Our Income Tax law allows all persons to self-assess their income and pay taxes. However, to protect the revenue base, unearth concealed income and to act as a deterrent, tax authorities have been vested with powers to conduct surveys and searches (commonly referred to as ‘raids’).
These raids are made the basis of information available by the department’s investigation wing and after obtaining requisite internal approvals. The information could come to them from various quarters — annual reports, media reports, information returns filed by banks pr credit card companies , or even through tip-offs from their network of informants. Generally, if one has been diligently reporting his income and paying his taxes, one need not worry about being subjected to a raid.

If the raiding team wants to seize certain items of jewellery, you may request them to seal them and retain it at your premises and not carry them away. If any valuables do not belong to you, make that known upfront and also provide the name, address and other details of the owner.

Jewellery up to a specified limit (e.g. 500 grams per married lady) cannot be seized. If it is a “survey” and not a “search” (the warrant will specify that), the raiding team do not have the authority to seize or take away any valuables and can only take away documents, files etc. Whatever is being seized, make sure they are being properly listed and described and, if possible, have two of your neighbors stand witness to the same. Raids are physically, emotionally and mentally stressful.

You must ensure that you and your family are allowed to take meals, medicines etc. at proper times. Call your chartered accountant or lawyer. He may not have the right to explain things on your behalf but he will ensure the raiding party act within their rights.

If you are asked to answer questions under oath, remember that any wrong statement would bring you serious harm. Listen carefully and reply with due thought and care. If you do not know something or are unsure, state it that way and ask for more time to furnish the answer. Make sure you sign on and obtain a copy of all statements that are recorded or lists that are made.

Provide fullest co-operation to the raiding team. They have an unpleasant task to perform and an adversarial stance will only aggravate the situation. Provide them access to all parts of the house, open up all locked doors, drawers and cupboards as they have powers to break open locks. From a preventive perspective, make sure that you keep proper records of income, assets and wealth for each of your family members including receipts, bills, bank account statements, copies of tax returns etc.

Furnishing those during the search operation would effectively mitigate much of the adverse consequences. In case you do go through any intimidation or undignified behavior, communicate that to the senior tax officers so that they can take suitable action.

If you have nothing to hide, the above guidelines will help mitigate some of the trauma of the raid.

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0 responses to “Income Tax raid- What to do?”

  1. BU says:

    It is indeed very timely for TDS to highlight a most filthy and nasty practice in income tax searches, that is forcing at late night for obtaining “CONFESSION” of unaccounted income. In a recent operation in the South, the tax payer was kept imprisoned in a room by the search party and was forced under threat to admit concealment of several crores of rupees though the search party could not find even a shred of paper evidencing the said unaccounted money! Next day the tax payer swore an affidavit explaining the circumstances under which such an admission was forced from him and he filed the affidavit in the ITO. The departmental officers are now very angry and and have threatened the tax payer of dire consequences.
    Then there is another thing. There are some “search auditors” who alone are seen to handle cases after searches-in all cities and towns. This clearly shows that there is an understanding between the search parties/department and this class of “agents” who are always found in the corridors of the offices where search wing is located.
    Will the authorities look into these aspects? It will be good if your site forwards these comments to the FM, CBDT, etc.

  2. TDS says:

    iT IS TOTALLY MISLEADING AND WRONG TO CONCLUDE THAT ”
    If you have nothing to hide, the above guidelines will help mitigate some of the trauma of the raid.”
    The reason is that, whether or not the search party finds any unaccounted/unexplained cash or incriminating document at the premises of the assessee, the search party are invariably not only under orders to force admission of unaccounted money, but they are also positively lured to forcibly extract confession by the assessee due to the dishonest system of rewards prevalent in the department. As a result, even the accounted for amounts lying in the bank, either in the SB/Current accounts or disclosed FDs, etc., are made to be encashed by the assessees under threat by the officers and then shown as “CASH SEIZURE” for purpose of claiming rewards.
    If a study is made of the officers/officials in recept of rewards in the last ten/twelve years, it will be seen only a few particular names recur in the lists year after year.
    In fact, those derving rewards for real good work done are not only never given rewards but instead are punished by bad postings compelling them to live miserable lives, all in the name of administrative expediency!
    So, those assessees who are seasoned actually have standing unwritten MOUs with the department so that after every given number of years these people are searched, after fixing dates convenient to the both parties, and the party searched also keeps a given amount of money readily available and to be “seized” as unaccounted cash and the department gets due mileage in the media-all by way of understanding between the Deptt and assessee. But such searches are usually characteristic featiyres in the cases of big showroom owners selling sarees, jewellery, fashion goods, ethnic articles, designer furniture-etc., the show rooms which provide (either free or at a token price, also paid by the field office) their merchandise as “gifts” to the visiting officers and their wives/spouses, children, friends, etc., and also takecare of the weddings/paties in the houses of the local officers and their bosses in metros/capital.
    So, in rffect, it is only the hapless who must suffer, whether or not they make loss or profit.

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