Income Tax Raid

In India there is a direct tax levied by government from all earning individuals. This is termed as Income tax. It is important in any country as with this tax which goes to government, government invests this money into infrastructure, defense and economic development of the country. The imposition of tax is through constitution of India, which is levied by central government of India. Income tax authorities have permitted tax payers to self- assess their income tax and file it online. And also do the same for income tax returns are checking of status of their application. Income tax raid is a system where income tax officers from income tax department, check the tax payers accounts, if they have done any fraudulent activities. The income tax department has record of income of the individuals, which help them keep a check on activities if they are fraudulent. When there is such activity happening in the country, the officers from income tax department to the person’s place to check all the records and everything else. This is known as income tax raid.

Who can permit raids- who are the authorized officer?

The director from income tax department.
The chief commissioner of income tax department.
The commissioner at income tax department.
The joint director or joint commissioner at income tax department.

When is the income tax raid directed?

Income tax raid can be done when the income tax department has proofs in form of documents that such person is involved in any fraudulent activity and the income tax authority has reason to believe it.
The search of raids can be only done by a person who is in the position of income tax officer. He may also delegate it to his subordinate, but he should not be below the position of income tax officer. The delegation must be mentioned in the search warrant in form 45.
Income tax raid can happen at a place of person who has possession of bullion, jewelry, cash or any other valuable items, whose disclosure has not been made by him or will not make in future.
A person to whom summons have been served and notice has been already given to produce his books of accounts and which he has not done, and the books of records have not been delivered to the income tax department.
Where the summons have been served to the person under section 13(1) and notice has also been served under section 142(1), where it was not possible to produce other document for further proceedings.

Powers of Income tax authority during process of raid

The income tax officers who have come for raid have powers to enter into building, house, premise, vehicle, vessel or aircraft where there is doubt of fraudulent activities taking place and the motive of the concerned income tax officer is to check the books of accounts, any other accounts, money, jewelry or bullion.
The income tax officers have a right to search a person who has to enter into building, house, premise, vehicle, vessel or aircraft where there is doubt of fraudulent activities taking place and the motive of the concerned income tax officer is to check the books of accounts, any other accounts, money, jewelry or bullion.
Where the officer has checked the books of accounts and other things he has right to check all the other things, if a person has not disclosed his income.
The income tax officer has all the power to break open any lock, door, cupboard or locker if there is no key available.
The income tax officer has powers to check the books of accounts or any records which is stored and available in electronic form.
The officer can place any mark of identification on the person’s books of accounts, records or any other documents.
The income tax officer, who is there for the raid, can seize any books of accounts, any other accounts, money, jewelry or bullion.
There are a few assets which cannot be seized by the income tax officer and they are-

Stock in trade (other than cash) for business, assets or cash whose accounts and records have been disclosed by the person, assets mentioned in books of account, cash duly explained, jewelry mentioned in wealth tax return, Gold up to 500gm for married lady, 250gm of gold for unmarried lady, and possession of gold of 100gm by a male member.

Rights of a person during tax raid

To insist on personal search of ladies to protect their decency.
To have at least two neighbors as witnesses.
A lady occupying apartment or place where the search is being conducted to refuse it to happen, if according to customs, she does not go out in public.
To allow having of meals at normal times.
To allow children to go to school after checking of them.
To call doctor in case of an emergency.
To inspect sealed places, with its subsequent opening.
To have copy of panchnama with all the annexes.
To have copy of statement given by the government against him.
An aggrieved person can file for a writ petition challenging the raid before High Court if he feels action of income tax department was unfair. Or of any income tax officer who came for the raid to the place of the aggrieved person.

How to prevent income tax raid?

Income tax raid can be lawfully avoided by a person, by him being compliant and responding to the summons and notices issued to him. Also by not keeping any black money, or any undeclared property.

Summary

Income tax has to be duly paid to the government of India by all the earning individuals. If the authorities feel that there is a suspicion of fraudulent activities being taking place by any person, and they have served summons or notice to that person, and no reply has been delivered. Income tax officer can raid the place and also check and seize the books of accounts, or any other documents. Therefore, it is advisable to clear and disclose all the financial accounts by individuals.

Devashi Katlana