SEARCH AND SEIZURE

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SEARCH AND SEIZURE

Section 132 was totally substituted by the finance Act, 1964.

Two committees have made certain recommendations on search and seizure provisions.

Raja Chellaiah committee

The kelkar committee

Authorized officer to issue order for search & Seizure

 

  1. The director General of Income Tax,OR
  2. The director of IT, OR
  3. Chief Commissioner of IT, OR
  4. The commissioner of IT, OR
  5. Any such joint director or joint commissioner of IT as may be empowered by broad.

 

Conditions in which search and seizure can be conducted

 

Section 132(1): The authorized officer who is punctually authorized by the board has in his control any information through which he has reason to believe that:-

Section132(1)(a): A person to whom a summon U/S131(1) or notice U/S 142(1) has been served to produce books of accounts or other documents has failed or omitted to produce or cause to be produced the said books of accounts or other documents.

OR

Section132(1)(b): A person to whom a summon U/S131(1) or a notice U/S142(1) has been or might be issued is not likely to produce or caused to be produced any books of account or other document which will be useful for or applicable to any proceedings under the Act.

OR

Section132(1)(C): A person is in possession of money, bullion, jewellery or other valuable article or thing and such property represents wholly or partly income or property which has not been discovered or would not be discovered.

 

Who are the persons to be searched

  • Who have books of account or documents which have not been produced or are not likely to be produced in response to notices or/summons;

OR

  • Persons who are likely to be in possession of undisclosed income or property.

 

Basis for search & seizure

The assessing officer must have a reason to believe that the person, whether or not a notice has been served on him, is not likely to create his books etc in such a case,the basic is that the person will conquer books of account and other documents which may be helpful and relevant to an income tax proceedings.

 

Kusum Lata V. C.I.T.1

There must be aggregation with the authorizing authority relating to two matters. One, the person should be in possession of money and secondly, such money represents either wholly or partly income or property which has not been revealed.

 

Pooranmal V. Director of Inspection,IT2

The material acquired during a search or seizure illegally or irregularly conducted can however be used for the intent of an fair assessment.

 

Powers of the officer to whom authority is given for search and seizure

  • Enter and search any building, place, vessel, vehicle or aircraft where he has reason too suspect that such books of accounts.
  • Break open the lack of any door, box, locker.
  • Require any person who is found to be in possession or control of any books of account.
  • Place marks of identification on any books of account or other documents.
  • Make a note or an inventory of any such money, bullion, jewellery.

 

Additional Powers of Officer

  • Deemed Seizure {Section 132(1)}

Where it is not possible or practicable to issue physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or owe to it being of an unsafe nature, the approved officer may suffice an order on the owner or the person who is in contiguous possession thereof that he shall not withdraw, part with or otherwise deal with it except with the previous permission of such authorized officer and such state of the authorised officer shall be considered to be seizure of such important article or thing.

 

  • Restraint order {Section 132(3) with Section 132(8A)}

Where it is not possible or practicable to seize any

  1. Books of accounts or other documents or
  2. Money, bullion jewellery or other valuable articles or things for reasons other than those mentioned, the authorized officer may serve an order on the owner or a person who is in immediate possession or control thereof that he shall not part with or otherwise deal with it except with the previous permission of such officer and such officer may take steps as may be required for compliance.

 

  • Power to requisition service of a police officer or officer of Central Government {Section 132(2)}

To help him for all or any of the intent specified above and it will be responsibility of every such officer to follow with this.

 

  • Examination of any person on oath {Section 132(4)}

Many investigate to any person who is recovered to be in possession or control of any books, documents etc.

 

  • Presumption of ownership of books of accounts and assets & it’s truthfulness {Section 132(4A)}

It may be presumed:

  1. The books of accounts or documents and assets found in possession of any person in the course of a search belong to such person.
  2. The contents of such books of accounts and other documents are true.
  3. The sign. and every other part of such books of account and other documents which purports to be in the handwriting of any particular person as in his handwriting.

 

  • Retention of books of account and other documents {Section 132(8)}

The books of account or other documents seized shall not be retained by the authorized officer for a period exceeding 30 days from the date of the order of assessment U/S 153A or 158BC unless the reasons for retaining the same are transcribed by him in writing and the approval of the chief commissioner, commissioner, director general or director for such retention is obtained.

 

  • Copies of extract of books of account and documents {Section 132(9)}

The person from whom custody of any books of accounts or documents are seized may make copies or take extracts in the oresence of officer.

 

  • Handling over of seized books and assets to assessing officer {Section 132(9A)}

Such handling over is finished within the time period of 60 days from the date on which the last of the authorization for search was executed.

 

Section 132B: Application of seized or requisitioned assets

The assets seized shall be dealt in following manner:

  • Seized assets may be applied towards existing and future liability [Sec132B(1)(I)]
  • Release of seized asset from meeting existing liabilities in certain cases [Sec132B(I)(ii)]
  • Money seized may be applied for discharging the liabilities [Sec132B(1)(ii)]
  • Assets other than money may also be applied to discharge liabilities [Sec132B(I)(iii)]
  • 1.Return of excess assets seized [Sec132B(3)]
  • 2.Interest to be paid at the rate of 1/2% P.M. or part of the month non seized money [Sec132(B)(4)]

 

Dr. C. Balakrishnan Nair V. C.I.T.3

In case where the search officers dumpsite documents and articles in special place and seal it, so that they could examine whether they could clutch it or not at their leisure, they may not be within their rights.

 

Ajit Jain V. Union of India4

Where the CIT had accredited a search simply on an suggestion from CBI without any attempt to determine the rightness of the allegation of money or other assets or firsthand confirmation the court held the investigation was invalid.

 

 

1(1989) 180 ITR 0365

21974 SCR (2) 704

31999 237 ITR 70 Ker

4(2003) 181 CTR SC 22

Author: AKANKSHA CHHABRA,
School of Law,IIMT

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