Income tax raid

 The power to conduct a search in tax evaders abode, followed by a subsequent seizure of any illicit money is one of the most important powers of the Income Tax Department. Tax authorities are known to conduct such raids to minimise tax evasion.

One of the most important powers that the Income Tax Department possesses is the power of search and seizure. Tax authorities usually exercise their right to conduct raids on individuals or groups who are suspected of evading tax or who are deemed to be in possession of any property or income belonging to another party that has not been disclosed. While this might seem like a drastic step, it is an act that is upheld by the constitution, and is deemed entirely necessary in cases where the Income Tax Department feels extreme action is needed.

Objectives of Income Tax Search and Seizure

The Income Tax Department exercises its right of search and seizure to achieve the following objectives:

• To ensure that any threat to social security is dealt with effectively

• To directly address problems and issues that arise due to evasion and avoidance of tax

• To meet the menace of black money head on

• To uphold the law laid down by the constitution of India

Income Tax Raids

As per law, if evasion of tax or undisclosed possession of property or valuables is suspected, officers authorised by the Income Tax Department are well within their powers to conduct raids and searches on the following:

• Any residential property or premise

• Any property or premise used for the purpose of conducting business

• Any vehicle or automobile

• Any lockers held at banks or financial institutions

• Any books or ledgers containing account details and transactions

• Any stocks, bonds or shares that have been acquired or sold

• Any valuable items such as jewellery, gold, and other precious metals

As per Section 1 32A of the Income Tax Act, the authorised officers can also exercise their right to inspect any books of accounts or any items of value that have been seized by any other department belonging to the government.

Reasons For Income Tax Raids

The Income Tax Department can conduct raids on individuals or groups for a wide range of reasons. The most pertinent of these are outlined below:

• Where the department has gathered evidence substantiating that an assessee is in possession of income or assets that have not been disclosed, and where the amount of tax that would be normally paid on such income or assets exceeds Rs 1 crore.

• Where the department suspects an individual or group of holding assets that have been unaccounted for, and which are deemed to be used for the purpose of smuggling, public disorder, fraud, terrorism etc

• Where the department has received verification of lavish expenditure at weddings or marriages

• Where the department has gathered evidence relating to the evasion of tax that is based on actual fact rather than rumors or assumptions

• Where the department has acquired reports or tax evasions that have been gathered by intelligence departments

• Where the department has acquired reports in relation to the confiscation of money by any state or central government law enforcement agency

• Where the department has gathered information from ‘informers’ hired by the law to provide critical data on any individual or organisation suspected of tax evasion

• Where the department has gathered data or information that has been put together from the perusal of tax assessment files and records that have passed through the process of verification

• Where the department has gathered information received from any party with an intimate relation with the assessee in question such as a member of the assessee’s family, a business partner, an employee etc. This information is subject to independent questioning on the part of the Income Tax department.