Some thoughts on Search Provisions

CA V.K. Subramani

Common man calls 'search' as 'raid'. A search leads to intrusion in to the privacy of the person searched. It is probably the most extreme or worst thing which a taxpayer may face under the income tax law considering its severity and attendant costs. Section 132 lays down the boundary from the perspective of the authority who can authorize search and the authority who can practically conduct search.

Search is normally conducted where the authorities have information in their possession that a person has undisclosed income/assets. It has numerous procedural checks and balances to apply only in deserving cases. While the expression 'reason to believe' is omitted for reassessment under section 147, the same expression continues to remain in section 132. In consequence of information in his possession if the authority who is empowered to authorize search may authorize a search to be conducted.

During the course of search, the authority may seize any asset except stock in trade. Obviously, when search is conducted on jewellery shop when bullion, jewellery or other valuable article or thing forms part of stock in trade, seizure of the same is not permissible. But when a search is conducted on other persons when the same jewellery is not forming part of stock in trade, it can be seized. There is CBDT Instruction No. 1916, dated 11-5-1994 which provides the threshold limit beyond which it is permissible to seize bullion, jewellery or other valuable article in the absence of satisfactory evidence for acquisition regarding source etc.,

During search or within 60 days from the date on which last of the authorization for search is executed, the Revenue may attach provisionally any property belonging to the assessee. Such provisional attachment would cease to have effect upon expiry of 6 months from the date of such order (prescribing provisional attachment).

The books of account seized in search could be retained up to 30 days from the date of order of assessment which could be extended beyond that period by recording reasons in writing and obtaining the prior approval of Pr. CCIT or CCIT or PCIT or CIT or Pr. DGIT/DGIT/Pr. DIT or DIT.

The time limit for completing the assessment would be subject to section 153 and specific reference is invited for excluding the time period as contained in clause (xii) of the Explanation 1 to section 153. When a notice under section 148 is issued, the time limit would be 12 months from the end of the financial year in which it was issued (proviso to section 153(2)). The time period provided for exclusion referred above must also be considered for this purpose.