When does such a search and seizure income tax action happen?
It is only when the IT department suspects that you have either generated or routed black money. The word black money is basically unaccounted money on which tax has not been paid and is normally on account of cash transactions. Income tax officers are authorized to conduct such search and seizure operations where they have credible information of tax evasion. Such information could come from the GST department, Financial Inteligence Wing or even records of large asset purchases like gold, property, artefacts, etc. Today most of your transactions are tracked through the twin pathway of PAN and Aadhar. The IT department also conducts raids where it believes that expenses and investments are disproportionate to known sources of income. There is a clearly laid down procedure and defined hierarchy of how such an income tax search and seizure can be conducted.
What can the search officer do as part of the “Search and Seizure” Operation?
The officer in charge of the raid has been given powers to undertake any or all of the below mentioned actions, although there are conditions circumscribing such rights.
- The officer is authorized to enter and search the premises. where there is reason to suspect that books of account, important documents, fake invoics or ill-gotten wealth are stashed. The officer can break open the locks if the keys are not handed over on request.
- The officer is also authorized to conduct a personal search of such persons who are suspected of hoarding such information or assets with them. The officer can also simultaneously raid the residential premises of the directors.
- The officer can make photocopies of suspicious documents and also seize any assets like books of accounts, unaccounted cash / gold, pen drives / floppies / hard disks, etc. However, they are not allowed to seize any stock-in-trade or other asset that has been declared and tax paid on. All items must be mentioned in the register.
Individual rights circumscribe the powers of search officer
Even though a person is raided, there are some rights they can insist on.
- The individual can insist that any lady in the house be searched only by a lady officer. One can also insist on two or more respectable residents of the locality as witnesses.
- One can insist that they be allowed to have meals on time, get access to medicines / doctors and permit children to go to school, with appropriate bag search.
- You can ask for copy of the Panchnama, inspect all the seals and also verify the identity of the raiding officers. You can also ask for a copy of any statement given by another person or any evidence that is being used as grounds for the raid.
- The person being raided has legal recourse too. They can file a writ petition before the High Court challenging the raid, if the action is seen to be unfair. The person can also file an appeal before the Commissioner of Income Tax (Appeals) after the raid.
There are some basic rules to handle a raid.
- You must cooperate and give unhindered access to the premises as well as to assets / books of accounts and relevant documents. Give clear explanations where sought by the officer.
- Avoid concealing identities or misrepresenting identities. This is a criminal offense and punishable under the IPC.
- You are duty bound to speak the truth. Making a false statement or giving false evidence is punishable under the IPC. Such actions can weaken your case.