In the Income Tax Bill (ITB), the provision expands the scope by empowering the authorities to gain access by overriding the access code to any said computer systems or virtual digital space where the access code thereof is not available
The New Income Tax Bill, a simplified version of the Income Tax Act has been tabled in the parliament. According to media reports, the bill requires assessees to share their computer ‘access codes’ with tax officials during search and seizure operations. Thus, the bill requires more cooperation from income tax officials.
Section 132 of the ITA empowers the authorized officer to exercise certain powers where he has a reason to suspect that the books or assets are kept in any building, place, vessel, vehicle, or aircraft (‘places’). One such power is to break open the lock of any door, box, locker, safe, almirah, or other receptacle where the keys thereof are not available.
According to Advisory and Research Taxmann, “In the ITB, the provision expands the scope by empowering the authorities to gain access by overriding the access code to any said computer systems or virtual digital space where the access code thereof is not available. 42. Section 132(3) of the ITA provides that the assessing officer can pass a restraint order where it is not practicable to seize books of account, other documents, money, bullion, jewellery, or other valuable articles or things.”
The ITB adds computer systems, bank lockers, and bank accounts to the list of assets for which a restraint order can be passed. 43. Section 132(4A) and Section 292C of the ITA contain certain legal presumptions against the person whose possession or control of any books of account, other documents, or assets are found.
The ITB expands the list of assets against which such presumptions shall be assumed, which are virtual digital assets, virtual digital space, electronic content, records, and communication found on computer systems.