The term Raid in Indian Income Tax Law is incredulous and any unexpected encounter with IT sleuths generally leads to chaos and vacuity.
Income Tax Raid is conducted with the sole objective to unearth tax avoidance.
That, the situation can be faced with confidence and serenity, if you should experience such action That’s a fact, it’s better to familiarise with the subject. Furthermore, lack of knowledge leads to panic and all the discomfort. Oftentimes it’s extremely important to understand some nittygritty of law on the subject, with the intention to face the situation efficiently. You can check their search warrant and in addition note the date, address and authorization and stuff, when Income Tax Search Party visits. In case and similar valuable articles the department may leave such items after necessary sealing and stuff in the custody of assessee.
Raid team does not have the powers to seize or take away any valuables, I’d say in case it is a survey and not a search.
Jewellery up to a specified limit is generally accepted. Whatever is seized, ensure they are being properly listed and described. You can also call your an or lawyer. You shouldn’t mislead them by impersonation. Anyways, as a rule of a thumb, identify each individual in the premises and to explain their relationships to the person being searched. You shouldn’t remove any article from its place without the notice or knowledge of raid team.
You must answer all queries truthfully and to some quality stuff from your knowledge. You shouldn’t allow any third party to either interfere or prompt while your statement now is recorded by the officer. You shall be punishable with imprisonment or fine or both, u/s 179 of the IPC, I’d say if you refuse to answer a question on a subject relevant to the search operation. Known while Being legally bound by an oath or affirmation to state the truth, you shall be punishable by imprisonment or fine or both u/s 181 of the IPC, if you make a false statement. Options of Assessee After the Raid -If you feel that the action of the department is unfair, you can file a writ petition before the High Court challenging the raid.
Law After the Raid The Department will issue notice to assessee to furnish a return of income for six previous years preceding previous year in which search is initiated.
CIT that when search takes place, the action for such year can be taken u/s 147 and for other years u/s 153A.
At any time, assessment for preceding seven years can be reopened. Consequently, assessment or reassessment for past six years will have to be completed by AO within twenty months from the end of the financial year in which last of the authorization was executed. It had been held if of Ramballah Gupta Asst. The assessment of search year shall have to be completed as per above time limit. Action for the assessment can be taken within six years from end of assessment year, as per section 147. Now look, the preceding seventh year is omitted u/s 153A. Documents, assets found or seized belong to any other person, the concerned AO shall proceed against other person as provided u/s 153A and 153B, if any books of accounts. Now look. The provision of section 234A and 234B or levy of interest shall be applicable. Certainly, with intention to get immunity, only requirement is that assessee must disclose additional income in the original income field.
The Explanation 5 to section 271 isn’t applicable in the event of search initiated on or after 01 dot 07.deeming provision of concealment shall no longer apply in new searches.
The department can not withdraw cash from bank a/c or encash fixed deposits without assessment for a reason of search operations.
Section 133A does not permit sealing of business premises. It had been instructed by CBDT vide letter dated 10 dot 03 dot 2003 that while recording statement in the course of the course of search and seizures and survey operations, no attempt will be made to obtain confession as to the undisclosed income. Restriction on seizure of stock in trade applies only to valuables and not cash. Other Provisions The authorized officer can not seize stock in trade of a business. Power to arrest assessee ain’t entrusted to the department. Now regarding the aforementioned fact… Assets which can not be seized -Immovable assets Stock held in business Assets disclosed in Income Tax and Wealth Tax returns Assets appearing in books of account Cash for which explanation can be given Jewellary mentioned in wealth tax return Gold up to 500 gm per married lady, 250 gm per unmarried woman and 100 gm per male member of the family.
Assets which can be seized -Unaccounted cash, jewellary, gold, bullion, lockers, promissory notes, cheques.
All unaccounted income going to be declared.
One shouldn’t keep any unaccounted or undisclosed money, property or income popularly known as Black Money. Notice, the chances of being trapped in a tax raid are minimized, if such a disclosure is made before its detection by the Income Tax Department. Steps to Prevent Raid Compliance with Summon and Notices u/s 131, 142 The Summons or notice calls for the books of account and akin documents to be produced before the authorized officer whenever earlier. What leads to Income Tax Raids, Search and Seizures With a view to focus on high revenue yielding cases and to make the optimum use of manpower, the Board has decided that officers deployed in the Investigation Wing should restructure their activities. This is the case. Searches should’ve been carried out only in cases where there’s credible evidence to indicate substantial unaccounted income/assets in relation to the tax normally paid by the assessee or where the expected concealment is more than Rs. Then again, henceforth, search operations shall be authorized only by the concerned DGIT, who might be accountable for the action initiated by the officers working under him.
The code laid down in the Income Tax Act for search and seizure confers vast powers to the authorities. I know that the powers was judicially approved and held to be constitutionally valid on grounds of flagrant tax evasion and huge flow of unaccounted money in the system. The Author, CA Jain, can be contacted at, 21, Skipper House, 9, Pusa Road, New Delhi -110005, Mobile No. EMail.