Income Tax Search & Seizure: What are the Rights of Assessee
We have all heard about the Income tax raids. Every other day we read in the news about the black money seized during the raids. But do you know what power does the Income tax officers have to conduct raids, and do the assessee also have any rights in the process of search and seizure on him.
What is Black Money?
Black money is the money accumulated by a person without reporting the same to the government and no direct and Indirect tax is paid on the same. It also includes the money earned from illegal means but not limited to it.
Black money can be in the form of cash as well as any precious objects like gold, silver, diamonds etc.
How Tax Department Comes to Know If Any One Possesses Black Money:
Income tax department has a separate investigation wing which collects intelligence and carries out investigations and enquiries to find out hidden wealth. Based on the Intelligence information, if the IT department finds it necessary, they may proceed to plan search.
What are the Powers Exercised By the Income Tax Officers in the Raid?
Section 132 of the Income tax is related to search and seizures. It provides power to the officers to:
- Enter and search any building, place, vessel, aircraft or vehicle where he has reason to suspect that such money, documents or other valuable things are kept,
- Break open the lock of any door, box, locker, safe, almirah when keys are not available,
- Seize any money, bullion, jewellery, books of accounts, documents, or other valuable things,
- Search any person who has got out of, or is about to get into, or is in, the building or other place where search is going on,
- Authorised officers may also accompany with police officers or any other officers of central government and it is the duty of every such officers to comply with the instructions of authorised officers.
Who can Conduct the Raid?
Raid can be conducted by:
- Additional commissioner/Director,
- Joint Commissioner/Director,
- Assistant Commissioner/Director,
- Deputy Commissioner/Director,
- Income Tax Officer
But it should be authorised by either:
- Principal Chief commissioner/ Principal Director General,
- Chief commissioner / Director General,
- Principal Director/ Director,
- Principal commissioner
- Commissioner
Seizure Cannot be Done on the Following Assets:
- Assets, Jewellery, Valuable things and cash which has already been disclosed before Income Tax
- Assets, Jewellery, Valuable things acquired with tax paid Income
- Gold up to 500 grams for each married woman and 250 grams for each unmarried woman and 100 grams per male
- Stock in trade of a business
Assessee Rights During Raid
Assessee also has some rights during the search which he can exercised. Following are the rights given to the assessee during the search procedure:
- To see the warrant of authorisation duly signed and sealed by the issuing authority.
- To verify the identity of each member of the search party.
- To have at least two respectable and independent residents of the locality as witnesses.
- To have personal search of all members of the search party before the start of the search and on conclusion of the search.
- To insist on a personal search of females by another female only with strict regard to decency.
- To have a copy of the panchnama together with all the annexures.
- To put his own seals on the packages containing the seized assets.
- A woman occupying any apartment etc., to be searched has the right to withdraw before the search party enters, if, according to custom, she does not appear in public.
- To call a medical practitioner if he is not well.
- To have his children permitted to go to school, after examination of their bags.
- To inspect the seals on various receptacles placed in the course of the search and subsequently reopened by continuation of the search.
- To have the facility of having meals etc., at the normal time.
- To have a copy of any statement before it is used against him in an assessment or prosecution proceedings.
- To inspect books of account etc. seized or to take extracts therefrom in the presence of any of the authorised officers or any other person empowered in this behalf.
- To make an application objecting to the approval given by the Commissioner for retention of books and documents beyond 180 days from the date of the seizure.
Assessee Statutory Duties During Raid
Besides the rights mentioned above, Assessee is also having some statutory duties to be performed during the search which are as follows:
- To allow free and unhindered ingress into the premises.
- To see the warrant of authorisation and put signatures on the same.
- To identify all receptacles in which assets or books of account and documents are kept and to hand over keys to such receptacles to the authorised Officer.
- To identify and explain the ownership of the assets, books of account and documents found in the premises.
- To identify every individual in the premises and to explain their relationship to the person being searched. He should not mislead by personation. If he cheats by pretending to be some other person or knowingly substitutes one person for another, it is an offence punishable under section 416 of the Indian Penal Code.
- Not to allow or encourage the entry of any unauthorised person into the premises.
- Not to remove any article from its place without notice or knowledge of the Authorised Officer. If he secretes or destroys any document with the intention of preventing the same from being produced or used as evidence before the Court or public servant, he shall be punishable with imprisonment or fine or both, in accordance with section 204 of the Indian Penal Code.
- To answer all queries truthfully and to the best of his knowledge. He should not allow any third party to either interfere or prompt while his statement is being recorded by the Authorised Officer. In doing so, he should also keep in mind that:
- If he refuses to answer a question on a subject relevant to the search operation, he shall be punishable with imprisonment or fine or both, u/s 179 of the Indian Penal Code.
- Being legally bound by an oath or affirmation to state the truth, if he makes a false statement, he shall be punishable with imprisonment or fine or both u/s 181 of the Indian Penal Code.
- Similarly, if he provides evidence which is false and which he knows or believes to be false, he is liable to be punished u/s 191 of the Indian Penal Code.
- To affix his signature on the recorded statement, inventories and the panchnama.
- To ensure that peace is maintained throughout the duration of the search, and to cooperate with the search party in all respects so that the search action is concluded at the earliest and in a peaceful manner.
- Similar co-operation should be extended even after the search action is over, so as to enable the Authorised Officer to complete necessary follow-up investigations at the earliest
Search and seizure can be avoided by any assessee by proper calculation and payment of taxes and by disclosing all the assets and incomes to the IT department in the returns.