Block Assessments


Block Assessments

The Income Tax Department’s ‘search-and-seizure operations’ u/s 132 of the Income Tax Act, more commonly known as ‘I-T raids’, have always been one of the worst nightmares of businessmen and taxpayers. Most of this fear is valid as the negative impacts of an I-T raid are generally unavoidable, though the after-effects can be mitigated if the assessee has reasonable knowledge about practical aspects of the raids.

TaxAaram has tried to summarize some of the significant aspects and practical nuances of I-T raids that assessees should remember in order to lessen its impact.

Search-and-Seizure Procedure

A team from the investigation wing of the I-T Department carries out the search operations, usually in the morning. The search team has to carry a search warrant to legally carry out the operation. It usually covers all known business premises of the assessee (in India), as well as the residential premises of persons important to the assessee, like his/her partner(s), or directors of the company, etc. The entire operation can extend up to two-three days on an average. If needed, the operation may extend to close relatives, friends, also, as long as the proper warrants are in place.

The search team usually checks cash, stock, jewellery, other assets, books of accounts, loose papers, etc. Besides checking the accounts and logs, the search team records statements of personnel, management, and also questions persons present, which may even include visitors, customers, and guests. Moreover, use of telephones and mobiles during search is usually not allowed.

Reliefs available to Taxpayers

It is essential to know about the reliefs which the Income Tax laws grant to assessees under the scanner to reduce the damages caused by such operations. These include:

The search party cannot seize stock in trade of a business and can only make a note of such inventory. This relief is available to disclosed as well as undisclosed stocks.

The search party cannot seize available cash if the assessee can explain and prove its origins. Jewellery held as stock in trade and that disclosed in wealth tax return cannot be seized.

Even if the assessee has not filed returns on wealth tax or is not assessed for it, gold jewellery and ornaments to the extent of 500 grams per married woman, 250 grams per unmarried woman, and 100 grams per male member cannot be seized.

Rights and Duties of the Assessee

Awareness about one’s rights and duties during such search operations is essential to avoid any severe legal implications and unpleasant situations.Some significant rights and duties of assessees in such operations:

  • To check the warrants and identities of the inspecting officers.
  • To insist that women assessees and their possessions are checked only by female personnel to ensure decency.
  • To have at least two respectable and independent residents of the locality as witnesses.
  • To call a medical practitioner in case of an emergency.
  • To allow the children to go to school, after checking their bags.
  • To have the facility of having meals, etc. at the normal time.
  • To inspect the seals placed on various receptacles, sealed in course of the search, and subsequently at the time of reopening of the seals.
  • To have a copy of the ‘panchnama’.
  • To have a copy of any statement that the Department uses against the assessee.
  • To inspect the seized books of account, etc., or to take extracts from such books in the presence of an authorized officer or a person empowered by the latter.
  • To submit an application objecting the approval of Income Tax Commissioner to retain seized books and documents beyond 180 days from the date of seizure.
  • To allow the I-T team free and unhindered entrance into the premises.
  • To identify all receptacles in which assets or books of account and documents are kept and to hand over keys to such receptacles to the authorized officers.
  • To identify and explain the ownership of the assets, books of account, and other documents found on the premises.
  • To identify every individual in the premises and to explain their relationship with the assessee.
  • Not to allow or encourage the entry of any unauthorized person(s) into the premises.
  • Not to remove any article from the location of the investigation without the notice or knowledge of the authorized officer.
  • Being legally bound by an oath or affirmation to state the truth; if the assessee makes a false statement, he/she shall be punishable with imprisonment, or fine, or both under Section 181 of the Indian Penal Code.
  • To ensure that peace is maintained throughout the duration of the search, and to cooperate with the investigating officers in all respects so that the search is concluded quickly and peacefully.
  • Cooperation should be extended even after the search is over so that the authorized officer is able to complete necessary follow-up investigations at the earliest.
Block Assessment pursuant to Search & Seizure (A) In respect of Persons Searched (Section 153A)

Where a search is initiated u/s 132 or books of account, or any other documents or any assets are requisitioned u/s 132A, it becomes mandatory on the part of the Assessing Officer to issue notice u/s 153A, to such person requiring him to furnish the return of income, in respect of each assessment year falling within 6/10 assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made.

Time limit for furnishing Income Tax Return in response to Notice u/s 153A

Such return u/s 153A, should be furnished in prescribed Form within such time, as may be specified in the notice.

Assessment of income in respect of each assessment year

Assessing Officer shall assess or re-assess the total income of each of 6/10 assessment years and for the relevant assessment year or years.

Rate of Tax

Tax rate shall be levied at the rate(s) as applicable to the respective year falling in the said block period.

(B) In respect of any Other Person (Section 153C)

Where the Assessing Officer is satisfied that –

  1. any money, bullion, jewellery or other valuable article or thing seized or requisitioned, belongs to; or
  2. any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person against whom such search or requisition is made then.
  3. The books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person; and
  4. Such Assessing Officer shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of sec. 153A.

How TaxAaram can Help You

TaxAaram, on receiving an official e-mandate/authorisation from its valued registered users, will render its seamless and hassle-free e-services, in relation to all their Block Assessment related compliances, including preparationand representation of effective and qualitative submissions in response to Block Assessment Notices u/s 153A/153C of the Income Tax Act, within the comforts of their homes, without even the requirement of visiting the Income Tax department or tax consultants’ office, in the most professional and cost-effective manner.

TaxAaram's Block Assessments Plans