I-T raids: What is Section 132? Can it affect you
What's the story
Income tax raids in India are governed by section 132 of the Income Tax Act, 1961.
This provision empowers tax authorities to conduct searches and seizures of unaccounted income or assets under specific circumstances.
It is crucial for taxpayers to be aware of this legal framework, which authorizes such measures to combat tax evasion.
Initiation
The genesis of a raid
It all begins when an Assessing Officer has reason to believe that a person or company possesses unaccounted cash, bullion, jewelry, or any valuable article. This belief needs to be backed by reliable info.
The need for higher authority approval before conducting a raid serves as a safeguard, ensuring actions are taken only when substantial evidence of tax evasion exists.
Conduct
Execution and procedure
During a raid, the search team is empowered to enter the premises, search for valuable articles or documents indicating unaccounted income, and seize them if necessary.
They can break open the locks if the entry is denied.
They conduct it with dignity but assertiveness, to ensure cooperation and minimize discomfort for the individuals under investigation.
Protection
Rights of the taxpayer
Section 132 empowers tax officials to carry out raids, but it also safeguards the rights of taxpayers.
Those facing raids can demand the identities of the officers and have the right to witness the search operations.
Plus, they can also make copies of any documents that get seized.
These rights aim to maintain transparency and accountability during these stressful situations.
Follow-up
Post-raid actions
After the completion of a raid, the tax authorities carefully scrutinize the confiscated assets or documents to determine any unreported income.
The taxpayer is then provided an opportunity to explain these discrepancies.
Based on this analysis and the taxpayer's justifications, additional tax liabilities are imposed on the unreported income discovered during the operation.
This process highlights the robustness of the legal framework in combating tax evasion.