Rights and Duties of Persons Searched during Income Tax search and seizure operation

To face the situation efficiently, it is extremely important to understand some of Income Tax law on the subject. Lack of knowledge leads to panic and all the discomfort.

Rights of the person searched:

(i)           PRODUCTION OF SEARCH WARRANT

Assessee can see the warrant of authorisation duly signed and sealed by the issuing authority.

(ii)          PRODUCTION OF EVIDENCE OF IDENTITY OF OFFICERS OF SEARCH TEAM

Assessee can verify the identity of each member of the search party before the start of the search and on conclusion of the search.

     

Sometimes the authorised officers or the person accompanying them do not possess the identity card. As an alternative, they should carry and produce some other documents to prove their identity, e. g, a certificate attesting their signatures; The certificate should be issued by a senior officer in charge of the search or by an immediate superior. In a case where there is no proof of identity, the assessee would be within his right to refuse the ingress.

(iii)          To insist on personal search of ladies being taken only by a lady, with strict regard to decency.

(iv)          A lady occupying an apartment being searched has a right to withdraw before the search party enters, if, according to custom, she does not appear in public.

(v)             To have at least two respectable and independent residents of the locality as witnesses.

(vi)        RIGHT TO MEDICAL AID

          A person under search can ask for medical aid during the proceedings of search in case he is not feeling well and he requires medical aid. He can call his family doctor to look after him and on the advice of doctor, if required he may be admitted to hospital.

(vii)      To allow the children to go to school, after checking of their bags.

(viii)    To have the facility of having meals, etc., at the normal time.

(ix)       To inspect the seals placed on various receptacles, sealed in course of search and subsequently at the time of reopening of the seals.

(x)        Every person who is examined under section 132(4) has a right to ensure that the facts so stated by him have been recorded correctly.

(xi)          To have a copy of the panchanama together with all the annexures.

(xii)       To have a copy of any statement that is used against him by the Department.

(xiii)   To have inspection of the seized books of account, etc., or to take extracts therefrom in the presence of any of the authorised officers or any other person empowered by him.

Duties of person searched:-

(i)     To allow free and unhindered ingress into the premises.

(ii)    To see the warrant of authorisation and put signatures on the same.

(iii)   To identify all receptacles in which assets or books of account and documents are kept and to hand over keys to such receptacles to the authorised officer.

(iv)   To identify and explain the ownership of the assets, books of account and documents found in the premises.

(v)    To identify every individual in the premises and to explain their relationship to the persons being searched. He should not mislead by impersonation. If he cheats by pretending to be some other person or knowingly substitutes one person for other, it is an offence punishable under section 416 of the Indian Penal Code.

(vi)   Not to allow or encourage the entry of any unauthorised person in the premises.

(vii)  Not to remove any article from its place without notice or knowledge of the Authorised Officer. If he secrets or destroys any document with the intention of preventing the same from being produced or used as evidence before the Court or public servant, he shall be punished with imprisonment or fine or both, in accordance with section 204 of the Indian Penal Code.

(viii) To answer all questions truthfully and the best of his knowledge. He should not allow any third party to either interfere or prompt while his statement is being recorded by the Authorised Officer. In doing so, he should also keep in mind that:-

(a)  If he refuses to answer a question on a subject relevant to the search operation, he shall be punishable with imprisonment or fine or both, under section 179 of the Indian Penal Code.

(b)  Being legally bound by an oath or affirmation to state the truth or affirmation to state the truth, if he makes a false statement, he shall be punishable with imprisonment or fine or both under section 181 of the Indian Penal Code.

(c)  Similarly, if he provides evidence which is false and which he knows or believes to be false, he is liable to be punished under section 191 of the Indian Penal Code.

(viii)  To affix his signature on the recorded statement, inventories and the panchnama.

(ix)    To ensure that peace is maintained throughout the duration of the search, and to co-operative with search party in all aspects so that the search action is concluded at the earliest and in a peaceful manner.

(x)    Similar co-operation should be extended even after the search action is over, so as to enable the Authorised Officer to complete necessary follow-up investigations at the earliest.

Practical guide or check list after search and seizure 

Do’s

(i)         Panchanama - Copy must be obtained immediately.

(ii)       Inventory - Copy must be obtained.

(iii)      Copies of documents seized - Make application to furnish the copies seized.

(iv)     Copies of statements - Make application to furnish copies.

(v)       Factual error - Valuing stock - Inventory etc. - Write immediately to the concerned Officials who have conducted the search or seizure.

(vi)     Goods of Perishable in nature if kept under prohibitory order - Ask to release or sell

(vii)    Adjustment of cash-Ask adjust against tax liability.

(viii)  Disposal of assets seized-Release of assets or sell by the Income tax department.

(ix)     Retraction - Within reasonable time before the same Officials who have taken the statement.

(x)       If any valuable or documents of third party is seized - Ask the party concerned to make an application for release and claiming the ownership.

(xi)     If any documents or statement is proposed to be used against searched person, ask for the copies and opportunity for cross examination of the parties who have given statements.

(xii)    In response to summons, attend and answer the questions – If searched person do not know the answer, verify and reply.

(xiii)  Discuss with consultant possibility of approaching Settlement Commission advantages and disadvantages.

(xiv) Co-operate with proceedings.

Donot’s (Points to be taken care of)

(i)      Not to remove goods put under prohibitory order under section 132(3).

(ii)    Never lie to mislead on facts (IPC section 416)

(iii)   Not to remove or destroy any article from the place being searched (IPC section 204).

(iv)  Never refuse to answer. You may request to refer matter to concerned person/accounts.

(v)              Reply exactly what is asked.

Assessee may not insist for the presence of his counsel at the time of search operation

Assessee does not have legal right to insist the presence of his counsel at the time of search operations. Search proceedings are the investigation proceedings and are conducted in the presence of two independent witnesses.

Presence of counsel during search & seizure proceedings

v  The Counsel is entitled to advise and discuss the matter with client.

v  The Counsel cannot obstruct the conduct of proceedings in any manner.

v  Counsel cannot interfere in the recording of the statement.

v  The counsel cannot suggest any answer.

 [K. T. Advani v. State (1986) 60 Comp Cas. 603(Del)]

In central Excise and customs matters, Court has held that it is advisable to permit presence of lawyers during interrogation, though they cannot be allowed active participation.

[Abdul Razak Haji Mohd. v. UOI (1986) 26 Taxmann 234 (Bom),

[Anil G. Merchant v. Director of Revenue Intelligence (1987) 12 ECR 183 (Mad)]