Power to carry out search under section 132 and survey under section 133A are important tools in the armoury of the Income–tax department for detecting and preventing tax evasion. The authorities competent to authorise a search and seizure action have been indicated in section 132. The officer authorised under sub-section (1) of section 132 to carry out a search and seizure action is called the Authorised Officer. It is not necessary that the authorised officer should be an officer working under the direct control or supervision of the authority authorising search.
Authorising
Authority and Authorised Officer under Section 132(1)
A warrant of authorisation is a direction from the
authority competent to authorise search to officers named therein to exercise
the powers and perform the functions of the authorised officers under section
132. Income-tax authority, having power to initiate search under section 132,
can authorise its subordinate(s) (not below the rank of Income Tax Officer) to
conduct search. Following subordinates can be authorised:—
|
S. No. |
Income-tax
authorities competent to authorise the authorities to carry out search and
take other related actions |
Income-tax
authorities who can be authorised by
the authorities to carry out search
and take other related actions |
|
|
AUTHORISING
OFFICER (who gives the authority to search) |
AUTHORISED
OFFICERS (who actually
conduct search and seizure operation) |
||
|
1. |
(i) Principal Director General; or (ii) Director General; or (iii) Principal Director; or (iv) Director; or (v) Principal Chief Commissioner; or (vi) Chief
Commissioner; or (vii) Principal Commissioner; or (viii)
Commissioner |
(i) Additional/Joint
Director; or (ii) Additional/Joint
Commissioner; or (iii) Addl./Joint
Director; or (iv) Addl./Joint
Commissioner; or (v) Assistant
Director; or (vi) Deputy
Director; or (vii) Assistant Commissioner; or (viii) Deputy
Commissioner; or (ix) Income-tax officer |
|
|
2. |
Such (i) Addd.
/Joint Director; or (ii) Addl./Joint Commissioner; or (iii) Addl./Joint Director; or (iv) Addl./Joint
Commissioner (on the basis of
authorisation from above authority and
being empowered by the Board) |
(i) Assistant
Director; or (ii) Deputy
Director; or (iii) Assistant
Commissioner; or (iv) Deputy
Commissioner; or (v) Income-tax
officer |
|
Assembly
point
Assembly
point is the place where members of the search teams assemble before proceeding
to the premises to be searched.
An
Authorised Officer is designated as the leader of the search team
The
sealed envelope containing the warrant of authorisation, search packets, etc.
is handed over to the leaders of the search team at this point.
Material
should be provided to each search party
The
following material should be provided to each search party :-
i.
Forms
for appointing witnesses
ii.
Panchnama
forms
iii.
Form
of order under section 132(3)
iv.
Form
of order under second proviso to section 132(1)
v.
Form
of summons under section 131 (1)(A)
vi.
Form
of authorisation under section 133A(1)
vii.
Form
of recording statement under section 132(4)
viii.
List
of duties of witnesses
ix.
Copies
of Taxpayer's Charter indicating rights and duties of the persons searched
x.
Bags
for sealing seized material and -bunks with locks and cloth pieces
xi.
Required
stationary, including paper, carbon paper, copying pencils, pen and pencil
sharpener
xii.
Sealing
material including sealing wax, needles, thread, match box, candles, adhesive
tapes and gum
xiii.
Other
articles and things that may be required like, pins, clips, tags, stapler,
envelopes, battery operated torch, calculator and scissors
xiv.
Copies
of the Income-tax Act, 1961 and Income-tax Rules, 1962.
Powers of the Authorised Officer in exercise of search under section
132
The
authorized officer has the power to
·
To
enter and search any building, place vessel, vehicle or aircraft, where he has
reason to suspect that such books of account, other documents, money,
jewellery, bullion or other valuable article or things are kept.
·
Break
open the lock of any door, box, locker, safe, almirah or other receptacle where
keys are not available.
·
Search
any person who has suspected to have secreted any such books, documents, money,
bullion, jewellery, other valuable article or thing
·
Afford
him the necessary facility to inspect the books of account or other documents
maintained in the form of electronic record.
·
Seize
any books of account, other documents, money, bullion, jewellery or other valuable
article or things found as a result of search. However if the aforesaid items
(excluding money books. documents) are stock-in-trade of the business shall not
be seized but only inventorised
·
Place
marks of identification on any books or documents or copies therefrom.
·
Make
a note or any inventory of such money bullion, jewellery or other valuable
article or things
Steps
to be taken by the leader of the search team and its other members
·
The
leader of the search team and all its members should work as a well-knit team.
Wherever necessary, instructions should be obtained from the Control Room. Some
steps, which should be taken for orderly and proper conduct of search
operations, are listed below.
·
The
leader of the search team should ensure that there is optimum utilisation of
the available manpower and that the search is conducted in an efficient, fair
and orderly manner.
·
In
case the manpower provided is found to be inadequate, he should report the
matter to the Control Room, specifying the additional manpower needed.
·
Care
should, therefore, be taken to ensure that such persons do not exercise the
powers or perform the functions of an Authorised Officer, unless they have
actually been named as Authorised Officers in the warrant of authorisation
issued by the authority competent to do so.
·
It
should be ensured that money, assets, documents, etc., are not thrown or taken
out of the premises or are not destroyed or damaged in any manner by any
occupant of the premises being searched.
·
Where
the premises being searched has telephones, mobile phones, intercom systems,
telex systems, FAX, public address systems or computer systems with or without
Internet or network facility, etc., it should be ensured that there is no such
communication through them between any person occupying the premises and any
other person inside or outside the premises as would jeopardise the purpose and
conduct of the search.
·
If
the premises have several telephones, it would be advisable that only one or
two telephone is allowed to work and one or two members of the search team are
deployed there to attend the telephones.
·
All
incoming calls should be intercepted.
·
Outgoing
calls should be discouraged unless there are emergency calls.
·
Special
care in this regard is necessary as mobile phones can be used for sending SMS
or MMS, computer systems for sending e-mail messages and certain types
of remote devices for manipulating data stored in computer systems without
being noticed.
·
The
leader of the search team or any other member of the team, so directed by him,
should take over the control of all such systems.
·
The
occupants of the premises should be requested to lock all cupboards, boxes,
etc., and hand over all the keys to the leader of the search team.
·
No
outsider should ordinarily be allowed to enter the premises during the course
of the search. This should be relaxed only in exceptional situations, like when
a medical practitioner is required to attend to someone present inside the
premises.
·
Where
the premises being searched is an office, only those employees who are likely
to be of use in explaining or producing the books of account, documents,
computer systems, etc., should be allowed to remain in the premises.
·
If,
on the request of the person whose premises is being searched, or the person
in-charge of or in occupation of premises, some or all employees are allowed to
stay back in the premises to attend to office work, it should be ensured that
their presence does not in any way hinder or jeopardise the process or purpose
of the search.
·
Children
should not be prevented from going to school. However, their school bags should
be searched and, if considered necessary, their personal search taken to ensure
that they do not carry any such books of account, document, locker or safe
vault keys, digital devices, digital storage devices, jewellery, bullion or
other valuables articles or things, etc. as would be relevant to the search
operation. Similarly, servants may also be allowed to get in after taking their
personal search.
·
Movements
of servants, drivers, other employees, etc. should be restricted to the minimum
and if the Authorised Officer allows them to leave the premises, their personal
search may be taken before they leave.
·
The
occupant or person in-charge of the building, place, vessel, vehicle or
aircraft, or any other person acting on his behalf, should be permitted to be
present throughout the search.
·
However,
their legal/tax advisors are not entitled to be present during the search.
·
No
food or refreshment should be accepted from any occupant of the premises being
searched, as it would be improper to accept any such hospitality. Secondly,
there is also a risk of the members of the search team being drugged.
Movement
of the search team from the assembly point to the premises to be searched
·
The
Investigation Unit organising the search operation hands over a sealed envelope
containing the warrant of authorisation and other confidential papers to the
leader of the search team.
·
The
leader should open the sealed envelope in the presence of another member,
preferably an Authorised Officer of his team.
·
Both
of them should subscribe their signatures with date and time on the sealed
envelope in witness of the above fact.
·
The
leader of the search team should take suitable steps to ensure secrecy of the
operation before commencement of the search.
On
reaching the premises to be searched
·
On
reaching the premises, the leader should ensure that members of the search team
are deployed at every entry and exit points and under the windows.
·
This
will ensure that documents, books of account, money, jewellery, other valuable
articles or things, assets, etc. are not thrown out of the premises to be
searched.
·
If
intercom systems or telephones are installed at the entrance of the premises,
or outside it, or if mobile phones are available with security guards,
watchmen, etc. through which interaction with the occupants of the premises is
possible, one of the members of the search team should take control of such
systems.
·
This
is to ensure that the occupants of the premises do not get any advance
intimation of the arrival of the search team.
·
Similarly,
a member of the search team should also take control of any alarm system, if
installed at the entrance of the premises.
·
If
a closed circuit camera is installed at the entrance of the premises or outside
it, movements of the search team should be organised in such a manner that the
occupants of the premises do not get any advance intimation of it’s arrival.
In case there is
some confusion regarding the exact location of the premises to be searched
In case there is some
confusion regarding the exact location of the premises to be searched, he
should depute a member of the team shortly before the strike time to locate and
identify the premises to be searched.
Switch off their
mobile phones while travelling from the assembly point to the premises to be
searched
Members of the search
team other than the leader of the team, and a small number of such other
members as have been identified by him in advance, should switch off their mobile phones while travelling from the
assembly point (the place where the search parties assemble) to the premises to
be searched and during the search operations. This will reduce the
possibility of the search team’s movements being tracked.
Ensure that team
reaches the premises to be searched exactly at the strike time
The leader should
ensure that his team reaches the premises to be searched exactly at the strike
time. In order to ensure that there is no confusion with regard to time, all
the leaders of the various search teams should synchronize their watches,
before proceeding from the assembly point to the places to be searched.
On
reaching the locality, the leader should ensure that the members of the team do
not actually reach the premises before the strike time. This is to ensure that
persons in occupation of the premises do not get any advance information of the
search team’s arrival.
Entry
into the premises
·
A
member of the search team should ring the call bell or knock at the door.
· The
Authorised Officer should wait for a reasonable period of time for the occupant
of the premises to open the entrance door.
· The
Authorised Officer has the power to demand free ingress into the premises
authorised to be searched. If he does so, any person in charge of or in the
said premises is legally obliged to allow him free ingress into the premises
and afford all reasonable facilities for a search therein.
· If
the Authorised Officer is not allowed entry into the premises despite exercise
of the aforesaid powers, he should take the assistance of police officers or
other officers of the Central Government available for the purpose to enter and
search the premises.
If
any such building or place is an apartment in actual occupancy of a woman
[Proviso to Rule 112(4)]
· If
any such building or place is an apartment in actual occupancy of a woman, who
according to custom does not appear in public, (the authorised officer) shall
before entering such apartment give notice to such woman that she is at liberty
to withdraw
·
Every
reasonable facility should be afforded to her for withdrawing. In such a
situation if there is a lady member in the search team, it is advisable that
she should first enter the room.
·
It
is only after this has been done that the apartment should be broken open.
·
Though
the law does not require that witnesses should be called for securing the
entry, it may still be advisable to have witnesses before breaking open any
door, window, etc.
· If
possible, two witnesses may be called before securing entry by breaking open
the door or windows.
· However,
where the Authorised Officer has reason to believe that any delay in the entry
could jeopardise the search, he may secure the entry without the witnesses.
·
The
actual search cannot, however, begin without witnesses.
If
ingress into vessel, vehicle or aircraft cannot be obtained because such
vessel, vehicle or aircrafts is moving or for any other reason [Rule 112(4A)]
If ingress into any vessel, vehicle or aircraft
authorised to be searched cannot be obtained because such vessel, vehicle or
aircrafts is moving or for any other reason, it shall be lawful for the
authorised officer with such assistance of police officers or of officers of
the Central Government, or of both, as may be required, to stop any such vessel
or vehicle or, in the case of aircraft, compel it to stop or land, and search
any part of the vessel, vehicle or aircraft, and in order to effect an entrance
into such vessel, vehicle or aircraft to break open any outer or inner door or window
of any such vessel, vehicle or aircraft, whether that of the person to be
searched or of any other person, if after notification of his authority and
purpose and demand of admittance duly made, he cannot otherwise obtain
admittance.
Allowing
access to searching officer by opening box, locker etc. [Rule 112(4B)]
The authorised officer may require any person who is
the owner, or has the immediate possession, or control, of any box, locker,
safe, almirah or any other receptacle situate in such building, place, vessel,
vehicle or aircraft, to open the same and allow access to inspect or examine
its contents, and where the keys thereof are not available or where such person
fails to comply with any such requirement, may cause any action to be taken
including the breaking open of such box, locker, safe, almirah or other
receptacle which the authorised officer may deem necessary for carrying out all
or any of the purposes specified in the authority issued under subrule (2).
In
certain situations, entry can also be effected by breaking open any outer or
inner door or window of the building or place
· In
certain situations, entry can also be effected by breaking open any outer or
inner door or window of the building or place, whether that of the person to be
searched or of any other person. This can, however, be done only if after
notification of his authority and purpose and demand of admittance duly made, the
Authorised Officer cannot otherwise obtain admittance.
· It
should be ensured that this is done in such a manner that there is minimum
damage to the property. The power to do so should be exercised with caution.
Requisitioning
the services of Police officers and other officers
·
The
Authorised Officer is empowered to requisition the services of any police
officer or of any officer of the Central Government, or both, to assist him for
carrying out search and seizure operations. It is the duty of every such
officer to comply with such requisition.
·
Omission
to assist a public servant when bound by law to give such assistance is an
offence under section 187 of the Indian Penal Code.
·
Ordinarily,
requisition of the services of police officers are made centrally by the
Investigation Unit organising the search and their services provided to each of
the search teams.
·
Once
their services have been provided to the search team, they are duty-bound to
provide assistance to the Authorised Officer for all or any of the purposes
specified in section 132(1) or 132(1A)
·
However,
in case of an emergency where a search team needs more police personnel and
requisition of their services through the Investigation unit/Control Room is
likely to cause delay, jeopardising the search and seizure operation or
physical safety of the members of the search team, the Authorised Officer,
preferably the officer appointed as the leader of the search team, should, in
exercise of the power vested in him under section 132(2), requisition the
services of adequate number of police officers.
·
He
should ensure that the matter is also reported to the Control Room as early as
possible.
Where
the premises to be searched is found to be locked
·
Where
the premises to be searched are found locked, the Authorised Officer should
report the same to the Control Room and wait for further instructions.
·
He
should, in the meantime, ensure that no one enters the premises.
·
If
at all the search team has to leave the premises without entering and searching
the same, this should be done only after the premises has been sealed in the
presence of at least two witnesses and suitable number of armed guards posted
outside the premises.
·
Wherever
necessary and possible, one or more members of the search team or any official
of the Income Tax Department should be deputed to stay outside the premises,
along with the armed guards.
·
In
such a situation, the Authorised Officer should also issue an order under
section 132(3).
·
A
copy of the said order should be pasted on a prominent place near the entrance
to the premises, along with a notice to the public in general, warning the
members of public to refrain from breaking or tempering with the seal and also
informing the person(s) to be searched to contact the Control Room at the
specified address and telephone numbers.
·
Where
it is suspected that the occupant(s) may not return with a view to delaying the
search or that any delay in entering the premises may result in consequences
adverse to the process or the purpose of the search, the Authorised Officer
should, after obtaining instructions from the Control Room, break open any
outer door or inner door or window and enter the premises, preferably in the
presence of at least two witnesses.
Wherever entry is obtained by
breaking open any door or window, etc.
·
Wherever
entry is obtained by breaking open any door or window, etc. and the process results in any
damage to the premises or any part thereof, the leader of the search team or
any other Authorised Officer should record a note, specifying the circumstances
in which any of the aforesaid actions was taken and the nature and extent of
damage caused to any property.
·
The
note should be signed by the leader of the search team, other Authorised
Officers, witnesses, if any present and, if possible, the person in occupation
or control of the premises.
·
The
matter should be reported to the Control Room as early as possible.
Where
a locked premises has occupants inside
·
There
can be a situation where the premises are locked from outside but there are
occupants inside.
·
The
Authorised Officer should, when faced with a locked premises, make all efforts
to find out whether the premises is occupied.
·
If
there are occupants inside a premises locked from outside, it is necessary for
the Authorised Officer to ensure that entry into the premises is gained as
early as possible, if necessary by breaking open any outer or inner door or
window.
·
He
should also take all possible steps to ensure that in the meantime, the
occupants do not destroy or manipulate any document or books of account or
evidence (including any digital evidence) or throw out of the premises the same
or any money, jewellery, other valuable articles or things, etc.
Premises occupied by
person(s) other than that/those mentioned in the warrant of authorisation
Where the Authorised
Officer finds that the premises is occupied by person(s) other than that/those
mentioned in the warrant of authorisation, he should ascertain through a
process of discreet investigations whether the address of the premises he has
reached is,
(i) different from the one mentioned in the
warrant of authorisation; or
(ii) the same as mentioned in the warrant of
authorisation.
In
case of (i) above, the search-team should immediately proceed to the correct
address. However, in case of (ii) above, the Authorised Officer should
immediately report the matter to the Control Room and seek its instructions.
In
respect of whom the warrant of authorisation was issued, has/have shifted to
another place or premises
·
There
can be a situation where the person(s) in respect of whom the warrant of
authorisation under sub-section 132(1) or 132(1A) as the case may be was
issued, has/have shifted to another place or premises and are no longer
available at the premises mentioned in the said warrant of authorisation.
·
In
such a case, the matter should be immediately reported to the Control Room.
·
In
case, the current address of the said person(s) is available, the Control Room
should be informed about the new address, along with the names of the person(s)
presently occupying the premises mentioned in the warrant of authorisation.
·
It
should also be ascertained through suitable inquiries whether the said premises
actually belongs to the said person(s) or whether the present occupants of the
premises are in any way connected with them.
·
The
outcome of the inquiries should be immediately reported to the Control Room. On
receipt of such a report, the officer-in-charge of the Control Room should take
such further steps as are required.
Authorised
Officer cannot take action under section 132(1) where the address of the
premises to be searched specified in the warrant of authorisation is not
correct
·
The
Authorised Officer cannot take action under section 132(1) where the address of
the premises to be searched specified in the warrant of authorisation Issued
either under sub-section (1) or the first proviso to sub-section (1) or
subsection (1A) of section 132. is not correct.
·
He
will also not be able to do so if the name(s) of the person(s) mentioned in the
warrant of authorisation is/ are not correct.
·
The
Authorised Officer should, when faced with any such situation, seek Control
Room’s instructions.
·
In
case, the instructions from the Control Room are to withdraw from the premises,
the unexecuted warrant of authorisation should be returned to the Control Room,
along with a report.
·
The
officer-in-charge of the Control Room should pass on the information to the
concerned Joint/Additional DIT (Investigation) who should, after examining the
matter and making suitable inquiries ensure that further appropriate action in
accordance with the law is taken (For example, issuance of a fresh warrant of
authorisation with correct name(s) of the person(s) and the address(es) of the
premises to be searched).
Warrant
of authorisation in the name of a person who is dead
·
Where
it is found that the warrant of authorisation is in the name of a person who is
dead, the matter should be immediately reported to the Control Room.
·
The
Authorised Officer should also make suitable inquiries to ascertain the name(s)
and address(es) of the legal heir(s) of the deceased and the present occupants
of the premises and report the same to the Control Room.
·
On
receipt of the information, the officer-incharge of the Control Room should
pass on the same to the concerned Joint/Additional DIT (Investigation), who
should, after examining the matter and making such further inquiries as he may
deem fit ensure that further appropriate action in accordance with the law is
taken.
·
In
the meantime, if there is no objection from the occupant of the premises, entry
can be made but actual search should not begin without a proper warrant of
authorisation.
·
The
Authorised Officer (preferably, the leader of the team) should, on receipt of
the directions from the Control Room, send the unexecuted warrant of
authorisation, along with a report to the Control Room.
Premises
occupied by only ladies or children
·
If
a premises is found to be occupied only by ladies or children, it should be
ensured that the search takes place only in the presence of lady officers of
the team.
·
If
such an occupant so requests, the leader of the search team may consider the
feasibility of delaying commencement of the search for a reasonable period of
time to enable a male member of the household to join the occupants.
·
It
should, however, be ensured that the delay does not in any way jeopardise the
process and purpose of the search.
Showing of warrant
of authorisation
As soon as members of
the search team enter the premises to be searched, they should identify
themselves to the person in respect of whom the warrant of authorisation has
been issued or the person in occupation or control of such premises.
Obtain, on the body
of the warrant of authorisation, his signature as well as the signatures of the
witnesses to the search
Authorised officer should
show the warrant of authorisation to the aforesaid person and obtain, on the
body of the warrant of authorisation, his signature as well as the signatures
of the witnesses to the search. The person in whose case the search is being
conducted or the person in occupation or in charge of the premises and the
witnesses are entitled to see the warrant of authorisation and read the same.
It is, however, not necessary to provide copies of warrant of authorisation to
them.
In
case any person refuses to sign on the body of the warrant of authorisation
In
case any person refuses to sign on the body of the warrant of authorisation,
the Authorised Officer should record a note to this effect. This should be
signed by the Authorised Officer and the witnesses and annexed to the
panchnama.
(1)
valid official identity cards of the leader and members of the search team; and
(2)
the Taxpayer’s Charter indicating rights and duties of the persons to be
searched.
Their
signatures should be obtained on both the parts of the Charter, that is, the
rights of the person to be searched and duties of the person to be searched, in
the following format
Party’s
signature
Date:
......................
Witness
1 ............................. Time: ...................... Witness 2
.............................
The
Authorised Officer should retain this document after countersigning it.
Showing
of Taxpayer’s Charter indicating rights and duties of the persons to be
searched
[Charter was issued vide letter F. No.
289/10/2001-IT(Inv. II) dated 07.03.2001
In
addition to the warrant of authorisation, the following should also be shown to
the person in-charge of or in occupation of premises and the witnesses to the
search:
[A]
Rights of the person to be searched
1.
To see the warrant of authorisation duly signed and sealed by the issuing
authority.
2.
To verify the identity of each member of the search party.
3.
To have at least two respectable and independent residents of the locality as
witnesses.
4.
To have personal search of all members of the party before the start of the
search and after conclusion of the search.
5.
To insist on a personal search of females by another female only with strict
regard to decency.
6.
To have a copy of the panchnama together with all the annexures.
7.
To put his own seals on the packages containing the seized assets.
8.
Woman having the occupancy of any apartment etc., to be searched has right to
withdraw before the search party enters, if according to the customs, she does
not appear in public.
9.
To call medical practitioner if he is not well.
10.
To have his children permitted to go to school, after the examination of their
bags.
11.
To inspect the seals placed on various receptacles sealed in course of searches
and subsequently reopened by continuation of searches.
12.
To have the facility of having meals, etc., at the normal time.
13.
To have a copy of any statement before it is used against him in an assessment
or prosecution proceedings.
14.
To have inspection of the books of accounts, etc., seized or to take extracts
therefrom in the presence of any of the authorised officers or any other person
empowered by him.
15.
To make an application objecting to the approval given by the Commissioner of
Income-tax for retention of books and documents beyond 180 days from the date
of the seizure.
PARTY’S
SIGNATURE
Date:
Witness 1 Countersigned
Witness
2 Authorised
Officer
Note:
A copy of this invariably be served on the person searched in the presence of
witnesses by the authorised officer of the search party on entering the
premises.
[B]
Duties of the person searched
1.
To allow free and unhindered ingress into the premises.
2.
To see the warrant of authorisation and put signature on the same
3.
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.
4.
To identify and explain the ownership of the assets, books of account and
documents found in the premises.
5.
To identify every individual in the premises and to explain their relationship
to the person being searched. He should not mislead by impersonation. If he
cheats by pretending to be some other person or knowingly substitutes one
person for another, it is an offence punishable under section 416 of the Indian
Penal Code. 6. Not to allow or encourage the entry of any unauthorised person
into the premises.
7.
Not to remove any article from its place without notice or knowledge of the
authorised officer. If he secretes 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 punishable with imprisonment or fine or both, in
accordance with section 204 of the Indian Penal Code.
8.
To answer all queries truthfully and to 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 keep in mind
that:-
(i)
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;
(ii) Being legally bound by an oath 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;
(iii) 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
1.
To affix his signature on the recorded statement, inventories and the
panchnama.
2.
To 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.
3.
Similar cooperation 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.
PARTY’S
SIGNATURE
Date:
Witness
1 Countersigned
Witness
2 Authorised
Officer
Note:
A copy of this invariably be served on the person searched in the presence of
witnesses by the authorised officer of the search party on entering the
premises.
After
gaining entry into the premises to be searched, Authorised Officer should Report to the Control Room
After gaining entry into the
premises to be searched,
the Authorised Officer should report to the Control
Room, the time at which the search team gained entry into the premises and the
telephone numbers of the premises. Other significant developments, if any
should also be reported to the Control Room.
Report
to the Control room
·
Leaders
of search parties should telephonically report to the control room soon after
the search party has entered the premises and obtained the signatures on the
warrant of the owners/occupants and the witnesses.
· They should also report to the
control room all important developments of the search proceedings. Wherever
necessary, leaders of the search parties should seek instructions from the
control room.
·
Search
team’s interaction with the Control Room should not be confined only to the
initial report.
·
The
leader of the search team should interact with the
Control Room at regular intervals and also report to it all important
events and developments.
·
If
no message is received for long from a search team, the officer in charge of
Control Room should get in touch with the leader of the team to ascertain the
progress of the search and other significant developments.
Appointment
of witnesses
Calling respectable persons - Calling of two or more
witnesses is essential before making search [Rule 112(6)]
Before starting the search, the authorized officer
has to call at least two respectable inhabitants of the locality, who will
witness the search and remain present at the premises throughout till the
operation comes to an end.
Presence of witness - Witnesses not required to
attend as a witness of search in any proceeding under the Act [Rule 112(7)]
The search shall be made in the presence, of the
witnesses aforesaid and a list of all things seized in the course of such
search and of the places in which they were respectively found shall be
prepared by [the authorised officer] and signed by such witnesses; but no
person witnessing a search shall be required to attend as a witness of the
search in any proceedings under the Income-tax Act, 1961 unless specially
summoned.
Panchas
(Witnesses) should independent and respectable people
‘Panchas’
should be independent and respectable people. They should normally belong to
the locality and/or neighborhood of the place where the panchanama is drawn.
There is however no bar in getting panchas from distant places also if need be
or to overcome the non-availability of local panch witnesses.
Selection of witnesses by the
Authorised Officer
The
selection of the witness is done by the Authorised Officer. While selecting
witnesses, the Authorised Officer should ensure the following norms:—
(i)
The person selected as a witness should not
have a bad reputation.
(ii) The
person selected as a witness should be sufficiently educated to understand the
process of search.
(iii) No
person with a criminal record should be appointed as a witness.
(iv) A friend or a relative or an employee of the
person whose premises are being searched should not be appointed as a witness.
(v) The person selected as a witness should be
major and a citizen of India (above 18 years).
(vi) The witness should not be a business rival
or a disgruntled employee or a person hostile to the person(s) in whose case
the search is being carried out or the person who is in the occupation or
control of the premises being searched.
(vii) The person selected as a witness should be
free from any such physical or mental infirmities as would affect his functioning
as a witness.
(viii) The legal advisor or consultant of the
person(s), whose premises are being searched, should not be appointed as a
witness.
(ix) Religious sentiments of the person(s) whose
premises are being searched or who are in occupation or control of the premises
being searched should be kept in view while selecting witnesses.
(x) An
employee of the Income Tax Department should not be selected as a witness.
NOTE
Even though witnesses are to be
selected by the Authorised Officer, if the person in whose case the search is
to be conducted or the person in occupation and control of such premises raises
any objection against selection of a particular person as a witness, the
Authorised Officer should take such objection into account before taking a
final decision.
Functions
of the Witnesses
(a)
Present from time of entry into the
premises
(b)
Should have knowledge of the purpose of
the search
(c)
Present from beginning to the end of the
search
(d)
Initial the documents / records for
identification of having seen it at the time of search
(e)
Carefully watch the proceedings in the
search
Duties
of a Witness
The
main duties of a witness to the search are, in brief, as under:—
(i)
He should read and understand the
warrant of authorisation.
(ii) He should witness the search carefully right
from its commencement to its closure. His role as an independent and impartial
witness demands that he carefully observes whether—
(a) The search and seizure operations are being
carried out in an orderly manner and in accordance with the law, without any
interference and tampering or destruction of any evidence or valuables;
(b) Statements on oath of persons are being
recorded properly; without any undue influence or coercion;
(c) Personal search of a female occupant is being
taken only by female members of the search team with a strict regard to
decency;
(d) Facts relating to the search and seizure are
being recorded correctly and accurately in the panchnama, inventories and all
other relevant documents; and
(e) In case of continuance of a search on a
subsequent date, the seals are intact at the time of entry and are being broken
in his presence for re-entry to continue the search.
(iii) He should not leave the premises without the
permission of the Authorised Officer. Refusal by a witness to stay till the end
of the search constitutes an offence under section 187 of the Indian Penal
Code. Atleast one of the witnesses should remain in the search premises
throughout the duration of the search.
(iv) He should read everything
before putting his signature in all documents. He should affix his signature on
all packets containing seized bullion, jewellery, etc. and documents and
statements like, body of the warrant of authorisation, copy of the Taxpayers’
Charter containing the rights and the duties of the persons being searched,
inventories of books of account, documents and valuables, panchnama and its
various annexures.
(v) He should attend as a witness under the Act,
only if and when summoned. [Rule 112(7), which provides that no person
witnessing a search shall be required to attend as witness to the search in any
proceedings under the Act unless specifically summoned]
(vi) Ensure that any untoward incident during the
search, should feature in the Panchnama.
NOTE
If a witness raises any objection
or makes any point relating to the process or procedure of search or any matter
related thereto, the leader of the search team should consider and decide the
same.
Search starts after arrival of witnesses
Usually
the warrant is executed on assessee after witness are called and all the three
the assessee and witness signatures are taken on the warrant, so it is executed
at that time. As a general practice Department use to execute warrant as and
when strike at the premises and practically there is always some gap between
this and arrival of witnesses.
Steps
are as follows:
(1) Appointment of witnesses.
(2) In presence of the witnesses warrant of
authorisation is executed to the party.
(3) When the staze (2) is achieved it is said
that search has began.
Whole proceeding in the presence of
two witnesses
The search team must include at least two respectable
and independent residents of the locality as witnesses. The authorised officers
conducting the raid are duty bound to allow or permit two individuals from the
local area to stand as independent witnesses. The Authorised Officer should issue an order in
writing to the persons selected to attend and witness the search.
It
is not the right of the assessee to select witnesses of his choice
It is not the right of the assessee to select
witnesses of his choice. However, in practice, selection of witnesses is made
by the authorised officer with the consent of the assessee so that whole
proceedings may be carried out smoothly.
Female Panch witness may be included where female members are present in the place of search
Where female members are there in the
place of search, try to include female panch witness also. Explain to the
panchas the purpose of the search. Introduce the owners to the panchas.
Identify the suspect in the panchanama by taking his full name, his
father's/husband’s name etc., occupation, residential address, identification
marks, if any. Take the signatures of the panchas and the owner on the warrant
or the authorization for search and specify the details of the said documents
in the panchanama and state that the same has been dated and signed by the
panchas.
Authorised officer cannot forcibly require any person to act as witness
It is not possible to forcibly require any person to
act as witness. However, a person refusing to act as witness without any
justifiable cause, inspite of direction of the authorised officer may be
prosecuted for his denial.
If any witness refuses to sign the panchnama or any other document
If any witness refuses to sign the panchnama or any
other document, which he is required to sign, during or at the end of the
search, his statement on oath should be recorded. He should be specifically
asked about the reason for such refusal. The leader of the search team or any
other Authorised Officer should prepare a note describing the circumstances in
which the witness refused to sign the panchnama. All the members of the search
team and remaining witnesses should sign the note, which should be made a part
of the panchnama.
When
the witness turns hostile
If a witness turns hostile, the Authorised Officer
should record his statement. He should be specifically asked to explain his
conduct. The services of a hostile witness should be dispensed with. If because
of one or more witnesses turning hostile, the number of witnesses becomes less
than two, other respectable persons of the locality may be appointed as
witnesses.
Non-compliance with the Authorised Officer’s said
order entails prosecution under section 187 of the Indian Penal Code, 1860.
Where
the conduct of a person appointed as a witness found to be in violation of the
provisions of section 187 of IPC
In suitable cases, where the conduct of a person
appointed as a witness is found to be in violation of the provisions of section
187 of the Indian Penal Code, the matter should be reported to the Control Room
for exploring the possibility of launching prosecution against him.
Section
187 of the Indian Penal Code
“187.
Omission to assist public servant when bound by law to give assistance
Whoever, being bound by law to render or furnish
assistance to any public servant in the execution of his public duty,
intentionally omits to give such assistance, shall be punished with simple
imprisonment for a term which may extend to one month, or with fine which may
extend to two hundred rupees, or with both; and if such assistance be demanded
of him by a public servant legally competent to make such demand for the
purposes of executing any process lawfully issued by a Court of Justice, or of
preventing the commission of an offence, or of suppressing a riot, or affray,
or of apprehending a person charged with or guilty of an offence, or of having
escaped from lawful custody, shall be punished with simple imprisonment for a
term which may extend to six months, or with fine which may extend to five
hundred rupees, or with both.”
Offer
of personal search by the members of the search team
Ø The members of the search team
should offer themselves for search by the person whose premises, is being
searched or, as the case may be, the person in-charge of or in occupation of
premises.
Ø This should be done in the presence
of the witnesses.
Ø Personal search of lady members of
the search team should be allowed to be made only by a lady present in, or
occupying, the premises with a strict regard to decency.
Ø It is advisable that members of the
search team do not carry more than the minimum cash with them and except for
such jewellery like mangalsutra, or wedding ring, the members of the search
team should not wear other expensive jewellery.
Personal
search
· The
Authorised Officer has the power to search any person who has got out of, or is
about to get into, or is inside the building, place, vessel, vehicle or
aircraft. He may do so if he has reason to suspect that such person has
secreted about his person, any books of account, other documents, money,
bullion, jewellery or other valuable article or thing.
·
Personal
search should, however, not be carried out in an indiscriminate and routine
manner. When such a search involves a female, it should be carried out only by
another female with a strict regard to decency.
· A list of all things found as a
result of personal search should be prepared. The Authorised Officer, person
searched and the witnesses should sign this list.
Initial
Statements (Preliminary Statement) of the occupants of the premises
Before
commencement of search, the Authorised Officer should record statements of all
adult occupants of the premises.
If
the number of occupants is very large (like, in an office or a factory),
initial statements, which in the opinion of the Authorised Officer, are likely
to be useful for search proceedings or any other proceedings under the Act, may
be recorded.
It
will be useful to record such statements in a pre-designed proforma so that no
relevant point is missed.
Specimen
of Preliminary Statement – Question which may be asked during the course of
search operations
Q-1.
Please identify yourself.
Q-2.
Are you Income Tax assessee ? If yes, give your PAN and Ward/ Circle in which
you are filing your Income Tax Return.
Q-3.
What are your sources of income?
Q-4.
Give full details of your family members, age, occupation residence and their
source of income. Also state their income-tax particulars, if any.
Q-5.
In how many concerns you are partner or you have interest
O-6.
How much cash, jewellery and other valuables are lying in this premises?
Q-7.
How much is the cash kept at home?
Q-8.
What are the properties owned by you?
Q-9.
What are the properties owned by your wife and children?
Q-10.
Do you own any locker, separately or jointly with others? Please give the
complete details thereof.
Q-11.
What are the contents of the locker?
Q-12.
Do you maintain regular books of account?
Q-13.
(In case where the books are not maintained) Why do you not maintain regular
books of account?
Q-14. Please furnish the list of all bank accounts
held in India and abroad by you, your family members and business concerns in
which you or your family members have business interest, or are partners,
directors or sole proprietor.
Q-15. Give the particulars of your bank account, bank
deposits and other investments made in your own name, in the names of your
wife, children, other members of family and benamidars.
Q-16.
What is the extent of your monthly or annual personal expenditure and the source
of meeting them?
I have read over the above statement and understood
the same. I found that it has been correctly recorded. The above statement has
been given by me without any pressure, fear or coercion.
Case records of the person(s) in whose case(s) search(es) are being conducted are obtained from the Assessing Officer(s) and kept in his safe custody in the control room
The officer-in-charge of the
Control Room should ensure that soon after commencement of search, case records
of the person(s) in whose case(s) search(es) are being conducted are obtained
from the Assessing Officer(s) and kept in his safe custody in the control room.
As far as possible, no member of a search team should either directly or over
telephone contact any member of another team searching another premises.
Seizure
of books of account, documents, money, valuables, etc.
·
The
warrant of authorisation issued by the competent authority authorises the
Authorised Officer to seize any such books of accounts, other documents, money,
bullion, jewellery or other valuable article or thing found as a result of a
search, as have been referred to in section 132(1).
·
While
it is not necessary for the Authorised Officer to record reasons before making
a seizure, the power to do so should be exercised with care and caution.
·
Efforts
should be made to avoid indiscriminate seizures causing avoidable harassment to
taxpayers.
· While
it is for the Authorised Officer to decide whether any books of account,
documents, money, bullion, jewellery, other valuable article or thing should be
seized or not, in suitable cases, the leader of the search team should seek
guidance from the Control Room.
· The
officers manning the Control Room and authorities like, Joint/Additional DIT
(Investigation) are aware of the things found in other related premises and are
better placed to take a holistic view of the matter.
· The
category of books of accounts, other documents, money, bullion, jewellery or
other valuable articles or things seized should strictly come within the ambit
of the clauses either (a) or (b) or (c) of section 132 (1).
·
For
this it is necessary that the search team is provided with clear information
regarding the books of accounts already produced by the concerned persons and
the valuables already disclosed by them.
Seizure
of assets already reflected in the records filed with the department should be
avoided
·
The
search team should also equip itself with full information regarding the
declared assets of the tax payers from the returns of income/wealth filed, so
that only undisclosed assets are seized for the purposes of quantification of
concealed income and appropriation of taxes due on such income.
· In
case, assets disclosed in the regular books of accounts have been seized, these
can be released subject, of course, to recovery action liable against any
existing tax liability.
· However,
in cases where the seized assets will have specific evidentiary value in
prosecution, the assets should not be released till the completion of
prosecution proceedings.
Money
(Cash - Indian currency) found in the Course of search, its inventorisation and
seizure
· Indian
currency found in the course of search should be carefully counted. Wherever
necessary, ‘note counting machines’ can be used for this purpose. Counterfeit
Indian currency detected as a result of search should be segregated and
counted.
· Information
about the same should be immediately passed on to the Control Room. On receipt
of the information, the officer-in-charge of the Control Room should pass on
the same to the concerned Joint/Additional Director of Income Tax
(Investigation), who should take appropriate action in accordance with law and
wherever necessary, send an intimation to other concerned enforcement agencies.
· Inventories
of money found in the course of the search should be prepared. Separate
inventories should be prepared for the money found and seized, money found but
not seized and the counterfeit Indian currency found and further action taken
in respect of the same. Money found in the course of search can be seized only
if it represents undisclosed income or property of any person
·
Inventories
of money should contain details like the denomination of the notes, the number
of notes and their value. All these details should be recorded both in words
and figures. If there are stamps on stapled bundles of notes, these should also
be recorded in the inventory.
·
Where
bank slips are found, these should be treated as documents.
Foreign
currency, etc. found in the course of the search, their inventorisation and
seizure
·
Foreign
currency or cheques or travellers cheques, etc. found as a result of search
should be carefully counted.
·
Pointed
inquiries relating, inter alia, to the nature of possession, ownership and
source of acquisition should be made from the person in whose possession or
control these are found.
·
His
statement on oath should also be recorded.
·
Where
the said person claims that the foreign currency, traveller’s cheques, etc. do
not belong to him but to some other person, suitable inquiries in the matter
should be made.
· The matter should also be immediately reported to the Control Room and their instructions or advice obtained for further course of action to be adopted. On receipt of the information, the officer-in-charge of the Control Room should pass on the same to the concerned Joint/Additional DIT (Investigation), who should take appropriate action in accordance with the law and wherever necessary, send an intimation to other concerned enforcement agencies.
Promissory notes found in the course of search, their inventorisation and seizure
·
A
promissory note payable to order or to bearer is a negotiable instrument within
the meaning of Negotiable Instruments Act, 1881.
·
It
is a document in the nature of asset and falls in the category of ‘other
valuable articles or things’ referred to in section 132 of the Act.
·
Inventories
of all promissory notes found in the course of the search should be prepared.
·
Separate
inventories, containing full details, should be prepared for the promissory
notes found in the course of search but not seized and those found and seized.
·
Wherever
necessary, photo copies of the promissory notes duly certified to be a true
copy by the assessee/ the person from whose custody the promissory notes were
seized should be obtained by the Authorised Officer.
· Promissory
notes should be seized only if these are not reflected in the books of account
maintained in the regular course of business or profession or financial
activities of the concerned person(s) or represent unexplained or undisclosed
transaction of any person.
·
Their
indiscriminate seizure should be avoided.
·
Seizure
of undischarged promissory notes can at times, result in the debts becoming
barred by time and bad.
·
Promissory
notes, which have been seized in the course of search and are likely to become
time barred, may be returned on the assessee’s depositing an amount equivalent
to the value of the promissory notes, if the assessee can be persuaded to do
so.
·
In
a case where the assessee refuses to deposit an equivalent amount, no useful
purpose would ordinarily be served by retaining the promissory notes.
·
On
the other hand, it can involve the department in litigation if the amount due
under promissory notes becomes irrecoverable because of the Department’s
failure to return it to the assessee.
·
It
may be advisable to take the following steps in such situations:
(2) An order under section 132(3) should be passed directing the person in possession of the promissory notes not to part with the said notes unless an equivalent amount is deposited with the Assessing Officer. It is significant to mention in this connection that an order merely restraining the lender from parting with the promissory notes, would be ineffective as the lender can realise the debt by issuing a receipt discharging the debtor from any further liability. This is a possibility, which should be kept in mind while dealing with such cases. It would also be advisable to qualify the order under section 132(3) with a proviso that the lender may part with the promissory notes only on the condition that the borrower pays the money to the Income Tax Department and not to the lender. Since, section 132(3) empowers the Authorised Officer to take necessary steps to ensure compliance of an order under that section, he can also issue an order to the borrower not to pay the amount under the promissory note to the lender, but to the Income Tax Department.
·
In
suitable cases promissory notes themselves can be seized, order under section
132(3) passed and the assessee asked to provide replacement in terms of money
for the promissory notes before returning the same to him.
Fixed
Deposit Receipts (FDRs) found in the course of the search, their
inventorisation and seizure
·
Where
any Fixed Deposit Receipt (FDR) or Term Deposit Receipt or receipt of a similar
nature, whether issued by a bank or any other body or institution is found in
the course of a search, the Authorised Officer should make a preliminary
examination to identify the person(s) in whose names the FDR, Term Deposit
Receipts, etc. stand and the person(s) who made investments on the same. Other
relevant information should also be gathered.
·
A
Fixed Deposit Receipt (FDR) or a receipt of a similar nature found in the
course of search can be seized only if it represents undisclosed income or
property of a person. It is, therefore, necessary that before taking a decision
whether to seize the FDR, Term deposit receipt, etc. or not, the authorised
officer makes at least a preliminary examination in the matter.
·
He
should, for example, ascertain whether the investments made in and the income
earned on the FDR, Term Deposit Receipt, etc. have been reported in the
income-tax return of the owner/ concerned person/investor; whether the
investment made on the FDR, Term Deposit Receipt, etc. is fully explained and
whether the same is reflected in the books of account, if any maintained in the
regular course of business or profession or financial activities.
·
In
case a FDR or receipt of a similar nature is seized, marks of identification
should not be placed on the instrument itself but a piece of paper should be
attached to the FDR and marks of identification placed thereon.
·
The
points made elsewhere in this chapter above on valuation, inventorisation and
examination for ascertaining the nature of possession and the source of
acquisition of jewellery and ornaments will, so far as may be, also apply to
FDRs or receipts of a similar nature found as a result of search.
·
Where
it is decided to seize a FDR, an order under section 132(3) should also be
served on the assessee/person from whose possession and control, the FDR was
found as well as the Manager of the branch of the bank, or as the case may be
the body or the person that issued the FDR, to guard against any possibility of
the issuance of duplicate receipts.
·
However
since with effect from 01.06.2002, an order issued issued under section 132(3)
by an authorised officer remains in force for a maximum period of 60 days from
the date of issue, it is advisable that if its retention continues after the
expiry of the said period, the Manager/person-in-charge of the Bank or the body
or institution that issued the FDR, Term Deposit Receipt, etc., is informed
that the retention is continuing in accordance with the law.
·
Inventories
of FDRs, etc. found in the course of the search should be prepared.
· Separate
inventories should be prepared of the FDRs found but not seized and those found
and seized.
·
The
inventories should give all relevant details of each FDR like, the name(s) of
the holder(s), the date of issue, the date of maturity, the distinctive number
of the FDR, face value of the FDR, amount payable on maturity, rate of interest
and the name and address of the banker, or, as the case may be, the body that
issued the FDR.
·
Wherever
necessary, a photo copy of the FDR should be obtained by the authorised
officer.
Jewellery
found in the course of the search, its inventorisation and seizure
·
If
any jewellery is found in the course of search, the authorised officer should
contact the Control Room for sending an approved valuer for its valuation.
·
It
is necessary to record the exact place from where the jewellery was found as
this fact could be relevant for establishing its ownership and other related
issues.
·
The
approved valuer nominated by the control room should be asked to record full
description of each item of jewellery, its gross and net weights, basis of
valuation, value and other relevant details in the form of an inventory.
·
This
exercise should be carried out in the presence of the person(s) in whose
possession or control, the jewellery items were found, witnesses to the search
and the authorised officer.
·
In
case, the assessee or the person who was found to be in possession or control
of the jewellery or any other person on his behalf produces any report of its
valuation, the same should not be shown to the approved valuer.
·
If
for some reason it becomes necessary to show the same to him, this should be
done only after he has made the valuation. This should minimise the possibility
of any bias on the part of the approved valuer in its inventorisation and
valuation.
Where
it is claimed that any item of the jewellery found does not belong to the
person in whose case the search is being conducted
· Where
it is claimed that any item of the jewellery found does not belong to the
person in whose case the search is being conducted or to the person found to be
in possession or control of the same but to some other person, the Authorised
Officer should make suitable preliminary inquiries in the matter.
· He
should also consider the explanation offered by the person(s) concerned or
other evidence found in the course of the search or produced before him.
·
He
should report the matter, along with his conclusions or recommendations to the
Control Room.
· The
officer-incharge of the Control Room should pass on the information to the
concerned Joint/Additional Director of Income Tax (Investigation) who should
take further appropriate action in accordance with the law.
Jewellery
or ornament found in the course of search can be seized only if it represents
undisclosed income or property
v
Any
jewellery or ornament found in the course of search can be seized only if it
represents undisclosed income or property of any person.
v
While
it is not mandatory for the Authorised Officer to conclusively establish the
identity of the person to whom the jewellery or ornaments belong or who made
investments for their acquisition or make a detailed investigation on any
matter relating to the source of investment or nature of possession, especially
in situations where conflicting claims are made or evasive replies given to
him, it is necessary that before taking a decision whether to seize the
jewellery or ornaments or not, he at least makes a preliminary examination in
the matter.
v
He
should, for example, try to find out the nature of possession and the source of
acquisition of the jewellery and ornaments; ascertain whether the investments
made in the same have been reported in the income-tax return of the
owner/concerned person/investor or declared under any scheme of voluntary
disclosure of income; whether the investments made are explained; whether the
same are reflected in the books of account, if any maintained in the regular
course of business or profession or financial activities and whether the same
have been declared in the wealth-tax returns, if any filed.
v
The
Board’s following guidelines regarding seizure of jewellery should also be
strictly adhered to:
(a)
In
the case of a wealth-tax assessee, gold jewellery and ornaments found in excess
of the gross weight declared in the wealth-tax return only need be seized.
(b)
In
the case of a person not assessed to wealth-tax, gold jewellery and ornaments
to the extent of 500 grams per married lady, 250 grams per unmarried lady and
100 grams per male member of the family, need not be seized.
(c)
The
Authorised Officer may, having regard to the status of the family and the
custom and practices of the community to which the family belongs, and other
circumstances of the case, decide to exclude a larger quantity of jewellery and
ornaments from seizure.
v
This
should be reported to the Principal Director of Income Tax/ Principal Commissioner
authorising the search at the time of furnishing the search report.
v
In
all cases, detailed inventories of the jewellery and ornaments found in the
course of the search must be prepared.
v
It
would be advisable to prepare separate inventories for jewellery (a) found and
seized; (b) found but not seized; (c) jewellery found on the person of an
individual and seized; and (d) jewellery found on the person of an individual
but not seized.
v
The
inventories should give full description of each item of jewellery indicating,
inter alia, its gross and net weights, basis of valuation, value and the place
and the circumstances in which it was found.
v The procedure for seizure of
bullion jewellery and other valuable articles or things, as given in sub rule
(10) of rule 112 of the Rules should also be strictly adhered to.
Gold,
Bullion or Silver found in the course of search
·
If
any gold, bullion or silver is found in the course
of search, the Authorised Officer should contact the Control Room for sending
an approved valuer for its valuation.
·
His
report should be obtained in the form prescribed in the Wealth Tax Rules in
quadruplicate.
· It
is necessary to record the exact place from where the bullion was found as this
fact could be relevant for establishing its ownership and other related issues.
·
Bullion
found in the course of the search should be inventorised, irrespective of the
fact whether it is seized or not.
· Separate
inventories should be prepared of the items found and seized and those found
but not seized.
·
Where
bullion with foreign marking is found, the Authorised Officer should
immediately report the matter to the Control Room.
· On
receipt of the information, the officer-in-charge of the Control Room
should pass on the same to the concerned Joint/Additional Director of Income
Tax (Investigation), who should take appropriate action in accordance with the
law and wherever necessary, send an intimation to other concerned enforcement
agencies.
· The
procedure for seizure of bullion or jewellery or other valuable articles or
things as given in rule 112(10) should be strictly followed.
Other
steps to be taken by the authorised officer, the leader of the search party
If during the course of the search any evidence of an
illegal activity leading to an offence under any of the following statutes or
any other law is discovered, the concerned authorities are immediately informed
so that they can take appropriate action against the offenders: -
(i)
The Antiquities and Art Treasures Act,
1972;
(ii)
The Arms Act, 1959;
(iii)
The Wild Life (Protection) Act, 1972;
and
(iv)
The Foreign Exchange Management Act,
1999.
Stock-in-trade
of the business found in the course of search and its inventorisation
· Stock-in-trade
of the business found in the course of the search should be carefully
quantified, valued and inventorised.
· This
exercise should be undertaken carefully, in a systematic manner and in the
presence of the person in whose case the search is being conducted or the
person who is found to be in possession or control of the stock.
· Wherever
necessary, Control Room’s assistance should be sought for quantification and
valuation of stock or any related matter.
·
The
person(s) whose premises is being searched and the person who is found to be in
possession or control of the stock should be given an opportunity to offer
their explanation about the stock found, its quantity and value.
· Specific
queries in this regard should also be made while recording their statements
under section 132(4).
· Where
the person maintains a stock register, the stock found should be compared with
the entries made in the register.
·
Wherever
necessary, purchase and sale vouchers and other documents should also be
examined.
· Depending
upon the facts and circumstances of the case, suitable methodology for
verification of stock should be adopted.
· If
the person(s) concerned raise any objection on the methodology or the
computation for quantification of stock, the same should be carefully
considered, disposed off and also clearly recorded in a note, which should be
appended to the inventory.
· This
would eliminate the possibility of the person(s) concerned claiming in the
assessment or appeal or any other post-search proceedings that the methodology
or the computation made by the authorised officer was erroneous and that during
the search they were not given any opportunity to object to the same.
· If
no such objection is made, the fact should also be recorded in a note, which
should also be signed by the person concerned and the witnesses.
·
The
objective of the Authorised Officer should be to find out whether the stock
found in the course of the search stands explained with reference to the books
of account and other records maintained on a regular basis. If the stock found
is in excess or deficient with reference to such books or records, the person
concerned should be asked to explain the discrepancy.
· With
effect from 01.06.2003, any bullion, jewellery or other valuable article or
thing, found as a result of a search, which is stock-in-trade of the business
cannot be seized.
·
It
can also not be subjected to deemed seizure under the second proviso to section
132 (1).
· The
Authorised Officer is, however, entitled to make a note or inventory of such
stock-in-trade of the business.
Keys
found in the course of search, their inventorisation and seizure
·
If
any key is found in the course of search, the Authorised Officer should make
suitable inquiries to identify and locate the lock/locker/ vault/any other
receptacles to which it pertains.
·
This
exercise is important, as there is always a possibility that the key is that of
a bank locker or a receptacle. Any delay in detecting, locating and searching
such a locker or receptacle, etc., can adversely affect the purpose and process
of search.
· Where
any key found pertains to a bank locker or any other locker or vault or a
receptacle, not inside the premises being searched, the control room should be
informed about the same immediately.
·
All
efforts should be made to get information about bank lockers, other locker,
etc. soon after entry into the premises, in the course of initial statements of
the persons concerned.
· As
soon as any relevant information is received, all efforts should be made to
obtain the keys of such lockers. These should be seized. This is so because a
separate warrant of authorisation is needed for search of bank lockers, other
lockers outside the premises, etc. It is, therefore, necessary that the control
room is informed as early as possible about the existence of bank lockers,
other lockers, etc. and keys thereof so that the appropriate authority can take
a decision in the matter and prevent operation of the bank locker, other
lockers, etc. in the mean time.
· Each
key seized should be separately tagged and marks of identification placed
thereon together with the signatures of the person concerned and the witnesses.
· Inventory
of all keys found and seized in the course of search should be carefully
prepared. This should contain details like, the place at which the key was
found and its number and other details, if any appearing on the key.
·
Where
the bank locker or other receptacles to which the key found pertains has been
identified, full particulars like, bank locker number, name of the bank and
branch, particulars of receptacles and its location, etc., should be recorded.
· The
name of the person in whose name the locker/receptacle stands should also be
mentioned. In case it is not admitted that the key pertains to a bank locker,
the number alone should be mentioned without any reference to any bank locker.
Lavish
fittings, decoration item and furnishing, etc. found in the course of the
search and their inventorisation
· Where
in the course of search, the Authorised Officer comes across any lavish
fittings, decoration items and furnishings etc., he should inspect them and
make suitable preliminary inquiries to find out about their ownership,
cost/value and the date and source of acquisition.
· If
he has reasons to suspect that these represent expenses/investments incurred
out of the undisclosed income of any person, he should prepare an inventory of
all such items.
· The
inventory should give details like, the description/name of the article, number
or other details, if any appearing on the article and its value and the basis
of valuation.
· Wherever
considered necessary, he should get them valued by a valuer. He can seek the
Control Room’s assistance for identification and nomination of valuer.
·
Wherever
necessary, these fittings, furnishings, etc. should also be photographed.
Plants and machinery
and other movable properties found in the course of the search and their
inventorisation
Where costly plants and
machinery or other movable properties are found in the course of search and
there are reasons to suspect that these have either been under-valued or
represent expenses/investments made out of undisclosed income of any person,
suitable steps for their inventorisation and valuation should be taken.
Documents
and other things attempted to be thrown out or destroyed or removed by the
occupant of the premises
· There
can be a situation where before the commencement of the search or in the course
of the search, an occupant of the premises throws out or attempts to throw out
any books of accounts or documents or money, bullion, jewellery or any other
valuable article or thing or key(s) to avoid its detection by the search team.
·
The
leader of the search team should take all precautions to foil any such attempt.
· The
person(s) responsible for the incident should be asked to explain the reason
for such a behavior and his/their statement(s) on oath recorded.
·
Such
persons can also be prosecuted for an offence under section 186 of the Indian
Penal Code for obstructing a Government servant on duty.
·
The
things which were attempted to be thrown out or were actually thrown out and
subsequently recovered by the search team, should form a part of a separate
inventory.
·
Where
a person runs away with any books of account or other documents or any other
thing, the Authorised Officer should make all attempts to catch hold of such a
person and bring him back, if necessary, by taking the assistance of other
members of the search team or any police officer or officers of the Central
Government.
· A
complaint to the police should be lodged for recovery of the property and
documents that he took away and for such other actions as may be considered
necessary in accordance with the law.
·
Where
any person is in possession of books of account or documents or money, bullion,
jewellery or other valuable articles or things offers any resistance in handing
over the same to the Authorised Officer, he can, if necessary seek the
assistance of the available police officers or Central Government officers.
Such an act also makes that person liable for prosecution under section 183 of
the Indian Penal Code.
·
All
such incidents should be reported to the Control Room.
· Wherever
necessary, the Authorised Officer should seek, through the Control room,
assistance or guidance of the concerned Additional/Joint Director of Income Tax
(Investigation).
·
The
Authorised Officer should also prepare a detailed note on such incidents.
· This should be signed by the
witnesses to the search, the Authorised Officer and wherever possible, the
person(s) involved in the incident.
Deemed
Seizure [Second proviso to sub-section (1) of section 132]
·
The
second proviso to sub-section (1) of section 132 of the Act provides for deemed
seizure. This applies to a situation where –
Ø
a
valuable article or thing is found as a result of search;
Ø
the
said valuable article or thing falls within the ambit of clause (c) of sub
section (1) of section 132, that is, it represents either wholly or partly
undisclosed income or property; and
Ø
the
said valuable article or thing is liable to be seized but it is not possible or
practicable to get physical possession of the same and remove it to a safe
place due to its volume, weight or other physical characteristics or due to its
being of a dangerous nature.
·
In
such a case, The Authorised Officer has the power to serve an order on the
owner or the person who is in immediate possession or control thereof that he
shall not remove, part with or otherwise deal with it, except with his previous
permission.
·
Such
action of the Authorised Officer is deemed to be seizure of such valuable
article or thing.
·
With
effect from 01.06.2003, stock-in-trade of business cannot be subjected to
deemed seizure.
·
Contravention
of an order under second proviso to section 132(1) entails prosecution under
section 275A.
· It
is significant to mention that deemed seizure is different from restraint or
prohibitory order under section 132 (3). The basis and the conditions governing
the two are different. Also, a restraint order under section 132 (3) is not a
seizure.
Section
132 (4) empowers the Authorised Officer to examine on oath, during the course
of search and seizure operation
·
Section
132 (4) empowers the Authorised Officer to examine on oath, during the course
of search and seizure operation, any person who is found to be in possession or
control of any books of account, other documents, money, bullion, jewellery or
other valuable article or thing.
·
Such
examination may not be limited to the contents of the books of account, or
other documents or the nature of assets found during the search.
·
It
can extend to all matters relevant to any investigation connected with any
proceeding under the Act. Any statement made by such person during such
examination may also be used in evidence in any proceeding under the Act.
·
The
Authorised Officer has the power to record statements both under section
131(1A) and under section 132(4).
·
While
the Authorised Officer can record a statement under section 131(1A) before he
takes action under clauses (i) to (v) of sub-section (1) of section 132, he can
record a statement under section 132(4) only during the course of the search.
· Secondly,
under section 132(4), the Authorised Officer can examine a person and record
his statement only if he (the person) is found to be in possession or control
of any books of account, other documents, money, bullion, jewellery or other
valuable article or thing.
· One
of the purposes of on-the-spot examination on oath is to elicit truth before a
person whose statement is sought to be recorded, has an opportunity to concoct
an explanation or fabricate evidence.
·
The
statement also gives the person searched an opportunity to offer his or her
explanation on the books of account, documents, evidence and assets found as a
result of the search.
·
It
is, therefore, necessary that statements under section 132(4) of all the
persons referred to therein are recorded in the course of search.
· Statement
under section 132 (4) is a statement on oath. It is not only for fact finding but
also for further investigation to find out the undisclosed income, investments,
etc. of the person making the statement or any person connected with him.
·
Only
an Authorised Officer is competent to record a statement under section 132(4).
· Before
recording a statement, the Authorised Officer should administer an oath to the
person making the statement or bind him by an affirmation.
·
It
is upto the person whether he binds himself by an oath or affirmation to state
the truth.
· Recording
of a statement without administering an oath may not get the approval of Courts
in prosecution proceedings.
·
In
case the person to be examined is below twelve years of age and the Authorised
Officer is of the opinion that though such person understands the duty of
speaking the truth, he does not understand the nature of an oath or
affirmation, there is no necessity to administer an oath to him or her.
· In
any such case the absence of an oath or affirmation does not render inadmissible
any evidence given by such person nor affect his obligation to state the truth.
· The
Authorised Officer, should before recording the statement, also warn the person
that he is bound to state the truth and the consequences of making a false
statement.
· The
statement should start with the particulars for uniquely identifying the person
making the statement. These would include information like, his/her name,
his/her father’s name, age, nationality and local and permanent addresses.
· Tax
related information like, whether the person is assessed to tax and if so, his
Permanent Account Number and the assessment unit/Range and the charge where he
is assessed to tax should also be ascertained and recorded.
· It
may also be useful to obtain and record information about his relationship with
the person in whose case the search is being conducted.
Ask
specific queries while recording a statement under section 132(4)
While
there can be no specific and comprehensive guidelines for the types of
questions that may asked while recording a statement under section 132(4),
specific queries pertaining to the following areas could be useful:
(1) Questions
on the points which deals with recording of initial statement under section
131(1A)] may be asked, if not already raised and answered while recording
initial statement.
(2) In case there is any significant mismatch or
variation between the initial statement of a person and the information or
evidence, etc. gathered as a result of the search, the person should be
confronted with the same and his response recorded.
(3) Where any money or bullion or jewellery or
ornaments or any other valuable article or thing is found as a result of the
search, specific and pointed queries should be made from the person making the
statement on matters like, its ownership, date and manner of acquisition,
amount of investment and the nature of possession and the source of
acquisition. He may also be specifically asked whether he/she has any evidence
to substantiate his/her claim.
(4) In suitable cases, the person making the
statement may also be asked to explain the nature of the documents and books of
account, including those maintained in the form of electronic record referred
to in section 132(1)(iib) and other digital evidence, found as a result of the
search and the entries made therein. Specific and pointed queries may be made
if it is found that any such books of account or other documents point to any
undisclosed income or unexplained transaction of any person.
Wherever necessary, the relevant books of account or
documents may be shown to the person while recording his statement and pointed
queries raised.
Documents shown to the person at the time of recording
of his statement should be properly identified and the fact mentioned in the
statement.
(5) Where foreign currency, traveller’s cheques,
etc in foreign currency or counterfeit Indian currency are found, mode and
nature of their possession and source of acquisition should be enquired into.
(6) In suitable cases, specific queries on the
stock-in-trade found as a result of the search, its quantity, value and entries
relating thereto recorded in the books of account should be made.
Where the quantity of stock found as a result of the
search or its value does not match with the entries in the books of account or
other relevant documents, the person making the statement should be confronted
with the same and pointed queries in this regard made.
(7) During the course of search, following
situations may be encountered:
(i) the information or evidence gathered as a
result of search, points to any undisclosed income or asset or transaction of a
person, other than the person in whose case the search is being conducted, or
(ii) any claim to this effect is made by such person,
or
(iii) the person making the statement refers to any
transaction with, or any thing said to have been done or stated or written by,
any other person.
In
such a situation, specific and pointed queries should be made to elicit all the
relevant information for establishing the identity, and address of such other
person; and details of the transactions, etc. This information should be passed
on to the Control Room as early as possible. On receipt of any such
information, the officer-in-charge of the Control Room should pass on the same
to the Joint/Additional Director (Investigation) who should, decide about
further action, if any required to be taken (e.g. examination of such other
person before he could be contacted by the first person).
Recording
a person’s statement during the Search operation
·
Examination
under section 132(4) should be made only by the Authorised Officer.
·
The
statement should, as far as possible, be in question-answer form.
· Care
should be taken to write down the questions and answers legibly on a paper of a
reasonably good quality and thickness.
· The
persons whose statements are to be recorded should not be allowed to brief one
another or to compare notes.
· Where
a person declines to answer any question on the ground of ill health,
nervousness, or shock or fatigue or mental tension, he should be given some
time to take rest before resuming questioning. If need be, a medical
practitioner may be called for examination. All certificates issued by the
medical practitioner should be made parts of the panchnama.
· As
far as possible the statement of a person should be taken and recorded in the
language that he understands and the exact words used by him should be
recorded.
·
Queries
should be raised in a clear, specific and unambiguous manner so that there is
absolutely no room for doubt. This would also eliminate the possibility of the
person successfully claiming in any post-search proceedings, including appeals
against the assessment that he did not understand the question properly.
· No
police officer should be allowed to remain in the room where any person is
being examined under section 132(4). This is to ensure that the person making
the statement does not subsequently take a plea that his statement was recorded
under coercion or pressure or any undue influence. (
· Each
page of the statement should be signed at the bottom by the deponent,
authorised officer and the witnesses.
·
If
the deponent is illiterate his left hand thumb impression should be obtained.
· In
certain situations it may be advisable to obtain the left hand thumb impression
of a literate person also, in addition to his signature.
· In
obtaining thumb impression, care should be taken to use good quality stamp pad
and to apply ink evenly so that the impression is clear and shows the ridges
prominently and there is no difficulty in reading the impression by a finger
print expert.
· The
last page of the statement should contain an endorsement that the deponent has
read and understood the statement and that the statement was given with out any
coercion or undue influence.
· The
name of the person whose thumb impression has been obtained should be legibly
written just below the impression. The statement should be read out to the
deponent.
· If
the statement has been recorded in a language, which he does not understand or
where the person making the statement is illiterate, it should be read over and
explained to him in the language he understands. A certificate to this effect
should also be recorded.
· The
Authorised Officer should not ask the person making the statement to disclose
or surrender any undisclosed or unreported income or exert any pressure or
influence on him to do so. He should not make any attempt to obtain confession
as to the undisclosed income. The Board views this adversely.
· However,
if the person making the statement voluntarily discloses any undisclosed
income, financial transactions, etc., the Authorised Officer should ask him to
give all the relevant details, including the manner in which such income was
derived and the year to which it pertains. He should also make suitable efforts
to gather supporting evidence in this regard.
· Any
confession made by a person, which is not based upon any credible evidence,
will not serve any useful purpose if that person subsequently retracts it.
· The
focus and concentration of the search team should be on collection of evidence
regarding undisclosed and disclosed income and transactions.
·
It
has been, inter alia, stated in the Board’s letter F. No. 286/57/2002-IT (Inv.
II) dated 03.07.2002 that disclosure of undisclosed income in statement under
section 132(4) without proper evidence in support thereof shall be adversely
viewed.
· The
Board also desired in the said letter that in telex report, details of evidence
in support of disclosure, if any under section 132(4) should be clearly spelled
out.
·
All
statements recorded in the course of the search should be prepared in
triplicate and signed by the following:
(i) Authorised Officer who recorded the statement
(ii) The person who made the statement
(iii) Witnesses to the search
Text of Section 178 of the Indian Penal Code, 1860
178. Refusing oath or affirmation when duly required by public servant to
make it —
Whoever refuses to bind himself by an oath 1[or
affirmation] to state the truth, when required so to bind himself by a public
servant legally competent to require that he shall so bind himself, shall be
punished with simple imprisonment for a term which may extend to six months, or
with fine which may extend to one thousand rupees, or with both.
Refusal
to answer a question constitutes an offence punishable under section 179 of the
IPC
If
a person refuses to answer a question, he may be informed about its
consequences. If he still does not answer, the fact should be clearly recorded
in the statement.
Text of Section 179 of the Indian Penal Code, 1860
179. REFUSING TO
ANSWER PUBLIC SERVANT AUTHORISED TO QUESTION.
Whoever, being
legally bound to state the truth on any subject to any public servant, refuses
to answer any question demanded of him touching that subject by such public
servant in the exercise of the legal powers of such public servant, shall be
punished with simple imprisonment for a term which may extend to six months, or
with fine which may extend to one thousand rupees, or with both.
Refusal to sign the statement is an offence punishable under section 180 of the IPC
Where a person after giving the
statement refuses to sign it, the Authorised Officer should record this fact in
the statement and obtain the signatures of the witnesses.
Text of Section 180 of the Indian Penal Code, 1860
180. REFUSING TO SIGN STATEMENT.
Whoever refuses to sign any statement made by him,
when required to sign that statement by a public servant legally competent to
require that he shall sign that statement, shall be punished with simple
imprisonment for a term which may extend to three months, or with fine which
may extend to five hundred rupees, or with both.
Signatures
on the various inventories, lists, statements etc., prepared in the course of
the search
All
the inventories and lists referred to in the preceding paragraphs should be
prepared in triplicate. All the copies of inventories, lists, etc. should be
signed by the following:
(i)
Authorised
Officer
(ii)
The person in whose case the search was
conducted
(iii) The person in-charge, or in control, of the
building, place, vessel, vehicle or aircraft searched, where such person is different from the one
referred to at S.No. (2) above.
However, where the person referred to at S.No. (2)
above is not available at the premises, signatures of the person referred to at
S. No. (3) will be sufficient.
(iv)
Witnesses to the search
Copy of the
statement should not be given to the deponent during the search or at its
conclusion
In case any such person
makes a request for providing him a copy of the statement subsequently, a
decision may be taken in accordance with the Board’s letter F. No.
286/57/2002-IT(Inv. II) dated 03.07.2002, which inter alia provides that copies
of statement(s) should be allowed within fifteen days from the date of receipt
of application in this regard.
Temporary
conclusion of search for continuation on a subsequent date
· As
far as possible search of premises, once started should continue till it is concluded.
However, where because of any unavoidable and compelling reason, it is not
possible to do so and it is considered necessary, in consultation with the
Control Room, to temporarily conclude the search for the day and continue the
same on a subsequent day, the Authorised Officer should take the following
steps:
·
The
premises should be properly sealed in the presence of at least two witnesses
and placed under armed police guards along with some responsible persons of the
Income Tax Department.
·
In
a case where only a part of the premises could not be searched, the decision
whether to seal the entire premises or only that portion which is yet to be
searched should be taken after a careful consideration of all the relevant
factors, if possible in consultation with the Control Room.
·
As
far as possible only that portion of the premises should be sealed, which is
yet to be searched so that minimum inconvenience is caused to its occupants.
· The
Authorised Officer should issue an order under section 132(3) and serve the
same on the person-in-charge of the premises or, as the case may be, of that
part of the premises which has been sealed.
·
A
panchnama should be prepared even if the search is temporarily concluded. This
should clearly indicate that the search was temporarily concluded and not finally
concluded. If search has been concluded in respect of a part of the premises,
this fact should also be clearly recorded in the panchnama.
·
It
is not necessary that seizure of books of account, documents, bullion, other
valuable articles or things, etc. should be made only on conclusion of the
search.
· Seizure
can also be made even if the search has been suspended and is to continue on a
subsequent day. Where search of a part of the premises has been concluded,
inventories of the books of account, documents, bullion, jewellery, other
valuable articles or things, etc. found as a result of the search and seizures
made should be prepared in the usual manner.
· On
the subsequent day when the search is to be resumed, the seals should be opened
in the presence of witnesses.
·
As
far as possible the same persons who witnessed the search on the day it was
suspended should be called upon to witness its continuation. However, if they
are not available, the authorised officer should select two or more other
respectable inhabitants of the locality in which the building or place to be
searched is situate to attend and witness the search.
· The
Authorised Officer should issue an order in writing to the persons selected to
attend and witness continuation of the search, even if they are the same
persons who witnessed the search on the day it was suspended.
·
Where
on continuation of the search earlier suspended, any seal is found to be broken
or tampered with, the matter should be immediately reported to the Control
Room.
·
A
complaint to the police should also be lodged immediately. Contravention of an
order under section 132(3) also entails prosecution under section 275A.
·
The
search may resume after the aforesaid actions have been taken.
Contravention of order made under section
132(3)
Person defaulting in second proviso to section 132(1)
shall be punishable with rigorous imprisonment which may extend to 2 years and
shall be liable to fine also. (Section 275A)
However, from 01.06.2003, the aforesaid provision
shall not apply in case of any valuable article or thing being stock-in-trade
of the business. [Inserted vide third proviso to section 132(1)]
Text of Section 275A
Contravention of
order made under sub-section (3) of section 132.
275A. Whoever contravenes any order referred to in the second proviso to sub-section (1) or sub-section (3) of section 132 shall be punishable with rigorous imprisonment which may extend to two years and shall also be liable to fine.
Preparation
of Panchnama
·
At
the end of the search or when it is temporarily concluded, a panchnama is
required to be prepared.
·
The
Investigation unit organising the search provides the form of such panchnama to
search teams.
·
This
is a document of considerable evidentiary value and should be prepared with due
care and caution.
·
When
the search is resumed on a subsequent day, the panchnama prepared on the
subsequent day should refer to the immediately preceding panchnama and also to
the fact that all the seals were inspected by the Authorised Officer, the
person in-charge of the premises and the witnesses and that they were found
intact.
·
The
panchnama should mention all significant events in the search in the same
sequence in which they occurred.
·
It
also gives various details like, the name(s) of the person(s) in respect of
whom the warrant of authorisation was issued; names and designations of the
Authorised Officers and other officials who assisted the Authorised Officers;
names and addresses of the witnesses to the search, date(s) and time of the
commencement and conclusion/temporary conclusion of the search; references to
the orders under section 132(3) and the second proviso to section 132(1) issued
and served on the persons concerned; names of the persons who were examined on
oath or solemn affirmation; list of the books of account, other documents,
money, bullion, jewellery and other valuable articles or things found but not
seized and those found and seized.
· A
specimen of the official brass seal used should also be put on the panchnama.
Even where nothing is found or seized in the course of a search, a panchnama
should be prepared in the usual manner.
·
One
copy of the panchnama (along with its annexures referred to above should be
provided to the person searched, or where he is not present in the premises
searched, to the person in-charge, or in control, of the building, place,
vessel, vehicle or aircraft searched.
The
following should also be appended to the panchnama and made a part thereof
§
List/Inventory
of all books of account and documents found and seized
§
List/Inventory
of all books of account and documents found but not seized (A mention should be
made of the marks of identification made)
§
Lists/Inventories
of bullion, jewellery, ornaments and gold and silver articles, etc. found and
seized
§
Lists/Inventories
of bullion, jewellery, ornaments and gold and silver articles, etc. found but
not seized
§
Lists/Inventories
of other valuable articles or things found and seized
§
Lists/Inventories
of other valuable articles or things found but not seized
§
Lists/Inventories
of cash found, with break-up of cash seized and cash not seized
§
Lists/inventories
of counterfeit Indian currency found and further action taken in respect of the
same
§
Lists/inventories
of computers, hard disk, CDs, floppies, pen drives, etc. found as a result of
search and seized
§
Lists/inventories
of computers, hard disk, CDs, floppies, pen drives, etc. found as a result of
search but not seized
§
List/inventory
of rubber and other seals found (in the form of their impressions taken in a
bank sheet of paper), indicating the seal(s) that were seized and those not
seized
§
List
of key(s) found, indicating the key(s) that were seized and those not seized
§
Lists
of persons who were examined under sections 131(1A) and 132(4)
§
List
of orders under section 132(3) and the second proviso to section 132(1) issued,
clearly indicating the date of issuance of the order, the person on whom the
order was served and the date and time of service
§
In
case, personal search was taken of any person under section 132(1)(ii)(a), (i)
inventory or the list of all the things found but not seized; and (ii)
inventory or the list of all the things found and taken possession of
§
Notes,
if any recorded on all important events/facts referred to in the panchnama.
Signatures
on the panchnama prepared in the course of the search
Panchnama
should be prepared in triplicate.
It
should be signed by the following:
(i) Authorised Officer
(ii) The
person in whose case the search was conducted
(iii) The person in-charge, or in
control, of the building, place, vessel, vehicle or aircraft searched, where such person is different from the one
referred to at S. No.(2) above.
However, where the person referred
to at S. No. (2) above is not available at the premises, signatures of the
person referred to at S. No. (3) will be sufficient.
(iv)
Witnesses to the search
All
such notes recorded in the course of search, as have not been annexed to the
panchnama or made a part thereof, should also be attached to the search report.
Documents
and other things attempted to be thrown out or destroyed or removed by the
occupant of the premises
· There
can be a situation where before the commencement of the search or in the course
of the search, an occupant of the premises throws out or attempts to throw out
any books of accounts or documents or money, bullion, jewellery or any other
valuable article or thing or key(s) to avoid its detection by the search team.
·
The
leader of the search team should take all precautions to foil any such attempt.
· The
person(s) responsible for the incident should be asked to explain the reason
for such a behavior and his/their statement(s) on oath recorded.
· Such
persons can also be prosecuted for an offence under section 186 of the Indian
Penal Code for obstructing a Government servant on duty.
· The
things which were attempted to be thrown out or were actually thrown out and
subsequently recovered by the search team, should form a part of a separate
inventory.
Where
a person runs away with any books of account or other documents or any other
thing
· Where
a person runs away with any books of account or other documents or any other
thing, the
Authorised Officer should make all attempts to catch hold of such a person and
bring him back, if necessary, by taking the assistance of other members of the
search team or any police officer or officers of the Central Government.
· A
complaint to the police should be lodged for recovery of the property and
documents that he took away and for such other actions as may be considered
necessary in accordance with the law.
·
Where
any person is in possession of books of account or documents or money, bullion,
jewellery or other valuable articles or things offers any resistance in handing
over the same to the Authorised Officer, he can, if necessary seek the
assistance of the available police.
Deemed
to be seizure of such valuable article or thing under section 132(1)(iii)
[Second proviso to Section 132(1)]
Authorised Officer may, where
it is not possible or practicable to take physical possession of any valuable
article or thing (other than stock-in-trade of the business) and remove it to a
safe place due to its volume, weight or other physical characteristics or due
to its being of a dangerous nature, serve an order on the owner or the
person who is in immediate possession or control thereof that he shall not
remove, part with or otherwise deal with it, except with his previous
permission. His action is deemed to be seizure of such valuable article or
thing.
Authorized
officer has the right to Requisition the services of any police officer or of
any officer of the Central Government [Section 132(2)]
Authorised Officer can requisition the services of any police
officer or of any officer of the Central Government, or of both, to assist him
for all or any of the purposes specified in section 132(1) or 132(1A). It shall
be the duty of every such officer to comply with such requisition.
Authorized officer is also
empowered to pass an order prohibiting the person in possession or control of
any books, documents, money, bullion, jewellery or other valuable article [Second proviso to section 132(1)]
Authorised
Officer may,
where it is not practicable to seize any books of account, other documents,
money, bullion, jewellery or other valuable article or
thing found as a result of search, for reasons other than those mentioned in
the second proviso to sub-section (1) of section 132, serve an order on the
owner or the person who is in immediate possession or control thereof that he
shall not remove, part with or otherwise deal with it except with his previous
permission. He may take such steps as may be necessary for ensuring compliance
in this regard.
Restraint order under section 132(3)
The Authorised Officer may issue a
restraint order under section 132(3) of the Income-tax Act, 1961 when it is not
practicable to seize any books of account, other documents, money, bullion,
jewellery or other valuable articles or things. This power is invoked for
reasons other than those mentioned in the second proviso to section 132(1) and
is not deemed to be a seizure.
With effect from 01.06.2002, an order issued under section 132(3)
issued by an Authorised Officer will remain in force for a maximum period of
sixty days from the date of issue. [Section 132(8A)]
Some situations in which an order under section 132(3) can be
issued are as under :-
· Where
a warrant of authorisation for search of a bank locker has been obtained
following its detection during a search, but it is not possible to search the
locker immediately. In such a situation, an order under section 132(3) should
be issued and served on the Bank Manager and the hirer of the bank locker and
the locker itself should be sealed. The Board have issued administrative
instructions that search of such a locker should be completed within seven
days.
· Where
a search remained inconclusive on the day of its initiation and its further
continuation had to be postponed for a subsequent day on account of some valid
reasons.
· Where
verification and valuation of stock could not be completed and is required to
be postponed for a subsequent day on account of some valid reasons.
·
Where
it is not practicable to seize any books of account or documents or assets
either because some special arrangements are required to be made for carrying
or storing it or where the same are lying under the control of some other
authority.
Examine on oath
any person [Section 132(4)]
Authorised Officer
may, during the course of the search or seizure, examine on oath any person,
who is found to be in possession or control of any books of account, documents,
money, bullion, jewellery or other valuable article or thing. This can be done
under section 132(4). A statement on oath may be used as evidence in any
proceedings under the Act.
The CBDT
circular has been issued a circular F. No. 286/2/2003-IT (Inv.) dated. 10.03.2003
directing officers carrying out search to desist from recording confessional
statements offering income in such statements.
Conclusion of
search
Some main steps that
should be taken before concluding the search or temporarily concluding the same
for being carried on a subsequent day are, in brief, as under:
· A
copy of the panchnama along with all its annexures should be provided to the
person in whose case the search was conducted or, as the case may be, the
person in-charge of the building, place, vessel, vehicle or aircraft searched,
where such person is different from the former and acknowledgement for the same
obtained on the original copy of the panchnama.
·
In
case, personal search of any person has been taken under section 132(1)(ii)(a)
of the Act, a copy of the inventory or the list of all the things taken
possession of, should be given to such person and acknowledgement thereof
obtained on the original copy of the inventory/list. A copy of this list is
also required to be forwarded to the concerned Chief Commissioner of Income Tax
or the Commissioner of Income Tax or where the authorisation is issued by any
officer other than the Chief Commissioner or Commissioner, also to that
officer.
·
The
members of the search team should offer themselves for search by the person whose
premises, is being searched or, as the case may be, the person in-charge of or
in occupation of premises. This should be done in the presence of the
witnesses.
·
Search
of lady members of the search team should be allowed to be made only by a lady
present in, or occupying, the premises with a strict regard to decency.
· The
fact that personal search of the members of the search team was offered both
before the commencement of the search and on its temporary conclusion or, as
the case may be, conclusion should be recorded in the panchnama, along with the
fact whether such personal search was taken or declined.
· The
leader of the search team should ensure that none of the things brought by the
team and required to be taken back by it, like kit bags, stationery, forms,
brass seal and mobile phones is left behind.
· No
search should be suspended or concluded without getting a clearance for doing
so from the Control Room. The officer manning the control room should obtain
instructions in the matter from the concerned Additional/Joint Director and
communicate the same to the search team.
Transport and safe
custody of the seized materials
· The
seized books of account, other documents and valuables should, as far as
possible, be transported to the control room for being handed over to the
Custodian, under police protection.
· Some
members of the search team, including an Authorised Officer must accompany the
seized books of accounts, other documents and assets, which are being
transported.
Handing
over of the seized books of account, etc. and seized money to the custodian
· The
Authorised Officer, nominated as the leader of the search team, should hand
over the books of account, other documents and the sealed package(s) containing
the bullion, jewellery and other valuable articles or things, seized as a
result of the search to the custodian.
· Any
money seized in the course of the search should also be deposited with him. All
the copies of the panchnama (other than the copy handed over to the person in
whose the case the search was conducted/the person incharge or control of the premises
searched), along with all its annexures should also be handed over to him.
· All
other documents, not appended to the panchnama, like statements recorded under
sections 131(1A) and 132(4) should also be handed over to the custodian.
Submission
of report by the search team
·
The
leader of the search team should submit a report, addressed to the
Additional/Joint Director of Income Tax (Investigation) in-charge of the
search.
·
The
report should mention all salient features of the search and seizure operation,
including, the problems, if any, faced by the search team; extent of damage, if
any, caused to the premises searched and the reasons thereof; demeanour of the
occupants of the premises; any untoward incident which took place during the
search; details of significant information given to the control room;
intimation, if any given to other Government agencies; any significant feature
of the seized books of account, other documents, digital evidence, etc found as
a result of the search; highlights of statements recorded under section 132(4)
and 131(1A) of the Act; and any other relevant information that the leader of
the search team wishes to make.
Objection that panchas were not present at the time of
search - Cannot be raised for first time before CIT(A) after a period of three
years from search conducted. Contention about presence of panchas could not be
raised in appeal, unless it was first raised before Assessing Officer
Assessee was a partnership firm carrying on business
of jewellery. A search under section 132 was conducted at business premises of
assessee and residences of partners. During search, huge stock of silver and
gold ornaments not disclosed in books of account was found. Further, certain
documents were recovered which showed a consistent practice of sale of
ornaments by estimate slips, with books of accounts reflecting only 10 per cent
of actual sales. Accordingly, additions were made on that basis estimating
turnover at ten times from that seen from books of account. During first
appeal, assessee raised a contention that search conducted upon assessee was
invalid for reason that panchas were absent during search and at time of
recording of statement under section 132(4). It was noted that panchas had
specifically stated that they were present during search, and recording of
statement. Further, contention about non-presence of panchas was not raised
before Assessing Officer and it was raised for first time before first
appellate authority after a period of three years from search conducted.
Contention about presence of panchas could not be raised in appeal, unless it
was first raised before Assessing Officer. Therefore, impugned search could not
be held invalid. [In favour of revenue] (Related Assessment years : 2003-04
to 2009-10)—[Rajan Jewellery v. CIT (2019) 414 ITR 621 : 308 CTR 602 : 266
Taxman 357: 177 DTR 369 (Ker)]
Authorised officer can search any place mentioned in
authorisation where he suspects that books of account belonging to assessee are
kept and as such, mere change of address of assessee even being in know how of
department by itself would not vitiate or invalidate search conducted under
section 132
Intention of the legislature is clear from the
expression and language found in sub-section (1) of section 132 that location
of the premises is in relation to the satisfaction to be reached by the
authorities mentioned therein and authorised officer would be empowered to
search any place mentioned in the warrant as well as any other place where he
suspects that books of accounts belonging to the assessee have been kept. The
premises which has been searched is the same premises as indicated in the
authorisation. This fact is not in dispute. However, what has been disputed is,
the said premises did not belong to the assessee. The language or expression of
sub-section (1) of section 132 is clear and unambiguous. The location of the
premises is in relation to the satisfaction reached by the authorities
mentioned therein and the authorised officer can search any place mentioned in
the warrant including any other place where he suspects that the books of
account belonging to the assessee are kept and as such, the mere change of
address of the assessee even being in the know how of the income tax department
by itself would not vitiate or invalidate the search conducted under section
132. Even otherwise, in the instant case, the search conducted is in respect of
the premises where the business of the firm carried earlier and continued by
one KMV, who no doubt had retired from the partnership of the assessee-firm and
it is in this premises where the books of accounts relating to the
assessee-firm has been found and seized, which by itself proves the fact that
the said premises was used by the assessee even as on the date of search conducted.
Thus, change in the address of firm, action initiated under section 132 in
respect of the erstwhile premises of the firm would not invalidate the search. Hence,
the search conducted in the premises in which the assessee may not be carrying
on the business would not nullify the search. However, if the search is
conducted in a premises other than what is reflected in the authorisation,
then, the consequences would be different. In the instant case, search has been
conducted in the premises, the address of which is reflected in the
authorisation and undisputedly, occupied by one KMV, who was the erstwhile
partner of the assessee-company till he retired on 31.07.2009. [In favour of
revenue] (Related Assessment years : 2005-06 to 2010-11) – [PCIT(C), Bengaluru
v. Associated Mining Co. (2019) 417 ITR 420 : 108 taxmann.com 564 (Karn.)]
Panchas are material witness and can be cross-examined
An issue raised by the appellants was that the search
was conducted both in their shop and in their house and that the search warrant
was limited to the shop. The Panchas to the search were, therefore, material
witnesses in this behalf. That they were not produced for cross-examination,
though asked for, is not disputed. There has, therefore, in our view, clearly
been a breach of natural justice. On this count alone, the order of the High
Court must be set aside. We are unimpressed by the argument that no prejudice
was caused to the appellants by reason of the non-production of the Panchas
which, it would appear, was what the High Court seemed to think. - [Arya
Abhushan Bhandar v. Union of India (2002) 143 ELT 25 (SC)]
It is not necessary for search
party to employ same witnesses on all dates of search
The assessee challenged the
assessment on the grounds that the search should be considered as having been
concluded on 13.12.1995, that the same witnesses were not employed by the
search party on the subsequent dates and that the assessment completed on 28.02.1997
was barred by limitation.
Held
: It is quite possible that the search operation may continue over a long
period of time. It may not, therefore, be possible to employ the same witnesses
throughout the search operation. The witnesses may have their personal
inconveniences to be present at the spot of search for a very long period. What
is required under the law is that the search operation should be witnessed by some
respectable persons and the law does not at all require that the same witnesses
must continue. Therefore, the assessee’s argument on this issue was not
justified. – [T. S. Chandrashekar v. ACIT (2000) 113 Taxman 26 (ITAT Bangalore)]
Assessee
cannot complain that the witnesses suggested by them were not respectable
persons of the locality
In
Naraindas v. CIT, the petitioner contended that the action of the authorised
officers in making search and seizure was illegal and out the following irregularities
: (i) respectable persons of the locality were not called as witnesses, (ii)
inventory of the books of account and documents was not made, (iii) boxes were
not sealed, and (iv) ornaments were also seized from the ladies in the family.
The Hon'ble Court held as under:
“In
our opinion, none of these objections can be reasonably sustained or can make
the search and seizure illegal. It is stated in the return that the names of
the witnesses were suggested by the petitioners. They wanted that outsiders
should not be called as that would have affected their credit and prestige. The
petitioners cannot now complain that the witnesses suggested by them were not
respectable persons of the locality. – [Naraindas v. CIT (1984) 148 ITR 567
: (1983) 35 CTR 310 : 14 Taxman 447 (MP)]
Assessee
is right in objecting to the witness chosen by the Assessing Officer as not
belonging to the locality, and not being respectable
Respectable
means impartial and independent. It could be a common man also. If it were proved
that the witnesses were not respectable, it would only be an irregularity,
which would reduce the weight of evidence. - [Sunder Singh v. State of UP
AIR 1956 SC 411]
Very nicely drafted.
ReplyDelete