SEARCH &

SEIZURE UNDER
IT ACT, 1961

-Shivani. K
-HC18118
AGENDA
• Introduction
• Circumstances under which it can be conducted?
• Who can authorize conduct of search and seizure?
• Who can conduct and what are their powers during
search and seizure?
• What can be seized?
• What are the rights and duties of person being
searched?
• Some relevant case laws
INTRODUCTION 3

• Similar concept under CrPC, but this is related to Income Tax.

• It is what is commonly known as “IT Raid”.

• SEARCH means an exploratory examination or probing into or

seeking out something which is hidden, sealed, suspected and not
open, exposed or demonstrated.
• SEIZURE means taking possession of something forcibly or under
the authority of law. Seizure relates to pre-assessment stage. Once
the assessment gets completed, seizure cannot be done.

• SEARCH & SEIZURE are stringent actions taken by the Income

Tax Department when the penal and prosecution provisions fail to
prevent tax evasion.

• These provisions are dealt under section 132 of Income Tax Act
1961.
 WHEN CAN SEARCH BE CONDUCTED? 4

• As per S.132(1) –
Where “the Commissioner, in consequence of information in his possession, has reason to believe that”— Can
conduct Search and Seizure-
a. “Any person to whom a summons was issued to produce any books of account or documents, and he failed to
do so”
b. “Any person to whom a summons has been issued will not produce any such books of account or documents
which may useful for proceedings under the Act,”
c. Any person possessed any assets and such assets represent undisclosed income or property .

• ‘Reasons to believe’: This is the most important condition which must be satisfied. The belief must be based on
solid, reliable information in good faith and not mere pretence. –
In the NK Textiles vs. CIT it was held that the facts constituting such information should be such that a reasonable
and prudent man same belief or conclusion.
In L.R. Gupta v. Union of India, it was held that the term “information” does not refer to rumour or gossip
Thus, when a certain level of officers possess certain information,
which can be in the form of
 credible information received from government departments, the
intelligence wing, informants etc, and
 information from records of the tax department, from a survey
conducted, from records of unexplained transactions, lavish
expenditure, illegal investments and a plethora other sources,
 and such information leads to an application of mind that there
is reason to believe that the aforesaid circumstances mentioned
exist in a case,
then such an operation can be conducted
WHO CAN AUTHORIZE AND WHO CAN CONDUCT SEARCH & 6

SEIZURE? – S.132(1)
 7

Whether Search warrant is required?

• The issue of a search warrant by the Commissioner under section

132 is not judicial in nature.

• Section 132 does not require that the warrant of authorization has to
specify the particulars of documents or books of accounts. A general
authorization to search and seize documents and books of accounts
is sufficient for the purpose.

• But it is very important that the warrant of authorization should

indicate the name of the person who has to be searched. If the
Commissioner signs a warrant which is blank, the search is illegal
and the articles seized are to be returned.
 POWERS OF AUTHORITY CONDUCTING 8

THE SEARCH

The authorised officers are empowered to do the following:

1. To Enter and search any building, place, vessel, vehicle, aircraft as

necessary. It must be within the jurisdiction of the income tax authority
but the offender will not be within his jurisdiction.

2. To break open the lock of any door, box, locker, safe, almirah or other
receptacle

3. To search any person whom the authorised officer has reasons to

suspect.

4. To inspect any such books of accounts or other documents which the

authorised officer has reasons to suspect.
 9

5. Seizure:
One important power within the power to search is the power of seizure. The
officer can seize any book of account/other documents or other articles in the
question of the raid, successfully found as a consequence of the search.

Exception: If such things are stock in trade of the person’s business, that is, the
things are to be used in the ordinary course of business and don’t function as a
personal asset, then such articles cannot be seized and only an inventory or note
can be made in respect of such items.

If it is not possible to take physical possession of any item due to its volume,
weight or other physical character or due to its dangerous nature, the authorised
officer may serve an order to the owner or to the person who is in immediate
possession or control thereof. This is known as deemed seizure.
 WHAT CAN BE SEIZED? 10

SEIZABLE ASSETS
NON-SEIZABLE ASSETS
 Unreported Cash And Jewellery
 A Company’s Stock-in-trade (Except Cash).
 Account Books, Challans, Diaries,
 Assets Or Cash Declared To The Income Tax And
And So On
Wealth Tax Department
 Chips In Computers And Other Data
 Assets Recorded In The Books Of Account
Storage Devices
 Cash That Is Duly Explained
 Documents Pertaining To Property,
 Jewellery Declared On A Wealth Tax Return
Such As Deeds Of Conveyance, Etc.
 Gold Worth Up To 500 Grammes For Each Married
 Assets That Are Not Able To Be Seized
Woman, 250 Grammes For Each Unmarried Woman,
And 100 Grammes For Each Male Member
 11

6. To put identification marks on any such books of account or documents to

make copies therefrom.

7. To keep a note of money, bullion, jewellery or any other valuable article or

thing [section 132(1)]

8. To get service of any police officer or any officer of central government in

assisting in the procedure. [section 132(2)]

09. To take steps for the compliance of order served on the owner or possessor
[section 132(3)]

10. To examine any person who is in possession or control of any of the items
aforesaid and to utilise such statements as evidence in any proceedings under this
Act. [section 132(4)]
 RIGHTS OF PERSONS BEING SEARCHED
The CBDT has issued a charter of rights and duties of persons searched by the
Income Tax Department. The rights of a person searched are:

o He can make a personal search of the members of the search party before
and after the search

o He can also insist for the presence of at least two respectable and
independent residents of the locality as witnesses.

o To see the warrant of authorisation duly signed and sealed by the issuing
authority

o To verify the identity of each member of the search party

o To insist on personal search of women being taken only by a woman, with

strict regard to decency

o To call a medical practitioner in case of emergency

o To allow the children to go to school after checking their school bags

o To have facility of having meals at normal time

o To inspect seals placed on various receptacles, sealed in the course

of search.

o To have a copy of panchnama together with all annexures

o He must ensure that the facts given by him has been recorded
promptly

o To get a copy of any statement used against him by the department

o To inspect the seized books of accounts in the presence of

authorised officers.

o To object to the retention of documents beyond 180 days of the

seizure
 Individual’s rights after Search and Seizure

• In the presence of any authorised officer or other person

empowered by him, the person whose custody any books of
account or other documents are seized may make copies or
extracts from them.

• If a person feels that the department’s action was unfair, he can

file a writ petition in the High Court challenging the raid.

• He can also contest the assessment by filing an appeal with the

Commissioner of Income Tax (Appeal)
DUTIES OF PERSONS BEING SEARCHED 15

o To allow free and unhindered ingress into his premises and put his signatures
on the warrant of authorisation.

o To identify every individual in the premises and should explain the relationship
to the person being searched.

o To identify all receptacles and hand over the keys to authorised officers
o Not to allow the entry of any unauthorised person into the premises

o Not to remove any article from its place without informing the authorised
officer. If he destroys any article for the sake of preventing something, then he
may be liable to imprisonment of fine or both
 16

o To answer all queries truthfully and to best of his knowledge. He should not
allow any third party to interfere or prompt while his statement is being
recorded by the authorised officer.

o If the person refuses to answer a question or makes false statements, then he

may be liable to prosecution which may result in imprisonment or fine or both.
o To ensure peace is maintained throughout the search operation
 CASE LAWS 17

1. Pooran Mal v. DIT (1974) 93 ITR 505 (SC)

In this case, the constitutionality of the provisions of section 132 of the act and rule 112 of
the Income-tax rules 1962 was upheld and were held not to be violative of Article 19 of the
Constitution. The apex court held the law to be covered under “reasonable restrictions” and
also held that evidence obtained in such search is not liable to be rejected.

It cited another case (M.P. Sharma v. Satish Chandra, 1954 AIR 300) to assert that search and seizure is only a
temporary interference with the right to hold the articles and premises and for limited purposes of investigation and
any damage caused due it is a subject of redress in other proceedings. It also commented that there are many inbuilt
safeguards including the fact that this power is vested only in the highest officers.

2. Rajendran Chingaravelu (Mr) v. R. K. Mishra, Addl. CIT (2010) 320 ITR 1 (SC) (10)
In this case, the court shunned the practices of various officers of informing the media before an investigation is
completed. Thus, a trial by media has to be strictly avoided in case of raids as well.
Presentation title 18

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