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Income Tax Raid, Search and Seizure

Income Tax Raid, Search and Seizure

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Income Tax Raid, Search and Seizure

One of the important and major powers held by the Income Tax Department is the one to conduct search and also seize any money, jewellery or important documents that they think belongs to a person who has committed serious evasion of tax or has committed fraud with respect to the disclosing of income.
And the Income Tax Officials and Authority exercise this power held by them to raid the individuals, groups or companies which they suspect to be committing any fraud or evasion of tax involving large amount of money. This can also be done in case of persons who are deemed to be in possession of any property or assets or income that belongs to other person or party who has failed to disclose the presence of such property or assets or income while declaring the income or asset details. Despite of being a drastic step, this is considered to be an important step which should be taken in case the Income Tax Authority feels there is major tax evasion and an extreme action is required as the same is held up by the constitution of the country also.

Objectives held by Income Tax Search and Seizure

The major objectives which are held by the Income Tax Authority in conducting the search and seizure would be the following:

  1. Endorse and holding up of the law which is laid down by the constitution of India is one major objective.
  2. Addressing of the issues and problems which are arising in the country and its economy due to evasion of tax or avoiding of the payment of huge amount of taxes by the individuals or groups.

iii. To take hold of the black money earned and maintained by the individuals or groups and also stop the circulation of such money in the economy of the country.

  1. To ensure that there is enough and proper security given to the society and there are no instances present in economy which would affect the social security in an adverse manner.

Income Tax Raid

As per the Income Tax Act, the officials assigned by Income Tax can conduct raids and searches of the individuals, groups or companies on the following:
– Residential property or premise which is belonging to such person or group or company or entity.
– Any property or premise which is being used by the person or group or company or entity for the purpose of operating or conducting their business.
– Vehicle or automobile of any kind being used by the person or group or company or entity.
– Lockers or such facilities being utilized or opened in the name of person or group or company or entity.
– Books, accounts statements, ledgers, financial statements or such other documents containing the financial transaction details pertaining to the person or group or company or entity.
– Stocks, shares, bonds or such other money market instruments acquired or bought by person or group or company or entity.
– Jewellery, gold, or precious metals which are owned by person or group or company or entity.
Further, it should also be noted that the Income Tax Authority have the power as per section 132A of the Income Tax Act to act the right to inspect the books of accounts, or any other items which belong to the person or group or company or entity, being seized by any other authority belonging to the Government.

Reasons for which Income Tax Raid Shall be Conducted

Following are certain reasons for which an Income Tax Raid can be initiated are given below:
– The Income Tax Department is having evidence which substantiates the assesse’s holding of income or property or assets which has not been disclosed. And the tax if any paid on such assets or income would exceed an amount of INR 1 Crore.
– The Income Tax Department suspects the holding of assets or income which has been unaccounted by the individual or a group and the same is deemed to be used for any illegal act like smuggling, terrorism, conducting fraud, causing public disorder or such other acts.
– The department of Income Tax has received information regarding the spending of lavish or huge amount of money in wedding or the conducting of marriage ceremonies.
– The department of Income Tax has gathered detailed evidence with regard to evasion of tax by an individual, group or company rather than on the basis of any assumptions made or rumours heard.
– The Income Tax Department have reports and evidences on hand with regard to the information gathered by Intelligence Department.
– The department have received reports with respect to confiscation of money by the enforcement agency of state or centre.
– The department has received information from people whom they have hired for collecting and providing information on individuals or organizations who are kept on the radar for tax evasion.
– Department have evidence with regard to the manipulation or window dressing of:
Vouchers or bills or invoices or books of accounts or ledgers.
– The department has received any intimation of information pertaining to evasion of tax or such other activity of an assessee from a close family member or friend or employee or business partner or such other acquainted person.
– Income Tax Department have received information on the income held by assessee which is illegal and unaccounted for with:
Assessee himself or residence or business property or lockers held in banks or financial institutions or at residence of a family member or residence of business partner or an employee or such other place or places.
– Income Tax Department received information from illegal and suspicious business activity of the assessee by reports published by magazines, social media platforms, media or newspaper.

Rights held by Assessee During Income Tax Raid

When an assessee is being raided by the Income Tax Department and its officials, he can take up the following rights with respect to the same:
– The officers who are conducting the raid holds the duty to either allow or permit two individuals belonging to the local area stand as independent witnesses to the raid.
– In case the assessee in the name of whom the search warrant or raid has been issued with is a child, then such child should be allowed to attend school. But the Income Tax officers hold the right to check the bag which is being taken by the child.
– The Income Tax Raid should begin after sunrise. And it should also end after the sunset.
– The maximum time which is allowed for an Income Tax raid is only 48 Hours or 2 days.
– The assessee who has been made victim for the raid should be given the right to have a detailed reading of the search warrant. He should also be allowed to check the identity proof of the Income Tax Officers who has arrived for the search or raid.
– The assessee can also mandate that the authorized tax officials who are female should only be searching the female members of his family.
– The assessee should provide a proper statement on completion of the raid or being carried out as on the contrary the silence would be having adverse effect on the proceedings taken against him after the raid.
– The assessee can also search or inspect the income tax officials to ensure that the evidences are not tampered with or planted in the premise.
– The assessee can also personally seal and stamp the packages of evidence being taken along with the right to receive a witness copy of the same.
– In case of a women who does not make any public appearances as per her customs, then she can practice her such right and not appear before any search party that is including the Income Tax officials authorized by the department.
– The assessee can also have their meals during the standard times and should be permitted for the same.

Procedure to be Adopted by Assessee in Occasion of being Wrongly Raided

There might be situations, where the Income Tax Authority conducted a raid and seized the belongings of a person due to any wrongful information or misunderstanding. And if the assessee feels that this was wrongful and not justifiable then he can follow any of the below given procedure for correcting the same:
– The raid and seizure procedure can be challenged by the assessee by filing a writ petition with the High Court of the state.
– In case where the assessee feels that he was put under suspicion by the Income Tax Authority and was wrongfully alleged of evasion of tax or such other offence and was raided then he shall challenge or submit an appeal against such raid before the Commissioner of Appeals (Income Tax).

How to Prevent any Income Tax Raid

In case of any person or group or company or entity, which wish to keep the chances for income tax raid and seizure at bay can take up the following tips:
– The assessee should ensure that any taxable or non-taxable income and its existence has been disclosed during the filing of the ITR (Income Tax Returns).
– Ensure that you as an assessee has complied with all the necessary procedure when served with a summons.
– Make sure that you hold proper documents pertaining to the declaration of any income which is exempt form payment of tax held by you.
– Make sure that all the documents like vouchers, bills or such other documents are maintained by you for being presented when and where required.
– Make sure that you have checked all the identities of the Income Tax Officials who have presented themselves for conducting raid or seizure of your space.
– Also ensure that all the details of lockers and items present in the same are maintained in the form of register for making the same transparent and being presented at the request of the Income Tax Authority.
Hence, we can conclude that it is always recommended to disclose your income whether taxable or not while filing your ITR for the assessment year. This would help one keep the Income Tax Department or any raid or search activities which might be initiated by them.
 

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