A
Note On Search & Surveys
The search and survey operations conducted by the
Income Tax Department are one of the worst nightmares of businessmen &
individuals who have high income. Main reasons being the fear of huge demands ,penalty mental harassment etc.
Here I am trying to bring to your attention the powers
of the department , rights and duties of
assessee etc. In a summarized form so that one can face the search and survey
procedure confidently. Thus the assessee can ensure that the department is not
misusing its powers & that you have rights.
Search
& Seizure Proceedings
In a search ,the department usually covers all the business
premises of the assessee (in India) and the residential premises of the
important & key persons of the assessee like the directors of the company
etc. It can be extended up to 2-3 days.
It may also cover the residential premises of the relatives, friends, business
associates etc.
The
Powers Of The Officer Authorized To Conduct Search Includes
I.
Enter and search anywhere he suspects that
the books of account, jewellery, documents, money, bullion etc are kept.
II.
He or she can break open any door, locker,
box, safe etc (If the key is not available.)
III.
Search anyone who got out or about to get
into or anyone inside the building or place.
IV.
Require any person who is found in
possession or control of any books of accounts or other documents maintained in
the form of electric record to provide the authorised officer the necessary
facility to inspect such document/books.
V.
Seize
any such books of accounts , other documents, money, bullion , jewellery or
other valuable article or thing found as a result of such search. (Provided
that stock in trade, properly explained cash, assets disclosed in wealth tax
return etc cannot be seized but a note can be made of the same.)
VI.
Place marks of identification on any books
of accounts or other documents or make extracts or copies there from.
VII.
To make a note on inventory of any such
money, bullion, jewellery or other valuable article or thing.
VIII.
The authorised officer may seek the help of
police to perform his duties .
Rights of The Person Being
Searched
I.
To see the warrant of authorisation duly
signed and sealed by the issuing authority.
II.
To verify the identity of each member on
the search party.
III.
To make personal search of all members of
the search party before the start of the search and on the conclusion of the
search.
IV.
To have at least two respectable and
independent residents of the locality as witness.
V.
To insist on personal search of ladies
being taken only by a lady with strict regard to decency.
VI.
A lady occupying an apartment being
searched has a right to withdraw before the search party enters, if, according
to custom, she does not appear in public.
VII.
To call
a medical practitioner in case of emergency.
VIII.
To allow the children to go to school ,
after checking their bags.
IX.
To have the facility of having meals at the
normal time.
X.
To inspect the seals placed on various
receptacles, sealed in course of search and subsequently at the time of
reopening of seals.
XI.
Every person who is examined u/s 132(4) has
a right to ensure that the facts so stated by him have been recorded correctly.
XII.
To have a copy of the panchanama together
with all the annexures.
XIII.
To have a copy of any statement that is
used against him by the department.
XIV.
To have inspection of the seized books of
account, etc., or to take extracts therefrom in the presence of any of the
authorised officers or any other person empowered by him.
XV.
To make an application objecting to the
approval given by the CIT for retention of books and documents beyond 180 days
from the date of seizure.
XVI.
To make an application under section
132(11) to the CIT against an order under section 132(5)
XVII.
To get back the assets found to be in excess
of the liability determined in the order under section 132(5).
Duties of the Person
Searched
I.
To allow free and unhindered ingress into
the premises.
II.
To see the warrant of authorisation and put
signature on the same.
III.
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 authorised officer.
IV.
To identify and explain the ownership of
the assets or books of account and documents found in the premises.
V.
To identify every individual in the
premises and to explain their relationship to the person being searched. He
should not mislead by impersonation If he cheats, it is an offence punishable
under section 416 of the Indian Penal Code.
VI.
Not to allow or encourage the entry of any
unauthorised person into the premises.
VII.
Not to remove any article from its place
without notice or knowledge of the authorised officer. If he secretes or
destroys any document with the intention of preventing the same from being
produced or used as evidence before the court or public servant, he shall be
punishable according to section 204 of the Indian Penal Code.
VIII.
To answer all queries truthfully and to the
best of his knowledge. He should not allow ant third party to either interfere
or prompt while his statement is recorded by the authorised officer.
IX.
To affix his signature on the recorded
statement, inventories and the panchanama.
X.
To ensure that peace is maintained
throughout the duration of the search and to co-operate with the search party
in all respects so that the search action is concluded at the earliest and in a
peaceful manner.
XI.
Similar co-operation is expected even after
the search is over, so as to enable the authorised officer to complete
necessary follow-up actions at the earliest.
Some
Important Facts to be known by the Assessee
I.
Business premises cannot be sealed by the
search team. This idea has been confirmed by the honorable high court in Shyam
Jewellers Vs Chief Commissioner (1992) 196 ITR 243(All)
II.
A blank warrant of authorisation makes the
search illegal. This idea has been confirmed in Sibal(HL) Vs CIT (1976) 103 ITR
606 (P&H)
III.
The competent authority to issue the search
authorisation shall at least be of the commissioner rank.
IV.
The department has no power to convert or realize the seized assets.
V.
Statement of anyone in control or
possession of documents books etc., may be recorded and be used against the
assessee at the time of assessment.
Survey
A survey is considered to be milder than search
proceedings as it does not involve confiscation of cash, jewellery or other
assets, taking statements on oath, or searching residential premises etc.
Survey usually takes place at the place of business or profession during
business hours.
Powers
of Income Tax Authorities while conducting Survey.
I.
To enter the place of business during
business hours and an other places, only after sunrise and before sunset.
II.
To enter the place other than the business
premises, if the assessee states that cash, stock, records and books of
accounts relating to the business are lying there.
III.
To place marks of identification on the
books of accounts, to take extracts from such books of accounts and documents
or records and to impound books of accounts noticed during survey, after
recording reasons.
IV.
To make an inventory of any cash, stock and
other valuables checked by him.
V.
To record statements of any person.
VI.
To collect information regarding nature and
quantum of expenditure incurred in connection with personal functions and
events like a wedding ceremony etc..
VII.
A survey can lead to search only on the
basis of information collected in survey, subject to fulfillment of certain
conditions of section 132(1).
VIII.
Normally survey is concluded on the same
day, however where situation warrants it can be continued on the next day also.
IX.
Authority can take a statement of anyone
available at the place on survey.(not on oath) also the tax officer cannot
force the assessee to make any statement about his income.
X.
Only an authority having jurisdiction over
the assessee can do survey.
Rights
and Obligations of an assessee being Surveyed.
I.
To permit entry to the IT officers after
satisfying their identity.
II.
To afford facility to the income tax
authority to conduct survey, to co-operate during survey, to maintain
equilibrium, to maintain peaceful atmosphere.
III.
To assist in preparing inventory of books
of account or documents or cash or stock in trade or any other article or thing
which may be found in the course of survey and to see that such inventories are
detailed, exhaustive and authentic.
IV.
To furnish the requisite classification so
as to let the income tax authority satisfy as to the assets found duly
accounted for.
V.
To give statements truthfully and
completely and avoid giving false or incorrect or vague answers.
VI.
To sign the inventories and statements
after carefully reading and vouching its correctness and obtaining its copies.
VII.
To extend facility so as to complete survey
as expeditiously as possible.
VIII.
To
let the survey continue after business hours and to see that it is concluded on
the same day and is not required to be resumed on the next date.
IX.
To keep the place in an orderly manner so
as to let the authorities perform their duties expeditiously.
X.
To keep and preserve copies of the
inventories, statements, etc. and to contact the tax consultant immediately on
completion of survey.
XI.
To truthfully disclose all material facts
and to be guided by the sound advice of his CA/Tax consultant.
XII.
To do any other act or steps or retract or
whatever is deemed desirable by the CA/Tax consultant on the facts and in
totality of the circumstances.
XIII.
Not
to hide or conceal such material aspects, which stand detected from the
material, found in the survey.
Important
Facts to be known by the Assessee.
I.
Department has no power to impound
stock-in-trade, cash or jewellery.
II.
The department may impound books of
accounts and other documents but cannot keep it for more than 10 days without
obtaining the permission of the Chief Commissioner of Income Tax.
III.
Department cannot go to the residential
premises of the assessee or its related parties unless cash or stock or books
of accounts are maintained there, according to the statement of assessee.
IV.
The competent authority to issue an
authorisation for survey shall atleast be of the joint-commissioner rank.
Some
Do’s and Don’ts during Raids.
I.
Ensure that all your rights are availed.
II.
Ensure that the department is not exceeding
its power.
III.
Maintain proper books of accounts.
IV.
Properly account all investments.
V.
Statements recorded on oath are very
crucial hence be very careful & cautious while making them.
VI.
Properly co-operate with the search and
survey teams.
VII.
Inform your CA/Tax consultant immediately after the raid so as to discuss the facts and take appropriate actions.
***THE END***
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