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.