How is a Search Operation Conducted by Income Tax Department ?

A search operation under the Income Tax Act is undertaken in the case of a person or a group of persons believed to be indulging in tax evasion. The provisions relating to search and seizure are contained in section 132 of the Income Tax Act, 1961.


A senior officer of the investigation wing, i.e. Director of Income Tax (Investigation) authorizes search in a case after full satisfaction that search action is absolutely necessary to unearth evidence of tax evasion and assets acquired out of undisclosed income.

 

 

For this purpose, he issues search warrants specifying the premises and the persons to be searched. The names of the officers who are authorized to conduct the search are also mentioned in the warrant. A separate search warrant is issued for each premises to be covered in the search operation.


A search can be conducted at any place where documents and books of account relating to undisclosed transactions and unaccounted cash, jewellery, gold or other precious things of the persons against whom the action is directed, are believed to be kept. The provisions for search allow any building, place, vessel, vehicle, or aircraft to be searched for this purpose. The places to be covered in a search operation are ascertained beforehand and search warrants are issued accordingly. Generally, in a search operation, the residences of proprietors, partners and directors, cars, bank lockers, etc. are all searched. Residences of the accountants, close relatives and business associates may also be covered, if considered necessary. The offices, shops, factories, godowns, etc., of the group being searched may be surveyed as a part of the entire operation. The decision whether to cover a business premises by survey or search is taken depending on facts of the case and the necessity of the action.

The authorized officer is empowered to call for services of any police officer and / or of any Central Government officer to assist him in carrying out the search operation. Generally, adequate police persQnnel accompany the search teams for maintaining law and order during the operation, and for ensuring the safety of the members of the search teams and others, if any untoward incident takes place.


Before starting the search, the authorized officer has to call at least two respectable inhabitants of the locality, who will witness the search and remain present at the premises throughout till the operation comes to an end. A friend or an employee or any relative or advocate / consultant of the person being searched, is not appointed as a witness.


The search entails entering the premises and carrying out a physical search of the premises including that of any boxes, safes, lockers, almirahs, cupboards, receptacles, etc. found in the premises. If the keys of the doors, almirahs, boxes, safes, etc. are not available, these can be broken open. If any hidden cavities are found, these can also be broken open and searched.


Any person present in the premises, or leaving the premises, or coming into the premises may be subjected to personal search if it is suspected that he is hiding any undisclosed / unaccounted documents or books of account or valuables on his person.


If during the search, any books of account or documents are found to be maintained as electronic record on computers or other digital or electronic devices, then the person having control over such accounts / data has to make the password, etc. available to the authorized officer so that he can have access to them.

 

During the course of the search operation, statements of the key persons are recorded so as to give them an opportunity to explain the state of all their financial affairs. While recording the statement, the authorized officer will ask questions on all investments, immovable properties, other assets, bank accounts, bank lockers and also on all papers, documents, diaries, digital records, account books, etc. found during the search. This statement has a lot of importance in the subsequent proceedings.


Finally, the incriminating books of account and documents and assets comprising of cash, gold, jewellery and other valuables, which are found to be unaccounted and not disclosed for income tax and wealth tax purposes, are seized. The stock in trade, however, is only inventorized and not seized, even if it is found to be unaccounted.


Inventories of all books of account and documents found and seized, as well as found but not seized, are prepared by the authorized officer. All the gold, silver, diamonds, gold ornaments, precious stones and jewellery found during the search are valued and inventoried. Those found to be undisclosed, which are to be seized, are also separately inventoried. Other valuables found during the search like paintings and other works of art, antiques, apparels studded with precious stones, etc. are also valued and inventoried.


Bank lockers may be simultaneously searched while the search at the main premises is going on, or may be kept under prohibitory orders to be searched at a later date. Any incriminating documents and undisclosed cash, gold ornaments, jewellery, etc. found from the bank lockers are also seized.


If it is not practicable to immediately seize any of the books of account, documents, valuables, etc. found during the search, the authorized officers may keep such books of account, documents, valuables, etc. under prohibitory order and seal the locker, receptacle, almirah, room or place where they are kept. The prohibitory order is lifted at a later date and action for seizure is taken.


If during the course of the search any evidence of an illegal activity leading to an offence under any of the following statutes or any other law is discovered, the concerned authorities are immediately informed so that they can take appropriate action against the offenders:


1. The Antiques and Art Treasures Act, 1972;
2. The Arms Act, 1959;
3. The Wild Life (Protection) Act, 1972; and x
4. The Foreign Exchange Management Act, 1999.


Before the search is concluded, a panchnama is prepared in which an account of the entire proceedings is recorded, and all the statements recorded and inventories prepared during the search are appended to it. The panchnama is to be signed by the authorized officer, the person in whose case the search is being conducted and the witnesses to the search.


The seized cash and other valuables like bullion, jewellery, gold ornaments, etc. are securely kept by the department till these are either adjusted against the tax rules or released to the concerned persons.
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
“Penalties” Under Income Tax Act. 1956
How is a Search Operation Conducted by Income Tax Department ?
Surveys for Checking Ostentatious Expenditure
Surveys for Enforcing Compliance with Provisions of TDS
“Summon” U/s 131 of Income Tax Act.
Investigation by Income Tax Department:
Appellate Authorities of Income Tax Department
Power to Call for Information U/s Sec. 133(6) of Income Tax Act.
Specific Surveys U/s 133A(1) of Income Tax Act.
Types Of Income Subject To TDS [Deduction Of Tax At Source]
Pre-Requisite For Claiming Income Tax Refund
Benefits of Filing Income Tax Returnsn
Section-139(9): Defective Tax Return
 
 
How is a Search Operation Conducted by Income Tax Department ?
The provisions relating to search and seizure are contained in section 132 of the Income Tax Act, 1961.
 
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
Scrutiny assessment refers to the examination of a return of income by giving an opportunity to the assessee to substantiate the income declared and the expenses, deductions, losses, exemptions, etc. claimed in the return with the help of evidence..
 
“Penalties” Under Income Tax Act. 1956
Penalties by way of monetary payments are charged under the Income Tax Act for various defaults relating to payment of taxes, maintenance of accounts, for noncompliance and non co-operation during proceedings, for evasion of tax, etc..
 
Income of Individuals And HUFs – As a Tax Payers Under Income Tax Act, 1961.
The individual tax payers and also the HUFs while proceeding to calculate the net taxable income in the first phase are required to arrive at the gross total income under different heads of income...
 
Types Of Income Subject To TDS [Deduction Of Tax At Source]
The following types of incomes are mainly subject to deduction of tax at source: (a) Salaries Section 192. (b) Interest on securities Section 193..
 
Pre-Requisite For Claiming Income Tax Refund
For claiming income tax refund the first prerequisite is that there should have been excess tax paid or deducted at source on the basis of return of income.
 
Section-139(1) : Provision for Voluntary Income Tax Return
Every person,— (a) being a company or a firm; (whether having income or loss) or (b) being a person other than a company or a firm if his total income or the total ncome of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall file a return of his income in the prescribed form.
 
Benefits of Filing Income Tax Returnsn
We have heard many a times that every individual whose total income exceeds the maximum exemption limit is obligated to furnish his/her Income Tax Return or ITR.
 
Section-139(9): Defective Tax Return
Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of intimation.
 
Section 139(5) : Revised Income Tax Return
If any person, having furnished a return u/s 139(1), or in pursuance of a notice issued under section 142(1), discovers any omission or any wrong statement therein, he may furnish a revised return at any time.
 
Section-139(4A) : Income Tax Return of Charitable and Religious Trusts
Every person in receipt of income derived from property held under trust or other legal obligation wholly or partly for charitable or religious purposes or of income being voluntary contributions referred to in section 2(24)(iia) shall.
 
Section-139(4) : Belated Income Tax Return
If an assessee has not furnished a return of his income within the time allowed to him under section 139(1) or within the time allowed under a notice issued under section 142(1).
 
 
Get Updated ...
 
 
 
 
LIBRARY @ Tax Management
TAX & INVESTMENT GUIDE FOR "NRI"- Non-Resident Indians !
GUIDE & FAQ @ TAX
GRAPHICAL PRESENTATION @ TAX
TIPS & TRICKS @ TAX
MANAGERIAL & FINANCIAL DECISIONS @ TAX
5 GOLDEN RULES OF TAX PLANNING
FAMILY TAX PLANNING
DEDUCTIONS FROM YOUR INCOME
EXEMPTED INCOMES
HUF - FORMATION, MANAGEMENT & TAX PLANNING
COMPUTATION OF GROSS TOAL INCOME
INCOME TAX @ GLANCE
MULTIPLE KNOWLEDGEBASE ON TAX
51 TIPS ON TAX PLANNING
APPEALS UNDER INCOME TAX
ASSESSMENTS
PENALTIES UNDER IT DEPATMENTS
TAX SAVING SCHEMES
TAX READY RECKONER
TAX RATES
PROSECUTIONS UNDER INCOME TAX DEPARTMENT
TAXATION SYSTEM IN INDIA
CHARITABLE & RELIGIOUS TRUST - TAXATION

KNOWLEDGE BASE !

New Topics @ Tax KnowledgeBase...
 
 
 

Most Popular Topics :

Corporate Tax ( Taxation in Companies)
FAQ on TDS on Salaries
FAQ on Taxable Income
FAQ on Filing of Income Tax Return
Graphical Chat Presentation of Provision of Motor Car / Other Vehicles [Rule 3(2)(A)&(B)]
Tax Amendment at a Glance for Year 2015
'Appeals' Under Income Tax Act. 1961.
'Assessments' Under Income Tax Act. 1961.
List of Exempted Incomes (Tax-Free) Under Section-10
Income Under the Head ' Business and Professions' [Section 28 to 44]
Income Under the Head ' Capital Gain'
Income Under the Head ' House Property '[Section- 22 - 25 ]
Income Under the Head "Salary"
[Section 15-17]
Income Tax on 'Partnership Firms'
PENALTIES Under Income Tax Act. 1961.
Tax Saving Schemes for Individual for AY 2015-2016-Instant Guide
Income Tax Rates / Tax Slabs (AY-2014-2015 & 2015-2016)
"Exempted Incomes" under Income Tax Act.
Charitable & Religious Trust :Formation, Registration, & Taxation
Hindu Undivided Family [HUF] - Formation, Management and Taxation
 

Most Popular Links :

Clubing of Income Deduction U/s 80C
Allowances Us-17(3) Exemption-Salary
Tax Amendment-2015 Taxable Income
Clubing of Income Tax Deductions
HUF Deduction HUF Investment
Gift by HUF HUF Tax Planning Tips
Tax Saving Schemes Tax Planning Tips
Refund of Tax Fringe Benefit Tax-FBT
Return Filing Assessment / Scrutiny
Notice from I.T. Dept. Incomes Types @ TDS
Exemptions-Tax Returns “Summon” U/s 131
'Black Money' @ I.Tax Big Gifts To Be Taxed
'Appeals' under I.Tax Assessment @ I.Tax
Exempted Incomes Capital Gain
Business & Professions House Property
Salaries @ I.Tax Partnership Firm
'Penalty' under I.Tax Act. Tax Ready Reckoner
Charitable Trust Useful Links @ I.Tax
 
 
Guide & FAQ on Tax Knowledgebase @ Taxation Income Tax @ Glance HUF - Formation, Planning & Taxation
TRUSTs (Formation, Management & Taxation) NRI (Tax Planning,Saving,Investemnt)    
______________________________________________________________________________________________________________________________________________________

Disclaimer:
All efforts are made to keep the content of this site correct and up-to-date. But, this site does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.

The visitors may click here to visit the web site of Income Tax Department for resolving their doubts or for clarifications

 
Contact Us :

SWAYAM EDUCATION
Mandal Bagicha, Hemkapada,
Sunhat, Balasore-756002 ( Odisha)
eMail ID : incometaxmanagement@gmail.com

www.IncomeTaxManagement.Com