Income Tax Raid: Few Important Points for the taxpayers
Search” is the term used in the Income Tax Act – 1961 which is referred to as “Income Tax Raid” in common parlance. Income tax raid is more often a game of psychology & pressure. There are few points which every taxpayer must know as far as income tax raid is concerned.
1. Assessee can ask for the identity card of the authorised officers or the persons accompanying them. Rather, it must be checked and verified as there are innumerable instances wherein fake raids are carried out by fraudster.
2. If assessee’s premises are covered by CCTV then the assessee have the right to ensure that the same is not switched off during income tax raid.
3. Assessee can check the Warrant of authorization to see if it is meant and addressed to the authorized officer and the name and address of the assessee is correctly mentioned. It has happened in the past that the raid is carried out on some other person whereas it was intended for some other person. For example, in one building there were two person by the name of Mr. Ashish Jain (Name changed). The raid was meant for Ashish Jain of first floor. However, the process was continued on the Ashish Jain of fifth floor.
Ideally, assessee must check the warrant first before the search commences. Further, assessee may inspect the warrant to see if (a) it is blank or (b) irrelevant portions are struck off, etc. If the warrant is blank or if name and address is not correctly entered then assessee may not allow the process of search. Even the possibility of questioning the validity under article 226 may be considered.
4. One of the common fear in the mind of the taxpayers is that they could be arrested. It may be noted that the assessee cannot be arrested during the course of search. Authorised officer have no power to arrest an assessee for an offence under the Income-tax Act under section 132. Only in case of action like destruction of documents, attack on the search party, use of anti-social elements etc that an authorised officer can lodge a complaint against assessee with the police and thereafter police can arrest assessee.
5. Provisions of section 132(i) empower seizure of only such assets, which represent fully or partly undisclosed income. If the cash and jewellery is disclosed then the same cannot be seized. Seizure of disclosed assets, results in an illegal act of seizure. Such illegal act of seizure is without jurisdiction and one can explore the possibility of filing a writ petition under article 226 of the Constitution.
6. Authorised officers don’t have power to enter all the building without authorization. Only such building in relation to which the warrant of authorization is specifically issued can be inspected by the authorised officers.
7. If the authorities don’t behave properly or make use of bad words or uses unwanted force, assessee can complaint it with the Director or Commissioner concerned or with the Director General or Chief Commissioner concerned or with the Member (Investigation). To some extent, the taxpayers must be very cautious and cordial while dealing with the authorities and may not get provoked at the instance of search party.
8. Most of the taxpayers believes that “I do not remember” or “I do not know” are the best answers. It may be noted that while recording the statement, it is certainly not advisable for assessee to deliberately answer every question by repeating “I do not remember” or “I do not know” as it may result in denial of few facts which could be very well handled during search. It may be noted that a statement made on the spot in support of his explanation has greater evidentiary value.
9. Often the damage is done by the departmental team to the furniture, POP, Tiles, etc for which there is no legal remedy as such as all such action is required to be done with aim to unearth the black money for which the search operation is carried out. Assessee must understand this view point and may not react much for this.
10. Taxpayers can perform their routine activities like pooja, yoga, lunch, dinner, health check up without any trouble from the department. Even school kids can go to school without any restrictions. Even the regular business meet of the assessee cannot be restricted by the authorised officers.
11. If any sort of misbehavior, injury, damage or harm is done by the department, then subject to the facts of the case, an action by way of challenge of the proceedings under article 226 can be taken with a request that search is done in an irregular and illegal manner.
12. There is no specific provision which empowers the assessee to ensure the presence of the CA/ Advocate during the search operation. Even, department normally don’t allow the Assessee’s tax counsel to remain present during income tax raid. However, assessee can seek the presence of his tax counsel by requesting to the authorities.
13. Authorised officer cannot refuse assessee from receiving or making telephone calls and telex messages. Only if such permission defeats the very object of the search and may enable assessee to manipulate or fabricate false evidence, remove the assets, or make other manipulation, refusal cannot be done.
14. The witness have an important role to play in case of any disputes and litigation at a subsequent dates. The witness with time, credentials & confidence can be sought for this
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