Income Tax Raid – Rules & Regulations
Income Tax Raid – Rules & Regulations
An income tax raid is an operation conducted on the business or residential premises of an assessee, the objective of which is to unearth undisclosed income. The rules and regulations pertaining to income tax raid or search and seizure by the Income Tax Department are available in the Income Tax Act. In this article, we review the concept of search and seizure according to the Act.
Officers Authorised to Issue Order for Search & Seizure
The following officers of the income tax department are authorized to issue an order for search and seizure under the Income Tax Act:
- The Director of Income Tax
- The Chief Commissioner of Income Tax
- The Commissioner of Income Tax
- Any such Joint Director or Joint Commissioner of Income Tax as may be empowered by the Central Board of Direct Taxes (CBDT).
The Director-General or Director, or the Chief Commissioner or Commissioner or Joint Commissioner or Joint Director who has been authorized by the Board, can authorize any officer subordinate to him not below the rank of Income Tax Officer to perform a search. The officer so authorized is referred to as the Authorized Officer, and the authorization is done by offering a search warrant in Form 45.
When Income Tax Raids can be Conducted
Under the Income Tax Act, an income tax raid can be conducted when the Officer has any information as a result of which he has the motive to believe any of the following to be true:
- A person has been issued a summons to appear before the Jurisdictional Tax Officer (JTO), but the assessee to whom the summons was issued has not complied with the terms of the document and thus has failed to make an appearance.
- A notice with reference to Section 142(1) has been served on the assessee to produce books of accounts or other documents. However, the notice has been unsuccessful or has omitted to produce or cause to be produced the books of accounts or additional documents that were required by the JTO.
- A person is in control of money, bullion, jewelry, or other valuable article or property conceals totally or partly income or property. As a result of the concealment, the property has not been disclosed or will not be disclosed.
Hence, an Authorised Officer would have sufficient cause to conduct a search if a person has not properly produced books of accounts or has not given any response to notices and summons. Alternatively, the Officer has probable cause to believe the person is in possession of undisclosed income or property.
Powers of the Authorised Officer While Conducting Search
The following are the powers given to an Authorised Officer while conducting a search and seizure operation:
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- Enter and search any building, place, vessel, vehicle or aircraft where there is a motive to suspect that books of accounts, other documents, money, bullion, jewelry or other valuable article or thing are concealed
- Break open the lock of any door, box, locker, safe, almirah or other receptacles for exercising the powers conferred by the Act where the keys are not available
- Search any person who has got out of, or is about to get into, or is in the building, place, vessel, vehicle or aircraft, if the sanctioned officer has reason to suspect that such person has secreted about his person any books of account, other documents, money, bullion, jewelry or other precious articles
- Necessitate any person who is established to be in possession or control of any books of account or other documents maintained in the form of electronic records, to afford the compulsory facility to the authorized officer to examine all books of account and other relevant documents
- Seize any such books of account, other documents, money, bullion, jewelry, or other precious article found as a result of the search. However, the authorized officer will have no powers to seize any bullion, jewelry, or other precious articles, which is of the nature of the stock-in-trade of the business encountered during search. The officer should make a note or inventory of such stock-in-trade of business.
- Create marks of identification on any books of account or other documents
- Make extracts or copies from books and other documents
- Make a note or an inventory of the total quantity of money, bullion, jewelry or other precious articles
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