IT Department

On a fine morning, you are on your bed, half asleep, lazing around wishing if somebody could drop by your favourite coffee along with the Newspaper to read. When you hear the birds chirping happily, you look around to find mesmerizing sunbeams all around in the room. You peep in through the window of your room, to find the Sun, not much high in the sky, gazing and smiling at you with all its warmth and the light.

Suddenly the doorbell rings. You look at the clock. It’s 8:00 am – too early for guests to visit. Whom could it be then? You keep guessing until you reach the door and open it… only to end up ruining your sunny morning.

“We are from the Income Tax Department. We have a search warrant to search your property.” You find a large team of officers standing in front of you, who are going to take away the earnings of your life. This is an Income Tax raid! In India, even the honest taxpayers fear the Income Tax department & their raids, owing to two primary contentions –

  1. The income tax law is so complex that it is always possible to miss out on some points;
  2. This is India, if you are a common man, anything can happen to you.

However, this is not true. That’s the reason why, even an honest taxpayer gets tangled in unwanted legal problems, just because of the panic situation that gets created at the time of the IT raid, instead of cooperation. This is mainly due to ignorance of knowledge concerningthe legal rights and duties of a person, during an IT raid.

Not all visits are Raids …

Income Tax Department can visit your premises for two kinds of legal purposes – first is Survey, where the officers merely visit to collect information, check cash balances or the stock; while the second is Search & Seizure, commonly known as Income Tax raid, which is aggressive and the officers may carry or seize any illegal income, wealth or documents. However, both are surprise visits.

When the IT Department does not have much information about your business but is merely suspicious, they carry out the survey, to collect important information. While Search & Seizure is carried out, only when the IT Department has strong evidence about some undisclosed wealth in your possession. The prominent differences between survey and search are as follows –

Survey, Search & Seizure

Survey Search & Seizure
Survey can take place only at a business premises or place of the profession. If books are kept at residential premises, only then, residential premises get covered. Search can take place at any building or place within the jurisdiction of that officer.
Survey can take place only during working hours and on business days. It can continue even after working hours. Search can take place on any day. It can start after Sunrise, but continue until the procedures are completed.
In Survey, the only inspection is done of books and verification of cash or inventory. In Search, the entire place is searched to unearth hidden assets, locks can be break opened, any undisclosed asset can be seized and carried away.
Personal search of a person cannot be done. The help of Police officers cannot be taken. Every person in the premises, going out or coming in, can be personally searched and their statement can be recorded. The search team is generally accompanied by Police officers.

 What should you be doing?

  1. The first and foremost thing you should do is, check the warrant – see if it a survey or search.
  2. Besides, note the date, address, and authorization. You can also ask for the identity of each member of the raid team, to avoid cases of frauds, as we see in the Bollywood movies.
  3. You have the right to personally search every member of the raid team, to avoid any planting of evidence.
  4. In the case of any health emergency, you have the right to call a doctor. You also have the right to have meals at a proper time.
  5. All the things that are being seized make sure that they are rightly listed and described.
  6. You have the right to retain a copy of the Punchnama.
  7. You can call your Chartered Accountant or Lawyer although he may not have the right to explain things on your behalf, you can ensure if the raid team is acting within their legal powers.

What should you, not be doing?

  1. Do not panic. Irrespective of the fact whether you are an honest taxpayer or not, you should not panic. Cooperate with the raid team.
  2. Do not stop them or argue without any legal reason. Allow free and unopposed entrance into the premises.
  3. Help them in identifying all the receptacles in which assets or books of accounts and documents are kept. If there are locks, handover the keys to them.
  4. Help them in identifying all the people on the premises, their relationship with you.
  5. Do not encourage or allow the entry of any unauthorized person into the premises when the search proceedings are going on.
  6. Do not remove any article from its place without the knowledge of the raid team. If you destroy any document to prevent the same from being used as evidence, you shall be punishable under Indian Penal Code for a civil offence.
  7. Answer all their questions truthfully and to the best of your knowledge. Do not allow any third party to either prompt or interfere while your statement is being recorded by the officer.
  8. Let the search proceedings complete without any disturbances, discuss the legal recommendations at a later stage with your Chartered Accountant.

Words of Wisdom

Pay your taxes honestly, to avoid Income Tax raids. And more importantly, cooperate with the Search proceedings. Most of the times, people go beyond the four corners of the law, generally out of panic, end up creating more problems than they originally existed. This complicates the situation further and then it becomes difficult to handle even for the legal experts to help them out.

Remember, the Search proceedings may take away a little part of your wealth, but not your life or your abilities. Merely by paying taxes, either at the right time, as is always recommended, or later on after search proceedings, you can get back to your routine life.

So when Income Tax Department raids your place… Do not panic, just cooperate!

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