Bailabel Type : bailable

Description

Section 132 of the Income Tax Act, 1961 gives the Income Tax authorities the power to conduct search and seizure operations in cases where there is a reasonable belief that a taxpayer is hiding income, evading taxes, or possessing undisclosed assets. This provision allows the authorities to gather evidence related to tax evasion and to ensure proper enforcement of tax laws.

Key Points of Section 132:

1. Power of Search and Seizure:

   • Income Tax authorities, including the Assessing Officer, Deputy Commissioner, Joint Commissioner, and others, have the power to search premises and seize documents, goods, and assets if they believe that a taxpayer has been involved in tax evasion, concealed income, or maintained false books of accounts.

2. Conditions for Conducting a Search:

   • The Income Tax authorities can only conduct a search if they have a reasonable belief that:
     • A person has undisclosed income or assets,
     • A person is concealing or falsifying information that affects tax liability,
     • The evidence of income or assets is hidden or not easily available in the regular course of business.

3. Authorization for Search:

   • Before conducting a search, the authorities must have an authorization order from the Chief Commissioner or Commissioner of Income Tax. This order allows the officers to enter, search, and seize property or documents as evidence.
   • If necessary, the officers may also take assistance from police or other officials to carry out the search.

4. Power to Search Premises:

   • The Income Tax authorities can search a residential or business premises, vehicles, banks, or other establishments that are believed to hold evidence of tax evasion or unreported income.
   • They can also seize books of accounts, cash, jewelry, or any other property that may be connected to the evasion of tax.

5. Power to Record Statements:

   • The authorities can record statements of individuals present at the premises during the search. These statements can be taken under oath and may be used as evidence in assessing the tax liability or in cases of prosecution.

6. Seizure of Property:

   • If the authorities find undisclosed income or incriminating evidence, they have the authority to seize the property, documents, or assets that may serve as proof of tax evasion.
   • Cash, jewelry, or assets seized during a search must be recorded and stored as evidence, and the taxpayer may later be given an opportunity to claim or challenge the seizure.

7. Panchnama:

   • A Panchnama (official record) is prepared during the search, listing all items seized, documents found, or actions taken. This serves as an official acknowledgment of the search and seizure process.

8. Seizure of Cash or Assets:

   • In cases where cash or valuables are seized, the authorities may either retain the property or release it if a proper explanation is provided by the taxpayer about the source of the assets.
   • If the assets are suspected to be proceeds of crime, they can be retained until further investigation is completed.

9. Protection Against Unlawful Search:

   • Any search conducted by the tax authorities must be reasonable, justified, and in compliance with the law. Unlawful or excessive searches may be challenged in a court of law.
   • If an individual is aggrieved by the search or seizure, they can file a complaint with the Income Tax Appellate Tribunal or other relevant authorities.

10. Seizure of Books and Documents:

    • If documents or books are seized, the authorities are required to provide an inventory of the items seized, and the person concerned must be given the opportunity to examine and make copies of the seized materials.

11. Retention of Seized Assets:

    • Seized assets can be retained by the authorities for a period of up to 180 days from the date of seizure.
    • If the investigation is not concluded within this period, the seized assets must be returned to the taxpayer unless the authorities seek an extension of the retention period.

12. Power to Requisition Information from Banks:

    • The authorities can also requisition information from banks and financial institutions if they suspect that financial assets or income have been concealed.

Punishment

Section 132 grants sweeping powers for search and seizure, but non-compliance or obstruction of these powers can result in severe penalties or criminal prosecution:

1. Obstruction or Non-Compliance:

   • If an individual obstructs the tax authorities from conducting a search, refuses to cooperate, or provides false information, they may face a penalty under Section 271(1)(c) for concealing income, or under other provisions like Section 277 for willfully furnishing inaccurate information.

2. Punishment for Tax Evasion:

   • If evidence found during the search proves that a person has evaded taxes or concealed income, they could be subject to penalty and prosecution under Sections 276C (for willfully evading taxes) or 277 (for making false statements).

3. Prosecution for Obstruction:

   • Obstructing the income tax authorities during the search can result in imprisonment of up to 2 years or fine or both under the relevant provisions for obstruction of public duty.