Significant amounts of black money are being spent year-after-year without any tax accountability in social and other functions like marriages, birthdays, anniversaries of different events, inaugurations, receptions and other such occasions. Most expenses for such purposes are from unaccounted money.

The Income Tax Department is almost turning a blind eye to such everyday happenings, involving huge expenditure, even though the I-T Act contains a provision for collecting information regarding such events. Public memory is said to be short, but not so short, as to forget events done on grand scales for the marriage of a politician's foster son in Chennai, booking of Wankhede stadium at Mumbai for marriage of a politician's son, making a part of Lucknow a fairly land and lavish expenditure on the occasion of marriages of two sons of a prominent businessman and a recently solemnised marriage in Haryana. It is in no way suggested that unaccounted money has been used in such functions and ceremonies but the stupendousness with which the functions were organised and grandeur with which the ceremonies were conducted needed to arouse the I-T Department's attention to find out whether money spent on such grand scales is duly accounted for in income-tax assessments.

Making enquiries

I-T Act, 1961 has a provision – s.133A (5) – for making enquiries on such occasions. According to this section, the I-T authorities are empowered to collect information and evidence, etc., about ostentatious expenditure incurred immediately after the function/event for verification and record statement of the assessee or any other person for use as evidence at the time of assessment. But, this provision is almost a dead letter in the I-T Act.

Though much concern is being expressed by the Government and others for checking generation, proliferation and use of black money, no efforts have been made to invoke this provision in the context of black money used on a large scale, which is an open secret. Actually, the Govt. has accepted its failure in not being able to use this provision effectively in a press release dated June 3, 1989, which reads as under:-

“Section 133A of the Act authorizes Income Tax Officers to make surveys of marriage ceremonies and other ostentatious social functions and to detect use of unaccounted money. So far, this provision has not been sufficiently used to make a visible impact on the curbing of wasteful expenditure”.

The position has not improved since then. The CAG has also, in one of its reports on the audit of the I-T Department's functioning, has expressed concern over non-use of this provision for checking and controlling black money.

Surveying social functions

No inconvenience is likely to be caused to the organisers of the functions and invitees there in as the enquiries are to be made after the function is over and guests have departed. Usually, heavy expenditure on such occasions is explained from the receipt of cash gifts (chandala) on such functions in small denominations of Rs 1,000, 2,000, 5,000, etc., from a number of persons, who are said to have come to the marriage. Whether such money has been received or not will get checked in the survey after the event. The position regarding other gifts, etc., will also be known.

The Government's reluctance to use this provision effectively is quite un-understandable. While there is so much hue and cry regarding prevalence of black money and its pernicious effects all around, there should be great enthusiasm to tap all ways and means to eradicate the menace of black money.

Hence, provisions like s.133A (5) of the I-T Act need to be used vigorously to create an impact and improve tax collections in the country.

(The author is a former chairman of CBDT.)

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