Subject- Principal of Taxation

Topic- Search and Seizure

(Back Paper Project)

Submitted to :

Submitted by

Ramesh Sir

Pulkit Pareek

(Asst. Prof.)

B.A.LL.B(7th Sem)

1 | Page

CONTENTS
1. Contents
2. Acknowledgement
3. Introduction
4. Authorized officer
5. Judicial position in Courts
6. Power of authorized officer
7. Right of the Tax payer
8. Responsibilities
9. Disclosure of Income in Search & Seizure
10. Conclusion

2 | Page

ACKNOWLEDGEMENT

I take immense pleasure in thanking Sir Ramesh wish to express my deep gratitude to him for
his insightful guidance which permitted me to carry out this work. My consult faculty has been a
source of inspiration and I am very thankful to him for his guidance which helps me in
completing this project.
Words are in adequate in offering my thanks to him for his encouragement and co-operation in
carrying out the report work last but not the least I would like to thank my friends.

INTRODUCTION

3 | Page

Search and Seizure, the origin of these provisions will in a few years celebrate its
golden jubilee. It was since 1956 that the provisions of search and seizure made its first
entry into the Income Tax Act. Section 132 was totally substituted by the Finance Act,
1964. After section 132 underwent a through overhaul in the year 1976, to committees
had made certain recommendations on search and seizure provisions (i) The Raja
Chellaiah Committee and, (ii) The Kelkar Committee. It is seen that the
recommendations affecting the substantive law have been given effect to in respect of
majority of such recommendations; the assessee friendly measures recommended by
these committees have not been given any serious considerations.

Who is the authorized officer to issue order for search and

seizure:
4 | Page

a) the Director General of Income Tax, or

b) the Director of Income Tax, or
c) the Chief Commissioner of Income Tax, or
d) the Commissioner of Income Tax, or
e) any such Joint Director or Joint Commissioner of Income Tax as may be empowered by the
Board.
The Director General or Director or the Chief Commissioner or Commissioner or Joint
Commissioner or Joint Director who have been empowered by the Board can authorize any
officer subordinate to him not below the rank of Income Tax Officer to conduct search. The
officer so authorized is referred as Authorized officer and the authorization is done by issuing a
search warrant in Form 45.

The circumstances in which search and seizure can be conducted?

132(1)
The authorized officer who is duly empowered by the Board has in his possession any
information through which he has reason to believe that
132(1 )(a)
A person to whom a summon u/s 131(1) or a notice u/s 142(1) has been served to produce books
of accounts or other documents has failed or omitted to produce or cause to be produced the said
books of accounts or other documents, or,
132(1 )(b)
A person to whom a summon u/s 131(1) or a notice u/s 142(1) has been or might be issued is not
likely to produce or caused to be produced any books of account or other document which will
be useful for or relevant to any proceedings under the Act; or
132(1) (c)
5 | Page

A person is in possession of money, bullion, jewellery or other valuable article or thing and such
property represents wholly or partly income or property which has not been disclosed or would
not be disclosed.

Who are the Persons to be searched: From the above it is clear that the persons to be searched
are persons:
(a) who have books of account or documents which have not been produced or are not likely
to be produced in response to notices or / summons, or

(b) persons who are likely to be in possession of undisclosed income or property

The basis for search and seizure

The assessing officer must have a reason to believe that the person, whether or not a notice has
been served on him, is not likely to produce his books, etc. in such a case, the basic is that the
person will suppress books of account and other documents which may be useful and relevant to
an income tax proceedings. Here the authorizing authority, if challenged, has to prove the basis
of belief.
MAMCHAND AND CO v CIT (1970) 76 ITR 217 (CAL)
KUSUM LATAv CIT (1989) 180 ITR365 (RAJ)
There must be information with the authorizing authority relating to two matters. One, the person
should be in possession of money and secondly such money represents either wholly or partly
income or property which has not been disclosed.
6 | Page

CIT v RAMESH CHANDER (1974) 93 ITR 450 (PUN)

Is the assessee entitled to a copy of reasons recorded for issuing a search warrant?
Disclosure of the material or the information to the person against whom the action is taken u/s
132(1) is not mandatory, because such disclosure might affect or hamper the investigation
(SOUTHERN HERBALS LTD v DIT (INVESTIGATIONS) (1994) 207 ITR 55 (KAR). Only
the High Courts and the Supreme Court have the jurisdiction to call for and look into the reasons
recorded to decide whether the issue of the search warrant was called for. (Dr. PRATAP SINGH
v DIRECTOR OF ENFORCEMENT (1985) 155 ITR 166 (SC)

Can

search

be

authorized

by

an

authorized

by

an

authority

other

than

jurisdictionalauthority?
The Chief Commissioner/Commissioner of Income Tax has the power to authorize a search of
any building, place, vessel, vehicle or aircraft of a person which is under his jurisdiction and also
in cases where such building, place, vessel, vehicle or aircraft is in his area of jurisdiction but he
has no jurisdiction over the persons concerned, if he has reason to believe that any delay in
obtaining authorization from the Commissioner having jurisdiction over the person would be
prejudicial to the interests of revenue. Such authorization shall be given in Form 45A.
Where a search for any books of account or other documents or assets has been authorized by
any authority who is competent to do so, and some other Chief Commissioner/Commissioner in
consequence of information in his possession has reason to suspect that such books of account or
other documents and assets etc, of the assessee are kept in any building, place, vessel or aircraft
not specified in the search warrant issued by such authority, he may authorize the Authorised
Officer to search such other building, place, vessel, vehicle or aircraft. Such authorization shall
be given in Form 45B.

7 | Page

The powers of the officer to whom authority is given for

search and seizure

a)

enter and search any building, place, vessel, vehicle or aircraft where he has reason t0o

suspect that such books of accounts, other documents, money, bullion, jewellery or other
valuable article or thing are kept.
b)

Break open the lock of any door,box, locker, safe, almirah or other receptacle for

exercising the powers conferred by clause (i) above where the keys thereof are not available.
c) Search any person who (a) has got out of, or (b) is about to get into, or (c) is in the building,
place, vessel, vehicle or aircraft, if the authorized officer has reason to suspect that such person
has secreted about his person any such books of account, other documents, money, bullion,
jewellery or other valuable article or thing.
d)

Require any person who is found to be in possession or control of any books of account or

other documents maintained in the form of electronic records, to afford the necessary facility to
the authorized officer to inspect all such books of account or other documents.
e) Seize any such books of account, other documents, money, bullion, jewellery or other
valuable article or thing found as a result of such search. However, w.e.f. 1-6-2003, the
authorized officer shall have no powers to seize any bullion, jewellery or other valuable article or
thing being stock-in-trade of the business found as a result of search. He shall make a note or
inventory of such stock-in- trade of business.
f)

Place marks of identification on any books of account or other documents or make or

cause to be made extracts or copies therefrom.

8 | Page

g) Make a note or an inventory of any such money, bullion, jewellery or other valuable article or
thing.

The additional powers of the authorized officer

a) Deemed Seizure 132(1) : Where it is not possible or practicable to take physical possession of
any valuable article or thing and remove it to a safe place due to its volume, weight or other
physical characteristics or due to it being of a dangerous nature, the authorized officer may serve
an order on the owner or the person who is in immediate possession thereof that he shall not
remove, part with or otherwise deal with it except with the previous permission of such
authorized officer and such action of the authorized officer shall be deemed to be seizure of such
valuable article or thing.
b) Restraint Order 132(3) with explanation and section 132(8A) : where it is not possible or
practicable to seize any (a) books of accounts, or other documents, or (b) money, bullion
jewellery or other valuable articles or things for reasons other than those mentioned , the
authorized officer may serve an order on the owner or a person who is in immediate possession
or control thereof that he shall not part with or otherwise deal with it except with the previous
permission of such officer and such officer may take steps as may be necessary for compliance.
c) Power to requisition service of a police officer or officer of the Central Government sec
132(2): The authorized officer may requisition the services of any police officer or any of the
officer of the Central Government or of both to assist him for all or any of the purposes specified
above and it will be duty of every such officer to comply with such requirements.
d) Examination of any person on oath sec 132(4) with explanation: the authorized officer
may, during the course of search or seizure, examine on oath any person who is found to be in
9 | Page

possession or control of any books of accounts, documents, money, bullion, jewellery or other
valuable article or thing and any statement made by such person during such examination may
thereafter be used in evidence in any proceeding under the I.T.Act,1 961. The statement can be
recorded during the course of search and seizure or when it is over. Further, an explanation has
been added to provide that the examination of any person may be not merely be in respect of any
books of account, other documents or assets found as a result of the search, but also in respect of
all matters relevant for the purposes of any investigation connected with any proceedings under
the Income Tax Act,1 961.
e) Presumption of ownership of books of accounts and assets and its truthfulness sec 132
(4A): it may be presumed a)the books of account or other documents and assets found in
possession of any person in the course of a search belong to such person, b) the contents of such
books of accounts and other documents are true, c) the signature and every other part of such
books of account and other documents which purports to be in the handwriting of any particular
person are in handwriting of that person or which may reasonably be assumed to have signed or
written the books of accounts or other documents are in that persons handwriting. In case of
documents stamped, executed or attested that it was duly stamped and executed or attested by the
person by whom it purports to have been so executed or attested.

g) Copies of extract of books of account and documents sec 132(9): the person from whose
custody any books of accounts or documents are seized may make copies or take extracts
therefrom in the presence of authorized officer or any person empowered by him in his behalf, at
such place an time as the authorized officer may appoint in this behalf.
h) Handling over of seized books and assets to assessing officer sec 132(9A): such handling
over is done within the period of 60 days from the date on which the last of the authorization for
search was executed

10 | P a g e

JUDICIAL POSITION IN OUR COURTS

Search does not get invalidated on allegation of bribery as affirmed in Kamal Khosla v Director
of Income Tax (Investigation) 258 ITR 43
> In case where the search officers dump documents and articles in particular place and seal it, so
that they could examine whether they could seize it or not at their leisure, they may not be within
their rights as held in Dr. C. Balakrishnan Nair v CIT 237 ITR 70

11 | P a g e

> Where the CIT had authorised a search merely on an intimation from CBI without any effort
to ascertain the correctness of the allegation of money or other assets or primary verification the
court held the search was invalid, Ajit Jain Vs Union of India 242 ITR 302
> In Ram Kumar Dhanuka v Union of India 252 ITR 205, the court has held that non residents
are not immune from the reach of powers of search and seizure.
> Constitutional validity affirmed in Pooran Mal v. Director of Inspection 93 ITR 505, C.
Venkata Reddy V ITO 66 ITR 212
> Power to arrest denied in L.R.Gupta v Union of India 194 ITR 32
> Interpretative clause cannot be invoked for the purposes of authorization of search held in Dr.
Nalini Mahajan v Director of Income Tax 2571TR 123
> Just because cash was initially seized by the police, there could not be action under section 482
of the Criminal Procedure Code, 1973, when the cash seized had meanwhile become the subject
matter of an other search. Kushi Ram v Hashim, AIR 1959 SC 542.
> It would not be correct for the search officers to seize assets not belonging to the assessee
where there was explanation as to the ownership of such assessee as held in Alleppey Financial
Services V ADIT 236 ITR 562.
> Immovable property cannot be seized held in Bapurao v ADI 247 ITR 98, followed Sardar
Parduman Singh v Union of India 166 ITR 115.

Search and Seizure Provisions

12 | P a g e

. Conditions for valid search Prabhubhai Vastabhai Patel Vs R.P. Meena 226 ITR 781 (Guj) has
summarised conditions laid down by various judgements Authority must have
informationAuthority must have information Reason to believe & not suspect It must be info &
not rumour or gossip or hunch. Information must exist prior to authorisation. reason to believe
must have reasonable bearing / connection to information. Existence of condition precedent is
open to judicial scrutiny. But sufficiency of information is not open to judicial scrutiny.
5. SEARCH AND SEIZURE-S.132 VALIDITY OF SEARCH WRIT JURISDICTION At
assessment stage: Chitra Devi Soni 313 ITR 174(Raj.) in favour of assessee SLP dismissed.
Paras Rice Mills 313 ITR 182(P&H);Gaya Prasad PathakParas Rice Mills 313 ITR
182(P&H);Gaya Prasad Pathak 290 ITR 128 (MP) against the assessee
6. Illegal Search Consequences When a search is held as illegal by High Court : All assets
seized to be returned Original copies of books of account or other documents to be
released.documents to be released. No proceedings u/s. 153A or u/s. 153C t. No presumption u/s.
132(4A) / 292C Costs may be awarded However, department is not precluded from using the
document [Pooranmal Vs. Director of Inspection (1974 ) 93 ITR 505 (SC).]
7. PRESENCE OF COUNSEL QUASI JUDICIAL PROCEEDINGS-MEANING A.Investigation
and collection of incriminating evidence and relevant facts and their verification, examination
(Police inspector role-administrative)examination (Police inspector role-administrative)
B.Issuing of show cause notice to the assessee after charges are framed (ie prosecutors role - to
file charge sheet before the trial court- administrative ) C.Appreciation and evaluation of the
evidences collected by him and explanation and evidences filed by the assessee (Judges Role)
8. PRESENCE OF COUNSEL Nature of INature of I--T proceedingT proceeding The Madras
High Court, in the G. Giribabu & Anr. (2010) 326 ITR 575 Madras) case, decided that a person
summoned cannot insist that he should be permitted to appear with his counsel during
preliminary enquiryappear with his counsel during preliminary enquiry proceedings.. The case
arose under the FEMA provisions. The petitioners' case before the high court was that the right to
be represented by an advocate flows as the cross examination is justified as if before a court of
law. The FEMA/I-T authorities have no jurisdiction or power to deny the presence of an

13 | P a g e

advocate. The right of fair procedure is part of the requirement of article 21 of the Constitution of
India.
9. PRESENCE OF COUNSEL Nature of Enquiry There is great latitude allowed to an incometax authority and the procedure in an adversary system of proceedings cannot be applied to him.
even at the stage of collection of information. The court held that the functions that the AOs
under the IT Act and officers of the ED under FEMA perform are of an inquisitiveand officers of
the ED under FEMA perform are of an inquisitive nature seeking and collecting information-not
that of deciding any issues. Basically, these are information gathering exercises. When the
information gets collected through the machinery of these provisions and it is to be put to use in
passing orders, the parties involved are to be given opportunity to have their say in accordance
with the principle of natural justice and they get full opportunity for cross-examination and, at
that stage, the assessee/party proceeded against, can be represented by his/her counsel-not at the
enquiry stage.
10. STATEMENTS/CONFESSION Statement on oath-Meaning thereof Sec.8 of INDIAN
OATHS ACT, 1969: Persons giving evidence bound to state the truth: Every person giving
evidence on any subject before any Court or any personevidence on any subject before any Court
or any person authorized to administer oaths and affirmation shall be bound to state the truth on
the subject. Name of Old act - The Indian Oaths Act, 1873
11. Binding nature of a statement made on oath an admission in statement recorded on oath is an
extremely important piece of evidence but it cannot be said that it is conclusive : Pullangode
Rubber Products Co. Ltd. (91 ITR 18)(SC),Krishnan vs.Products Co. Ltd. (91 ITR 18)
(SC),Krishnan vs. Kurushetra University (AIR 1976 SC 377) )(SC) a statement recorded
u/s.132(4) at midnight cannot be considered a voluntary statement if it is subsequently retracted
by the assessee and necessary evidence is laid contrary to such admission: Kailashben Manharlal
Chokshi (174 Taxmann 466)( Gujrat):
12. Statement made on oath C.I.T. vs. Radhakishan Goyal (278 ITR 454)( Allahabad) that it is a
matter of common knowledge, which cannot be ignored that the search is being conducted with
the complete team of the officers consisting of several officers with the police force.
Usuallyconsisting of several officers with the police force. Usually telephone and all other
14 | P a g e

connections are disconnected and all ingress and egress are blocked. During the course of search
person is so tortured ,harassed and put to a mental agony that he loses his normal mental state of
mind and at that stage it cannot be expected from a person to pre-empt the statement required to
be given in law as a part of his defence.
13. Statement made on oath VIOLATION OF HUMAN RIGHTS : Chief Commissioner of
Income-tax (CCA) v. State of Bihar Through The Chief Secretary, [2012] 18 taxmann.com 70
(Pat.):Due regard to human dignitytaxmann.com 70 (Pat.):Due regard to human dignity and
value cannot be ignored.
14. ASPECTS RELATING TO SURRENDER OF UNDISCLOSED INCOME Why to make
surrender? To avoid penalty To mitigate rigors of search, To wrap up the search proceedings
Conditions of surrender under section 132(4)Conditions of surrender under section 132(4) r.w.s
271AAB State the manner how undisclosed income has been derived Substantiate the manner
Pay the taxes before the specified date.
15. Retraction of Surrender To be made at the earliest Department may view it adversely
Ultimately nature of evidences will decide Challenging valuation, not retraction Challenging
calculation, not retraction Conditional surrender- fulfilling conditions Consequences of
retraction. In case of retraction burden of proof on assessee : Krishan Lal Shiv Chand Rai v. CIT
(1973) 88 ITR 293 (P&H
16. Surrender- consideration Cover incriminating material found Creation of capital Generation
of income v. Application in assets Set-off of losses Assets acquired prior to seven financial
yearsAssets acquired prior to seven financial years Current year income not recorded, advance
tax not paid Conditional surrender Principle of Peak Balance No surrender for third party
17. SURRENDER OF UNDISCLOSED INCOME: How to be made during the course of search
A paragraph mentioning that the surrender letter submitted by the assessee is in the nature of
statement of the assessee u/s.132(4). To mention that the declaration is subject to no penalTo
mention that the declaration is subject to no penal consequences. To mention broad manner of
earning undisclosed income and to substantiate it to the extent possible. Surrender letter to be
signed by of the person/entity making the surrender. In case a person makes declaration on behalf
of other person, he should be authorized to do so.
15 | P a g e

18. SURRENDER OF UNDISCLOSED INCOME: Surrender of undisclosed income to be made

in the hands of the person/entities against whom search warrant has been issued. To ensure that
surrender letter is given prior to the date of conclusion of search with respect to the concerned
person/entity. In case declaration is made amending or improving upon anyIn case declaration is
made amending or improving upon any earlier declaration, this fact should be clearly mentioned.
In case there is seizure of cash, assessee should state and request to treat the amount of cash
seized as payment of advance tax in the hands of concerned person/entity. A line mentioning that
surrender of undisclosed income is being made to buy peace and to settle the dispute.
19. Application of seized assets (Sec 132B) The assets seized shall be dealt with in the following
manner i) Seized assets may be applied towards existing and future liability (sec 132B(1)(i) ii)
Release of seized asset after meeting existing liabilities in certain cases 132B(1)(ii) iii) Money
seized may be applied for discharging the liabilities (sec 132B(1)(ii) iv) Assets other than money
may also be applied to discharge liabilities (sec 132B (1)(iii)132B (1)(iii) Return of excess assets
seized (section 132B(3) the interest shall be payable from the expiry of the period of 120 days
from the execution of the last of the authorizations for search till the date of completion of
assessment under section 153A or block assessment.
20. RELEASE OF ASSETS Application for release of disclosed assets, if seized : The first and
second proviso to section 132B(1)(i), provides : to make application to the Assessing Officer for
release of asset within thirty days from the end of the month in which the asset was seized.
explaining source of acquisition of the asset The amount of any existing liability referred to in
clause (i) of section 132B(1) may be recovered out of such asset. The remaining portion, if any,
of the asset may be released with the prior approval of the Chief Commissioner or the
Commissioner.with-in a period of one hundred and twenty days from the date on which the last
of the authorizations for search was executed. Delay in release of assets Remedies with the
assesee Approach to the higher administrative authorities. Writ to the High Court claiming
compensation for delay in release of the assets. File petition with the office of Ombudsman
21. POST SEARCH LETTERS request to appropriate cash seized toward advance tax. Now not
possible from 1st June 2013 Application u/s.132B for release of disclosed assets if any seized
along with all the relevant evidences.(Refer 1st and 2nd proviso to 132B(1)(i) Letter requesting
to give photocopies of all the documents, papers or books of account seized. Delay in supplying
16 | P a g e

copies of seized material Levy of interest not justified.[Refer Board order issuedmaterial
Levy of interest not justified.[Refer Board order issued u/s119(2)(a)] reported in 219 ITR 169
(ST) Letter for release by person/entity not covered in the search, in case any books of account or
assets belonging to them have been seized. Letter with complete evidences regarding disclosure
of jewellery or assets in case restraint order u/s.132(3) has been passed but assets have not yet
been seized. Letter for release of jewellery against deposit of equivalent amount of cash
/furnishing of bank guarantee.
22. Presumption as to ownership. S. 292 C [Inserted by Finance Act, 2008, w.r.e.f. 1/06/2002].
Presumption regarding Belongingness of book of account, other documents, money, bullion,
jewellery, other valuable article or thing Truthfulness of the contents regarding signature and
handwriting and stamping and execution or attestation. regarding signature and handwriting and
stamping and execution or attestation. NOTE: This concept is in line with the principle given
under Indian Evidence Act. Section 110 of Indian Evidence Act. 1872 reads as under : when the
question is whether any person is owner of anything of which he is shown to be in possession,
the burden of proving that he is not the owner is on the person who affirms that he is not the
owner.
23. HANDLING OF ASSESSMENT IN SEARCH CASES Systematically and chronically
arrange all the seized documents entities wise and Assessment year wise . For that, get the
transactions entered in excel sheet preferably in the following columns. Name of Entity, Date,
amount ,narration of expenditure, narration of income, narration of investment and premise
wise,and premise wise, Benefit of telescoping /peak credits Where any undisclosed income is
offered in the return filed u/s 153A then the expenditure incurred to earn that income may also be
claimed. Below the computation of income put the suitable and appropriate notes-provide
flexibility , no allegation of non disclosure etc
24. RELEVANT ISSUES UNDER SECTION 153A / 153C (made after 31/5/03) Assessment for
the preceding seventh year prior to the year of search can be reopened under section
148.Ramballabh Gupta v. Asstt. CIT(2007) 288 ITR 347 (MP). Fresh assessments to be framed
for all the preceding six years whether assessment proceedings are abated or not.years whether
assessment proceedings are abated or not. Notice under section 143(2) within time limit as

17 | P a g e

prescribed is mandatory in case of proceedings under section 153A :Asstt. CIT v. Hotel Blue
Moon (2010) 321 ITR 362 (SC).
25. RELEVANT ISSUES UNDER SECTION 153A / 153C Recording of satisfaction before
invoking provision of section 153C :Manish Maheshwari v. Asstt. CIT (2007) 280 ITR 341 (SC).
Jurisdiction under section 153C can be assumed when seized material belong or belongs to other
person :Vijaybhai N. Chandrani v. Asstt. CIT (2010) 38 DTR (Guj.) 225. Reference to
departmental valuation officers in search cases.Reference to departmental valuation officers in
search cases. Reference for special audit under section 142(2A). Reliance on statement recorded
by authorized officer during search. No addition for investment in jewellery upto specified limit
not required to be seized. Assessment in the case of retraction surrender of undisclosed income.
26. ASSESSMENT U/S.153A IN THE CASE OF CONCLUDED ASSESSMENTS
ASSESSMENT U/S.153A HAS TO BE MADE ON THE BASIS OF INCRIMINATING
MATERIAL ONLY IN THE CASE OF CONCLUDED ASSESSMENTS All Cargo Global
Logistics Ltd. vs. DIT, 2012-TIOL-391-ITAT-Mum- SB, i.e., on the basis of undisclosed
income/property/books of accounts/ documents found during 132/132A operation. A.C.I.T. vs.
Pratibha Industries Ltd., [2012] 28 taxmann.com 246 (Mum.)(Mum.) Jai Steel (India) vs.
Assisstant Commissioner Of Income Tax (dt.24.05.2013)(Raj.) held (a) the assessments or
reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts
under his original jurisdiction, for which, assessments have to be made; (b) regarding other
cases, the addition to the income that has already been assessed, the assessment will be made on
the basis of incriminating material and (c) in absence of any incriminating material, the
completed assessment can be reiterated and the abated assessment or reassessment can be made.
27. Penalty Provisions For earlier years U/s 271(1)(c) For specified years U/s 271AAA
Introduction of Section 271AAB by Finance Act, 2012 w.e.f.1st july 2012 Penalty for
undisclosed income even for specified previous year in staggered manner:-previous year in
staggered manner:- Declared during search in statement under section 132(4) 10% Declared in
the return of income filed under section 153A 20% Not Declared, addition made during
assessment 30%- 90%

18 | P a g e

28. Survey Under Income Tax Act, 1961 Jurisdiction Of Income tax authority for conducting
survey s. 133A (1) Territorial Jurisdiction Assessee specific Jurisdiction Authorized Jurisdiction
The place of the business or profession shall include any other place where the books of accounts
or otherany other place where the books of accounts or other documents or any part of the cash
or stock or other valuable article is kept.(Business related material) Expln.to Sec.133A defines an
Income Tax Authority : Director /Commissioner to Inspector level however If authorized by
Joint/Addl. Director/ commissioner then Deputy / Assistant Director / Commissioner ITOs ,Tax
Recovery Officer,Inspector of Income Tax (For certain Specific purpose)
29. Jurisdiction: Residential premises can also be covered if the assessee states that
business/professional work/document/assets is there Survey is possible even to enquire about tax
deducted at source : Reckitt and Colman of India Ltd. vs. ACIT [2001] 251 ITR 306 (Cal)..
Business or residential premises of third parties,Business or residential premises of third parties,
including a Chartered Accountant, a pleader, or Income Tax Practitioner, of whom the assessee
may be a client, are not places which could be entered into for the purpose of section 133A.
(Circular no. 7- D dt 3/5/1967),however if it is found that assessees books of
accounts/documents are there than for that limited purpose it can also be covered. Note : Survey
team has no power to break open any locked premises as power to break open any lock is not
conferred u/s 133A as against specific provisions contained u/s 132.
30. APPLICATION TO SETTLEMENT COMMISSION Pre-requisite for Filing Application 1.
An application before the Settlement Commission can be made only if the additional income
disclosed exceeds Rs 10 lakhs in normal case and in search case if disclosure exceeds 50 lakhs.
2. Application can be made only at the stage of the pendency of the original assessment
proceedings before the assessing officer (AO).original assessment proceedings before the
assessing officer (AO). 3. No application can be made when proceedings are initiated for
assessment or reassessment under Section 148 of the Income-Tax Act, 1961 4. Proceedings for
making fresh assessment when original assessment was set aside either by the Commissioner or
by the Tribunal will also be outside the purview of the application for settlement. 5. An
application can be made by an assessee for settlement before the Commission only once in a
lifetime. Advantage: Order is conclusive and final. Waiver of penalty and prosecution under
Income Tax
19 | P a g e

The tax payer has the following rights in case of search

Examining the search warrant which must clearly specify the name of the party to be
searched and be duly signed by the officer. The search warrant issued in the name of the firm
cannot be used to seize assets of individual partners.

Calling two or more respectable inhabitants of the locality to act as witnesses.

Verifying the identity and make personal search of each member of the search party.

Calling a doctor in case of emergency.

Personal search of ladies to be taken only by lady.

Allowing the children to go to school after checking their bags.

Having meals at the normal time.

Inspect seals placed on various objects

Have a copy of panchnama (first listing of evidence and findings made)

Inspect and take photocopies of the seized books of account and documents.

Anything representing stock-in-trade of the business shall not be seized but the authorized officer
shall make a note of it. As regards gold ornaments and jewellery, 500 gms. per married lady, 250
gms per unmarried lady and 100 gms per male member of the family shall not be seized.
Cases wherein people are convicted on the basis of digital data are on the rise. Now, businessmen
use removable storage devices such as USB drives, pen drives, digital cameras, iPods and MP3
players to store data due to their miniature and inconspicuous look, making them easy for hiding
in case of search. But the department keeps a close tab on all such moves. All these devices
including computers and laptops are seized in the presence of witnesses. However, the person
being raided can ask for a copy of the data on the drive.

20 | P a g e

So, it is advisable to make separate files for each family member which should specify the details
of assets held and income earned, followed by a balance sheet for each financial year, along with
the receipts and sources for acquisition of assets. Assets acquired as a result of gift or will should
be supported by proper certificates. The details of various bank accounts and lockers held should
also be mentioned in the file.

Responsibilities

1. You should allow free and unhindered ingress into the premises.

2. You should identify all receptacles in which assets or books of account and documents are kept
and to hand over keys to such receptacles.

3. You should identify and explain the ownership of the assets, books of account and documents
found in the premises.

4. You should identify every individual in the premises and to explain their relationships to the
person being searched. You should not mislead them by impersonation. It is an offence
punishable u/s 416 of the IPC.

5. You should not allow or encourage the entry of any unauthorized person into the premises

6. You should not remove any article from its place without the notice or knowledge of raid team.
If you destroy any document with the intention of preventing the same from being produced or

21 | P a g e

used as evidence before the court or public servant, you shall be punishable with imprisonment
or fine or both, in accordance with section 204 of the IPC.

7. You should answer all queries truthfully and to the best of your knowledge. You should not
allow any third party to either interfere or prompt while your statement is being recorded by the
officer. In doing so, you should keep in mind that

a. If you refuse to answer a question on a subject relevant to the search operation, you shall be
punishable with imprisonment or fine or both, u/s 179 of the IPC.
b. Being legally bound by an oath or affirmation to state the truth, if you make a false statement,
you shall be punishable by imprisonment or fine or both u/s 181 of the IPC.
c. Similarly, if you provide evidence which is false and which you know or believes to be false,
you shall be liable to be punished u/s 191 of the IPC.

8. You should affix your signature on the recorded statement, inventories and the panchanama.

9. You should ensure that peace is maintained throughout the duration of the search and to
cooperate with the search party in all respects so that the search action is concluded at the earliest
and in a peaceful manner.

10. Cooperation should also be extended even after the search action is over, so as to enable the
authorized officer to complete necessary follow-up investigations.

22 | P a g e

Disclosure of income in cases of search and seizure.(1) Subject to the provisions of this section, where any books of account, other documents,
money, bullion, jewellery or other valuable articles or things belonging to a person have been
seized as a result of a search under section 132 of the Income-tax Act or section 37A of the
Wealth-tax Act and such person (hereafter in this section referred to as the declarant) makes, on
or after the date of commencement of this Act but before the 1st day of January, 1976, a
declaration in accordance with sub-section (2) in respect of any income relating to the previous
year in which such search was made or any earlier previous year
(a) for which he has failed to furnish a return under section 139 of the Income-tax Act, or
(b) which he has failed to disclose in a return of income furnished by him under the
Income-tax Act before the commencement of this Act, or
(c) which has escaped assessment by reason of the omission or failure on the part of such
person to make a return under the Indian Income-tax Act, 1922 (11 of 1922), or the
Income-tax Act, or to disclose fully and truly all material facts necessary for his
assessment or otherwise, then, notwithstanding anything contained in any of the Acts
mentioned in sub-section (1), of section 8 or the Wealth-tax Act, the amount of income so
declared or, as the case may be, the value of the assets representing such income, shall
not be taken into account for the purposes of
(i) payment of interest by the declarant, under sub-section (8) of section 139 of
the Income-tax Act;
(ii) payment of interest by the declarant under section 215 or section 217 of the
Income-tax Act or the corresponding provisions of the Indian Income-tax Act,
1922 (11 of 1922);

23 | P a g e

(iii) imposition of penalty on the declarant under the provisions of any of the said
Acts, except under section 221 of the Income-tax Act or the corresponding
provisions of any of the other said Acts; and
(iv) prosecution of the declarant under the provisions of any of the said Acts.
(2) The declaration under sub-section (1) shall be made to the Commissioner and shall be in such
form and shall be verified in such manner as may be prescribed by rules made by the Board.
(3) A declaration under this section shall be signed by the person specified Item No. sub-section
(2) of section 4 as if the declaration had been made under that section.
(4) A copy of the declaration made by the declarant under sub-section (1) shall be forwarded by
the Commissioner to the Income-tax Officer and the information contained therein may be taken
into account for the purposes of the proceedings relating to the assessment or reassessment of the
income of the declarant under the provisions of any of the Acts mentioned in sub-section (1) of
section 8 or the Wealth-tax Act.
(5) The immunity provided under sub-section (1) shall not be available to the declarant unless the
tax chargeable in respect of the income of the previous year or years for which the declaration
has been made is paid by the declarant in accordance with the provisions in section 5.
Explanation.For the purposes of this sub-section, tax chargeable in respect of the income of
any previous year for which the declaration is made shall be,-(a) where the declarant has not furnished a return in respect of the total income of that year and
no assessment has been the income declared under sub-section (1) for that year as if such
aggregate were the total income, as reduced by the tax payable on the basis of the total income
returned; and
(c) where an assessment in respect of the total income of that year has been made, the tax
payable on the aggregate of the total income as assessed and the income declared under subsection (1) for that year as if such aggregate were the total income, as reduced by the tax payable
on the basis of the total income as assessed.
24 | P a g e

made in respect of the total income of that year, the tax payable on the income declared under
sub-section (1) for that year as if such income were the total income;
(b) where the declarant has furnished a return in respect of the total income of that year and no
assessment has been made in pursuance of such return, the tax payable on the aggregate of the
total income returned and
(6) Where any tax is paid by the declarant in accordance with the provisions of section 5, read
with sub-section (5) of this section, credit therefor shall be given to the declarant in the
assessment made under the Indian Income-tax Act, 1922 (11 of 1922), or, as the case may be, the
Income-tax Act, in respect of his total income of the previous year or years.
(7) Nothing in sub-section (1) shall apply in relation to any income which has been included in
the total income of the declarant in any assessment made by the Income-tax Officer before the
date on which the declaration under that sub-section is made.

25 | P a g e

Conclusion
Search and Seizure, the origin of these provisions will in a few years celebrate its golden
jubilee. It was since 1956 that the provisions of search and seizure made its first entry into the
Income Tax Act. Section 132 was totally substituted by the Finance Act, 1964. After section 132
underwent a through overhaul in the year 1976, to committees had made certain
recommendations on search and seizure provisions (i) The Raja Chellaiah Committee and, (ii)
The Kelkar Committee. It is seen that the recommendations affecting the substantive law have
been given effect to in respect of majority of such recommendations;

26 | P a g e