During the income-tax assessment of PR Ltd., the Assessing Officer suspected that the Company concealed incentive income received from its related parties. The Assessing Officer wanted to pursue this further and seized c

According to Section 131(1) of the Income-tax Act, 1961 (the said Act), the Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, Commissioner (Appeals), Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and the Dispute Resolution Panel referred to in clause (a) of sub-section (15) of section 144C, for the purposes of the said Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely: discovery and inspection; enforcing the attendance of any person, including any officer of a banking company and examining him on oath; compelling the production of books of account and other documents, and issuing commissions. Further, according to Section 131(3) of the said Act, subject to any rules made in this behalf, any authority referred to in section 131(1) or section 131(1A) or section 131(2) may impound and retain in its custody for such period as it thinks fit any books of account and other documents produced before it in any proceeding under the said Act. According to Proviso to Section 131 (3), an Assessing Officer or an Assistant Director or Deputy Director shall not: impound any books of account or other documents without recording his reasons for so doing, or retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner or Principal Director or Director therefor, as the case may be. The Assessing Officer can impound the documents as per the provisions stated above but in the circumstances given in the question the assessing officer seized the documents and records of the Company without obtaining permission from competent authority for more two months. Therefore, the act of assessing officer is not justified as the documents of PR Ltd., have been kept for more than 15 days without approval of the competent authorities.