Assessments of 'Search and Seizure' - Section 132

1. Authority who can issue order for Search and Seizure:

2. Basis for Search and Seizure [Section 132(1)(a), (b) and (c)]:

3. Search can be authorised by a Principal CCIT/CCIT or Principal CIT/CIT other than jurisdictional Principal CCIT/CCIT or Principal CIT/CIT:

4. Power of Officer to whom authority is given for Search and Seizure:

5. Additional power and duties of Authorised Officer in case of Assessment of  Search and Seizure

(A) Authority who can issue order for Search and Seizure:

Search and seizure can be authorised by—

1. the Principal Director General of Income Tax/Director General of Income Tax, or

2. the Principal Director of Income Tax/Director of Income Tax, or

3. the Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax, or

4. the Principal Commissioner of Income Tax/Commissioner of Income Tax, or

5. the Additional Director or Additional Commissioner, or

6. the Joint Director or Joint Commissioner of Income-tax.

The Principal Director General/Director General or Principal Director/Director or the Principal Chief Commissioner/Chief Commissioner or Principal Commissioner/ Commissioner may authorise any officer subordinate to him but not below the rank of Income-tax Officer to conduct such search. Similarly, Additional Commissioner, Joint Commissioner or Additional Director/Joint Director can authorise any officer subordinate to him but not below the rank of Income-tax Officer to do so.

However, no authorization shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, unless he has been empowered by the Board to do so.

(B) Basis for Search and Seizure [Section 132(1)(a), (b) and (c)]:

Authorisation for search and seizure can take place if the above authority, in consequence of information in his possession, has Reason to Believe that:

1. any person to whom: (i) summons under section 131(1) or (ii) notice under section 142(1), was issued to produce or cause to be produced any books of account, or other documents has willfully omitted or failed to produce or caused to produce such books of account or other documents as required by such summons or notice;

2. any person to whom summons or notice, as aforesaid, has been or might be issued, will not or would not produce any books of account or other documents which will be useful or relevant to any proceeding undertaken under the Income-tax Act;

3. any person is in possession of any money, bullion or jewellery, or other valuable article or things and these assets represent either wholly or partly the income or property which has not been or would not be disclosed by the person concerned for the purposes of this Act.

(C) Search can be authorised by a Principal CCIT/CCIT or Principal CIT/CIT other than jurisdictional Principal CCIT/CCIT or Principal CIT/CIT:

1. The Principal Chief Commissioner/ Chief Commissioner or Principal Commissioner/ Commissioner of Income-tax has the power to authorise a search of any building, place, vessel, vehicle or aircraft of a person which is under his jurisdiction and also in cases where such building, place, vessel, vehicle or aircraft is in his area of jurisdiction but he has no jurisdiction over the persons concerned, if he has reason to believe that any delay in obtaining authorisation from the Principal CCIT/CCIT or Principal Commissioner/ Commissioner having jurisdiction over the person would be prejudicial to the interests of revenue. Such authorization shall be given in Form 45A. [First proviso to section 132(1)]

2. Where a search for any books of account or other documents or assets has been authorised by any authority who is competent to do so, and some other Chief Commissioner/Commissioner in consequence of information in his possession has reason to suspect that such books of account or other documents and asset, etc. of the assessee are kept in any building, place, vessel, vehicle or aircraft not specified in the search warrant issued by such authority, he may authorise the Authorised Officer to search such other building, place, vessel, vehicle or aircraft. [Section 132(1A)] Such authorization shall be given in Form 45B.

(D) Power of Officer to whom authority is given for Search and Seizure:

The Officer authorised i.e. the Authorised Officer for search and seizure, shall have the powers to:—

1. enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;

2. break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) above where the keys thereof are not available;

3. search any person who (a) has got out of, or (b) is about to get into, or (c) is in the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;

4. require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic records, to afford the necessary facility to the authorised officer to inspect all such books of account or other documents;

5. seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search. However, the authorised officer shall have no power to seize any bullion, jewellery or other valuable article or thing being stock-in-trade of the business found as a result of search. He shall make a note or inventory of such stock-in-trade of the business.

6. place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom;

7. make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing.

(E) Additional power and duties of Authorised Officer in case of Assessment of  Search and Seizure

(1) Deemed Seizure [Second proviso to section 132(1)]:

Where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume weight or other physical characteristics or due to its being of a dangerous nature, the Authorised Officer may serve an order on the owner or the person who is in immediate possession thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such Authorised Officer and such action of the Authorised Officer shall be deemed to be seizure of such valuable article or thing. However, in the case of such deemed seizure also, the authorised officer shall have no power to seize any valuable article or thing, being stock in trade of the business.

(2) Restraint order [Section 132(3) with Explanation and section 132(8A)]:

Where it is not possible or practicable to seize any (a) books of account, or other documents, or (b) money, bullion jewellery or other valuable articles or things for reasons other than those mentioned in (1) above, the authorised officer may serve an order on the owner or a person who is in immediate possession or control thereof that he shall not remove or part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for compliance of this sub-section. However, in this case serving of such order shall not be deemed to be seizure of such books of account, etc. Such order is commonly known as an attachment order.

The above order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order.

Sub-section (3) can be resorted to only if there is any practical difficulty in seizing the item that is liable to be seized. Where the assessee has deposited the money in a bank, a prohibitory order under section (3) should be served not on the bank but on the assessee and a copy thereof may be sent to the bank. Attachment under sub-section (3) should be made only when the officer is satisfied that the asset is undisclosed.

(3) Power to requisition service of a Police Officer or Officer of the Central Government [Section 132(2)]:

The authorised officer may requisition the services of any Police Officer or any of the officer of the Central Government or of both to assist him for all or any of purposes specified above and it will be duty of every such officer to comply with such requisition.

(4) Examination of any person on oath [Section 132(4) with Explanation]:

The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Income-tax Act, 1961. The statement can be recorded during the course of search and seizure or when it is over. Further, an explanation has been added to provide that the examination of any person may be not merely be in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Income-tax Act, 1961.

(5) Search party has no power to interrogate and record the statement by depriving the assessee of sleep:

Where the assessee filed a complaint before the Bihar Human Rights Commission stating that interrogation and recording of statement under section 132(4) was conducted for more than 30 hours and till the odd hours of the night without any break or interval and thus violated his human rights, the Commission upheld the plea and directed the concerned officials to show-cause why the assessee should not be compensated from their salary. The Department filed a Writ Petition to challenge the order held by the Court.

(6) Presumption of ownership of books of account and asset and its truthfulness [Section 132(4A)]:

Where any books of account, other documents, money, bullion, jewellery and other valuable article is found in possession or control of any person in the course of search, it may be presumed—

1. the books of account or other documents and assets found in the possession of any person in the course of a search belong to such person;

2. the contents of such books of account and other documents are true; and

3. the signature and every other part of such books of account and other documents which purports to be in the handwriting of any particular person are in hand-writing of that person or which may reasonably be assumed to have signed or written the books of account or other documents are in that person's handwriting. In case of documents stamped, executed or attested that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

What section 132(4A) contemplates is the presumption regarding ownership. If control or possession has been established, the Assessing Officer can proceed to presume its ownership. The fact that an article or a document is found at a particular place is taken as proof of control or possession and consequently the ownership.

(7) Retention of books of account and other documents [Section 132(8)]:

The book of account or other documents seized under this section shall not be retained by the authorised officer (if he is himself a Assessing Officer) for a period exceeding 30 days from the date of the order of assessment under section 153A or under section 158BC(c) (relating to assessment of search cases/block assessment) unless the reasons for retaining the same are recorded by him in writing and the approval of the Chief Commissioner, Commissioner, Director General or Director for such retention is obtained.

However, that the Chief Commissioner, Commissioner, Director General or Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Income-tax Act, in respect of the years for which the books of account or other documents are relevant are completed.

If a person, legally entitled to the books of account or other documents seized, objects for any reason to the approval of extension given by Chief Commissioner, etc. as above, he may make an application to the Board for return of such books of account and documents and the Board may, after giving the applicant an opportunity of being heard, pass such order as it thinks fit. [Section 132(10)]

(8) Copies of extract of books of account and documents [Section 132(9)]:

The person from whose custody any books of account or documents are seized under this section may make copies thereof, or take extracts there from, in the presence of the authorised officer or any person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf.

(9) Handing over of seized books and assets to Assessing Officer [Section 132(9A)]:

The Authorised Officer, if he is not the Assessing Officer, is required to hand over the books of account or other documents or any money, etc., seized by him to the Assessing Officer having jurisdiction over the person searched within a period of 60 days from the date on which the last of the authorisation for search was executed; and thereafter, the powers and functions of the Authorised Officer under section 132(8) and (9) would be exercised by the Assessing Officer.

(10) Power of provisional attachment by authorised officer [Section 132(9B) and (9C) inserted] [W.r.e.f. A.Y. 2017-18]

In order to protect the interest of revenue and safeguard recovery in search cases, the Act has inserted the following sub-sections (9B) and (9C) in section 132:

“(9B) Where, during the course of the search or seizure or within a period of 60 days from the date on which the last of the authorisations for search was executed, the authorised officer, for the reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee, and for the said purpose the provisions of the Second Schedule shall, mutatis mutandis, apply. (9C) Every provisional attachment made under section 132(9B) shall cease to have effect after the expiry of a period of 6 months from the date of the order referred to in section 132(9B)."

(11) Power to make reference to Valuation Officer by the authorized officer [Section 132(9D) inserted] [W.r.e.f. A.Y. 2017-18]

In order to enable correct estimation and quantification of undisclosed income held in the form of investment or property by the assessee by the investigation wing of the Department, the Act has inserted the following sub-section (9D) under section 132:

"(9D) The authorised officer may, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, make a reference to a Valuation Officer referred to in section 142A, who shall estimate the fair market value of the property in the manner provided under that section and submit a report of the estimate to the said officer within a period of sixty days from the date of receipt of such reference.”