Following Steps will ease to handle raid :
1. PAN can be migrated to Central Circle thus making common place for all files at same common place where assessment under raid can be done. Order U/S 127 of IT Act is passed by CIT for PAN migration. Assessee are intimated by mail.
2. Assessment under raid starts by issuing notices u/s 153A by Central Circle (DCIT/ JCIT) for last 6 Assessment Years from Date of search requesting to file Income Tax Return u/s 153A.
3. To file Income Tax Return u/s 153A of the IT Act within the time prescribed in notice which may be 15 days to 45 days. (It will be easy if return is filed through some ready available package)
4. To file Copy of return filed u/s 153A with covering letter to Central Circle. Power of attorney can also be attached.
5. Generally, notice are issued by central circle requesting following documents :
- Financial statements like
- Balance sheet as on Year end, (audited in case of Company),
- Profit and Loss Account for the year (audited in case of Company),
- Notes of Account (in case of Company),
- Auditor report (in case of Company) ,
- Cash Flow can be given if applicable and if specifically asked,
- Director report are generally not required
- Income Tax Return and its acknowledgement. Manytime both previous ITR and ITR u/s 153A are required. It is basically required by them so that they have printed hard copy though they have soft copy with them.
- Computation of Income and Tax as per latest return u/s 153A. They may ask for any changes made in Income in Income tax return filed u/s 153A and/or its justification or supporting of it.
6. To expedite the process above documents can be submitted along suo motto with reply u/s 153A.
Also Read- Search & Seizure (Raid) by Income Tax Department Part I- During raid
7. AO may require more information while assessment and notice u/s 142(1) is issued by Central Circle. His requirement can be classified as:
A. Asset
- List of Bank A/c; Bank Statements, Book and its reconciliation, Summary of opening, total debit, total credit and closing of the year,
- Detail of Fixed asset, addition with source, Depreciation calculation as per IT and companies act,
- Ageing of debtors with opening, closing and transaction during the year.
- Reconciliation of Stock.
B. Liability
- Detail of Share capital along with addition to Capital
- Unsecured Loan – Loan Confirmation along with TDS Certificate
- Creditors details with opening, closing and transaction during the year (Invoice wise breakup may be required)
- Detail of any advance received.
- Detail of any other liability
C. Income
- Detail of Sale with quantity / unit and value.
- Sale of Shares/Fixed asset if any
- Rental Income agreement, chart showing rent, TDS etc
- Detail of Miscellaneous income.
- Copies of 26 AS and its reconciliation showing that all Income for which TDS is claimed are disclosed
D. Expenditure
- Detail of Purchase with quantity / unit and value
- Details of major expenses claimed.
E. Other
- CIB – Information from AO (Central) & its explanation
- Copies of any Assessment Order u/s 143(3)/147 [143(1) may be required]
- Explanation for content of Hard Disk/ Pendrive
- Business Activity of the entity and Individuals
8. Reply u/s 142(1) should be filed within the time prescribed in notice which may be 15 days to 45 days.
9. Mazerernama to be operated in presence of Director/ authorised representative i.e permitting Assessing officer to copy data of seized Pen Drive/ Hard disk to another Hard Disk. No one is authorised to use seized pen drive/ hard disk. Assessing officer can only work on copied data .
10. Explanation of the all the item seized as mentioned in panchanama, should be submitted.
11. Generally two/ three hearing are conducted by Assessing officer before passing the Order.
12. Assessing officer can counter check the facts submitted by assesee with the 3rd Party.
13. Assessing officer will re-transfer the file if appeal is not filed to respective department.
QUERIES :
1. What is time period given under Search and Seizure ?
AO shall make an order of assessment within following months from the end of the financial year in which search was completed
| Year in which search is conducted | Before1/4/18 | In between | After 31/3/19 |
| a) Prior 6 year | 21 | 18 | 12 |
| b) Same year |
2. Only Company mentioned in panchanama will be taken for assessment u/s 153A ?
CNo, Assessing officer can add more related Companies for assessment by justifying and taking approval from higher authority.
3. Will work u/s 153A goes year wise separately ?
Generally there are many Companies of the Group in which raid is conducted. Work for each Company for each year will be done separately but one should ensure that closing figure should match with opening of next year.
4. Can return filed u/s 153A be revised?
Yes one can revise the return.
5. What is benefit of filing return u/s 153A ?
This is opportunity that one can rectify any mistake which cannot be done as it is time barred. You can also correct carried forward losses or even MAT carried forward along with correction in Income.
6. What will happen if IT authority (one from Investing Wing) takes a declaration in stamp paper from 3rd party that transaction done through him is bogus ?
3rd party can deny by submitting retraction in stamp paper if previous statement was signed by him by giving undue pressure and was not given willing fully.
7. What will happen to the company which was taken under u/s 147 ?
As only last 6 Assessment years are taken u/s 153A and as last 7th year will become time barred u/s 147 in March. Assessment of It may be taken u/s 147. Assessee has to submit Income Tax Return u/s 147 and should get its assessment. AO will give order before December of that year.
For e.g,
Date of Search in Nov’2017
Year taken u/s 153A will be AY 2012-17 i.e 6 years
Year which will be time barred u/s 147 in March 18 is AY 2011-12.
8. No seizure of stock in trade
Bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, shall not be seized.
9. When and What can be seized ?
Books of accounts and/or documents further following items can be Seized if they are not accounted/ disclosed in books or :-
i) Bullion i.e Gold, Silver etc
ii) Cash
iii) Jewellery, Ornaments etc
iv) Silver articles and silverware
v) Other Valuables, locker keys, FD etc
10. Who keep the seized assets ?
Any asset or document so seized shall be handed over to the Assessing Officer having jurisdiction over such person within a period of 60 days from the date on which the last of the authorizations for search was executed. Thereafter, such Assessing Officer exercises all other powers.
11. Can Seized Asset can be release ?
On satisfaction of the following conditions, the amount of any existing liability may be recovered out of such asset and the remaining portion of the asset may be released to the person from whose custody the assets were seized –
- An application is submitted within 30 days from the end of the month in which the asset was seized for release of asset;
- The nature and source of acquisition of such asset is explained to the satisfaction of the Assessing Officer; and
- The Assessing Officer obtains the prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
12. What is time limit for release of asset ?
Asset or any portion thereof shall be released within a period of 120 days from the date on which the last of the authorisations for search was executed.
13. When Seized Asset cannot be release ?
Seized asset shall be retained by the Department during pendency of appeal filed by Revenue.
14. What happen to excess money?
After discharging all liabilities if any assets or proceeds thereof left, then it shall be returned to the persons from whose custody such assets were seized.
15. Is Interest payable on the asset seized ?
Where the aggregate amount of money (either seized or realized through sale of seized assets) exceeds the aggregate of the amount required to meet the liabilities, Government shall pay simple interest at the rate of ½% p.m. The interest shall be payable from the date immediately following the expiry of the period of 120 days from the date on which the last of the authorisations for search was executed.
16. What are the rules regarding seizure of jewellery ?
In the case of wealth tax assessee, Items found in excess of gross weight disclosed in the wealth tax return only can be seized.
For other person, gold jewellery to the extent of 500gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized.
17. Can you get refund as per appeal order even if department has gone to tribunal ?
Yes, Appeal order will be followed and money can be refunded. No need to wait for Tribunal Order. Fulfillment of each order is a separate issue.
Author Bio
Thank u for forwarding motivation to me for Part i. Now i have posted Part II. Based on your doubts received i will try to practical solution in Part 3