P. RATE AS PER TALLY IS RELIABLE & IF NO EVIDENCE FOR UNACCOUNTED PURCHASES, SAME G.P. RATE CAN BE ADOPTED.
UNACCOUNTED SALES/REVENUE (CONTD.) 6. IF CONCRETE EVIDENCE FOR UNACCOUNTED SALES FOR CURRENT YEAR IS FOUND, EFFORTS TO BE MADE TO FIND OUT FOR SIX EARLIER YEARS. STATEMENT TO BE RECORDED. 7. IF CASH DEPOSITS IN UNACCOUNTED BANK A/C OF PROFESSIONALS IS EXPLAINED AS FROM UNACCOUNTED REVENUE, NORMALLY ENTIRE SUM TO BE ASSESSED SINCE, UNLIKE UNACCOUNTED PURCHASES, UNACCOUNTED EXPENSES TOWARDS UNACCOUNTED RECEIPTS WILL NOT BE HUGE.
OTHER FALSE CLAIMS 1.BOGUS/INFLATED PURCHASES -VERIFY FROM STOCK BOOK ENTRIES, UNLOADING EXPENSES, TIME OF PAYMENT (IF MADE), MODE OF PAYMENT (BEARER/CROSSED CHEQUE VERIFY FROM BANK STATEMENT), GATE-KEEPER REGISTER, ETC 2. INFLATION OF EXPENSES -VERIFY FROM VOUCHERS FOUND (BUNCHES), HAND-WRITING, NAMES & SIGNATURES OF PAYEES, NO CORRESPONDING REVENUE/EXPENSES, ETC
OTHER FALSE CLAIMS (CONTD.) 3. WORKING PARTNERS RECORD STATEMENT FROM KEY EMPLOYEES (MANAGER, CASHIER, DRIVER, SECURITY, ETC) TO KNOW WHICH PARTNERS ARE COMING TO OFFICE REGULARLY & WHICH PARTNER IS DOING WHAT FUNCTION. 4. VERIFY INSTALLATION/USAGE OF ASSET BY GATE- KEEPER REGISTER, DEBITING OF INSTALLATION EXPENSES, PRODUCTION REGISTER, ELECTRICITY CONSUMPTION, PURCHASE/CONSUMPTION OF RAW MATERIALS, STOCK BOOK, DELIVERY CHALLAN, ETC
OTHER FALSE CLAIMS (CONTD.) 5. VERIFY PERSONAL USE OF BUSINESS CARS BY RECORDING STATEMENT FROM DRIVERS & SECURITY, LOCATION OF PETROL BUNKS IN RESPECT OF FUEL BILLS, ETC 6. VERIFY GENUINENESS OF LOANS FROM EMPLOYEES BY RECORDING STATEMENT FROM EMPLOYEES
OTHER FALSE CLAIMS (CONTD.) 8. VERIFY ELIGIBILITY CRITERIA FOR HUGE CHAPTER-VIA DEDUCTIONS CLAIMED 9. VERIFY GENUINENESS OF PAYMENTS TO RELATIVES BY TRACING BOOKING OF CORRESPONDING REVENUE, RECORDING STATEMENTS FROM KEY EMPLOYEES, ETC 10. RECORD STATEMENT FROM PARTNERS, ETC IN RESPECT OF AGRI. INCOME, DRAWINGS, USE OF VEHICLES FOR CURRENT + SIX YEARS
OTHER ISSUES 1.GATHER ALL DELIVERY CHALLANS & BILLS FOR MATERIALS PURCHASED FOR CONSTRUCTION & RECORD STATEMENTS FROM CONTRACTOR, ETC, TO FIND OUT ACTUAL COST. 2. PREPARE INVENTORIES OF TITLE DEEDS, FD RECEIPTS, PROMISSORY NOTES, ETC, FOUND. ONLY DOCUMENTS CAN BE IMPOUNDED (NOT VALUABLE ARTICLE OR THING). APPLY THE TEST WHETHER IT IS A VALUABLE ARTICLE OR DOCUMENT & DECIDE
RECORDING OF STATEMENT 1. IN THE LANGUAGE KNOWN TO DEPONENT. 2. STATEMENT U/S 133A(3) MAY NOT BE USED IN EVIDENCE UNLIKE U/S 133A(5)/131/132. IF THERE IS NO EVIDENCE TO THE FACTS ADMITTED IN STATEMENT U/S 133A, CONSIDER RECORDING U/S 131. (IT CAN BE INVOKED IN CASE OF NON-COOPERATION) 3. EACH PAGE TO BE SIGNED BY DEPONENT & A.O. 4. ONLY AFTER GETTING SIGNATURE ON FIRST PAGE, IT SHOULD BE CONTINUED IN 2NDPAGE.
RECORDING OF STATEMENT (CONTD.) 5. IF A DOCUMENT IS SHOWN TO DEPONENT TO GET HIS REPLY, IDENTIFY IT IN THE STATEMENT & GET IT SIGNED BY DEPONENT. 6. IN CASE OF IMPORTANT ENTRIES, ASK TO IDENTIFY HANDWRITING. 7. MERE DISCLOSURE OF ADDITIONAL INCOME IN STATEMENT WITHOUT COLLECTING INCRIMINATING EVIDENCE IN SURVEY IS OF NO USE. FORCING FOR SUCH DISCLOSURES WOULD BE VIEWED ADVERSELY.
IMPOUNDING OF DOCUMENTS 1. OFFICER CONDUCTING SURVEY TO PASS AN ORDER U/S 133A(3) IN WHICH HE RECORDS HIS REASONS FOR IMPOUNDING & ENCLOSES LIST OF IMPOUNDED DOCUMENTS MERE REASON IMPOUNDED IN ORDER TO EXAMINE WILL NOT SUFFICE. RECORD THE DISCREPANCY FOUND IN ONE OR TWO DOCUMENTS & IMPOUND MANY DOCUMENTS TO COMPUTE EXTENT OF DISCREPANCY. PUT RUBBER STAMP IMPRESSION IMPOUNDED DURING SURVEY IN THE CASE OF . ON AS PER SL.NO . OF PAGE . OF ORDER U/S 133A(3) PASSED BY (DESIGNATION OF CONDUCTING OFFICER) ON EACH BOOK. SIGNATURE OF ASSESSEE & OFFICER TO BE OBTAINED ON EACH BOOK. LOOSE SHEETS TO BE PLACED IN A FOLDER, NUMBERED & RUBBER STAMP IMPRESSION AFFIXED ON FOLDER. IF SHEETS ARE LESS, SIGNATURES TO BE OBTAINED ON EACH. OTHERWISE ON THE FOLDER. ON IMPORTANT LOOSE SHEETS/PRINTOUTS, OBTAIN SIGNATURES IN EACH PAGE. 2. 3. 4. 5.
IMPOUNDING OF DOCUMENTS (CONTD.) 3. IMPOUNDING IS NECESSARY IF- A. DUPLICATE SETS OF BOOKS FOUND. IMPOUND BOTH WITH SUPPORTING DOCUMENTS B. DOCUMENTS REVEALING COMMISSION OF ECONOMIC OFFENCE FOUND C. BOOKS OF ACCOUNTS/DOCUMENTS ARE ATTEMPTED TO BE THROWN OUT, DESTROYED, CONCEALED OR TAMPERED WITH D. BOOKS ARE NOT FULLY WRITTEN UP, ALL PRIMARY DOCUMENTS (e.g. PURCHASE VOUCHERS) REQUIRED TO MAKE ENTRIES
CONCLUSION OF SURVEY 1. ON CONCLUSION OF SURVEY, A PROCEEDINGS MAY BE PREPARED (FORMAT GIVEN SEPARATELY) 2. TO BE SERVED ON MAIN PERSON UNDER ACK. 3. ON RETURN, SUBMIT A BRIEF REPORT TO HIGHER AUTHORITIES 4. MAKE ENTRY IN THE REGISTER OF SURVEYS CONDUCTED 5. SUBMIT A DETAILED SURVEY REPORT LATER.
DOs & DONTs DOs: 1.CONFIRM JURISDICTION. MAKE DISCREET VISIT BEFORE FINALISING 2. GET AUTHORISATION/APPROVAL 3. COMMENCE WHEN PREMISES IS OPEN FOR BUSINESS. 4. GET A LETTER IN WRITING BEFORE GOING TO ANY OTHER PLACE WHERE BOOKS, ETC, ARE KEPT 5. CONFINE TO THE POWERS U/S 133A 6. INVOKE SEC.131 IN CASE OF REFUSAL/EVASION 7. RECORD STATEMENT, NOT ON OATH, ASKING QUESTIONS ON ALL DISCREPANCIES FOUND 8. IMPOUND NECESSARY BOOKS, ESPECIALLY IF QUESTIONS WERE RAISED ON THEIR BASIS. 9. PASS ORDER GIVING REASONS FOR IMPOUNDING. SERVE COPY & INVENTORY. 10. GET PHOTO COPIES OF NON-IMPOUNDED BUT REQUIRED BOOKS ATTESTED BY ASSESSEE. 11. GET YEAR-WISE BREAK-UP (6+1 YEARS) FOR DRAWING/AGRI.INCOME/USE OF VEHICLES 11.IF CONCEALMENT IS DETECTED, ASCERTAIN & RECORD THE FORM (ASSET) IN WHICH IT IS KEPT.
DOs & DONTs DON Ts: 1. 2. 3. 4. DO NOT ASK FOR OPENING OF BANK LOCKERS DO NOT REMOVE ANY CASH, STOCK OR OTHER VALUABLE ARTICLE FROM PREMISES DO NOT SEAL THE SHOP OR ANY ROOM, CUPBOARD OR COMPUTER DO NOT FORCE TO DOWN THE SHUTTERS. ON HIS OWN VOLITION HE MAY DO SO TO ENABLE EARLY COMPLETION OF STOCK-TACKING DO NOT PREVENT ANY PERSON FROM COMING INTO OR GOING OUT. BUT ENSURE THAT A RESPONSIBLE PERSON IS AVAILABLE TO REPLY. DO NOT INVOKE SEC.281B DURING SURVEY, UNLESS ASSESSMENT PROCEEDINGS ARE PENDING DO NOT FORCE TO GET A DISCLOSURE. DO s NO.11 DOES NOT AMOUNT TO GETTING DISCLOSURE. IT IS ONLY ASCERTAINMENT OF FACT DO NOT INSIST ON SPOT PAYMENT OF TAX (AS DD) FOR CONCEALMENT FOUND. IF WILLING, HE CAN PAY & PRODUCE CHALLAN NEXT DAY AFTER CONCLUSION OF SURVEY, DO NOT INVOKE SEC.131 OR 133(6) UNLESS SOME PROCEEDINGS ARE PENDING. DO NOT INVOKE SEC.142A OR 281B UNLESS ASSESSMENT PROCEEDINGS ARE PENDING 5. 6. 7. 8. 9.
