Search & Seizure under the Income Tax Act (of India)

SEARCH AND SEIZURE UNDER THE INCOME-TAX ACT.

The Income-tax Act,1961, which governs us currently provides for Search and Seizure of properties/documents/money bullion or such other material under certain situations. In this article we are analyzing the basis for the conduct of search by the Income-tax department, the procedure to be adopted and the consequences that would follow on the persons searched.

Basis of search: In situations where the Director General, Director, Chief Commissioner of Income-tax, the Commissioner of Income-tax or any Joint Director or Joint Commissioner (the last two authorities on being empowered specifically in this behalf), as a result of information in their possession, leading to the belief that

a) Any person to whom notices have been issued under the Act to produce or cause to produce any books of accounts or other documents, has either omitted to produce or failed to produce such documents or
b) Any person to whom summons or notice has been issued to produce books of accounts or other documents will not produce such documents, which are useful or relevant for any proceedings under the Act or
c) Any person found to be in possession of any money, bullion, jewellery or other valuable article or thing and the value of such items constituting income, (hereafter referred to as undisclosed income) may no be disclosed by such person

Then, the senior level Officers of the department as identified shall authorize any Joint Director, Joint Commissioner or Deputy Director/Commissioner or an Income-tax Officer, who would henceforth be identified authorized Officer, shall

enter and search any building, place, vessel vehicle or aircraft where he has reason to suspect that such books of accounts or other documents, money bullion, jewellery or other valuable articles or things are kept.

For this purpose he has powers to break open any lock or any door, box or locker, safe almirah or other receptacle. He can also search any person who has got out or gets in or is in the place, if he has reason to suspect that such person is in possession of such books or other materials.

If the books or documents are found in the electronic mode, then he has the authority to ask such person to afford necessary facility to afford such officer to inspect such books of accounts or other documents.

He is also endowed with the authority to seize books of accounts, or other documents, money, bullion or other valuable article or thing found as a result of search. The authorized Officer has also the option not to seize, but to place marks of identification on all the properties, make out list of inventories and other materials.

If during the course of search, the authorized Officer has the need to access such places which are within the jurisdiction of a different Chief Commissioner or Director General, then the search by the authorized Officer shall not vitiate the search, as if a separate authorization is to be secured from the different Chief Commissioner or Director General there could be delay which may also hamper the search. For this purpose, the authorized Officer may, if necessary requisition the services of the Police Officials and I is incumbent on the latter to provide adequate support to the authorized Officer.

The authorized Officer shall examine on oath any person who is found to be in possession of the books of accounts, documents or other such items as listed. Any such statement rendered by the person shall be used as evidence during the course of the Post search assessment.

In case it is not possible to seize any material, the authorized Officer shall serve an order on the person searched not to remove or part with or otherwise tamper with the material identified for seizure and listed by him.

Apart from the above discussion, the usual procedure relatively adopted is to garner information from different sources. For this purpose the Central Information Branch of the department, which is headed by a Commissioner forms the nucleus. It is at this point all statutory reports from various agencies such as a) Banks in respect of cash deposits exceeding 10 lakhs b) Property registered with a value exceeding 10 lakhs c) Investment in shares exceeding 1 lakh and such other valuable information are stored. They are processed with reference to the records, if any that remain with the jurisdictional assessing Officer. Apart from his, various personal or other material complaints information will also constitute the basis for the conduct of search.
(Continued in part II)