SEARCH UNDER INCOME TAX ACT : POWERS OF AUTHORITIES

 

After proper investigation and enquiry if the Income Tax Authority believes that person has undisclosed Income / Asset then, they conduct Search u/s. 132

SEARCH PARTY CAN :-


  • -Enter any building / place / vessel / vehicle / aircraft


  • Break upon any lock of any door / box / locker / safe / almirah


  • Search any person


  • Inspect book / documents


  • Place marks of identification


  • Take copies of Books / documents, back up of Computer data etc.


  • Make inventory of money / bullion / jewellery / valuables


  • Requisite service of police officers


  • Seize any books/ documents / money / bullion / jewellery / valuables


  • Record Statements on oath


  • Apply Seized Assets towards existing Tax Liabilities and post search Assessment Liabilities


  • It is presumed by the Search party that :


  • Books and assets in possession of the person belongs to that person


  • Content of books / Documents are true


  • Signature is in the handwriting of that person


  • Document are attested/ stamped by that person


 

PREVENTION IS BETTER THAN CURE

Precautionary Measures to be taken by an Assessee


  • Comply with all Notices and Summons in a timely and proper manner.


  • Books of Accounts should be prepared and maintained truly and correctly.


  • Income Tax & Wealth Tax Return should be prepared with complete and correct disclosures.


  • Supporting Documentary evidences of all transactions should be kept properly.


  • Physical Cash on Hand and Stock in tread must be periodically tallied with Books of accounts.


  • Avoid keeping unnecessary data, information, working either physically or electronically.


  • Ensure correct Accounting Standers are followed ( Eg. AS-7 / AS-9)


  • Ensure Income Tax provisions are squarely applicable before taking benefit of deduction under the Ace.(Eg. 80lA,80lB,)


  • Ensure High Discipline in keeping recodes.


  • Ensure Valuables and jewellery are correctly inventoried and accounted for.


  • Conduct Mock Search periodically.


  • Keep confidential things confidential.


  • Take timely advice from appropriate consultants.


  • Ensure Transactions reported in AIR are disclosed in the books.


 

AIR:REPORTED TRANSACTIONS


  • Cash Deposit in a Saving Bank A/c. Rs.10 lakhs or more in a year


  • A credit card Payment Rs2 lakh or more ina year


  • Investments in mutual Fund Rs2. Lakh or more in a year


  • Investments in Bonds, Debentures Rs5 Lakh or more in years


  • Investments in Shares & Gold ETFs Rs.1 lakh or more in a year


  • Buy or sell Immovable Property Rs30 lakh or more in a year