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.
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.
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.
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:Rights
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 –
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.