Income tax ‘raids’: What is the difference between surveys and searches?

Income tax ‘raids’: What is the difference between surveys and searches?

Subject: Economy

• According to tax officials, the surveys were conducted due to some alleged irregularities in funding these bodies. The searches, however, were conducted as an action against some unrecognised but registered political parties.

What is a survey?

• Tax authorities conduct surveys to unearth hidden or undisclosed income and property. Here, the main focus is the collection of information.
• It is also ascertained in a survey if a person or a business has properly maintained its books of accounts or not.
• It is guided by Section 133A of the Income Tax Act, 1961. It was inserted in 1964. Some amendments were made to the section through the Finance Act, 2002.

What is a search?

• Searches are thorough inspections of buildings, places of business, and other places to find hidden income or wealth in tax evasion cases. The authorities are also given the power to seize the documents, assets, bullion, which have been hidden from the authorities. That is why they are also called “search and seizure” operations.
• In common parlance, it is called a “raid“, but no such word exists in the I-T Act of 1961. Searches are conducted under Section 132 of the I-T Act.

How are surveys different from searches?

• Surveys can be conducted during business hours, searches have no restrictions
• Searches allow seizure of unaccounted assets, during searches authorities have to be cautious and can be held accountable later for impounding
• In case on non-cooperation, raiders can break open any door/ window, nothing such can be done during surveys
• Surveys can only take place at the place from where the business or profession is carried out. In search operations, there is no such restriction.
• Search operation is regulated by the provisions of the Code of Criminal Procedure, 1973 which allow the raiding party in case of non-cooperation to break open any outer or inner door or window to get access to the premises where the search warrant needs to be executed. However, such power is not conferred for survey proceedings
• “Few rights of taxpayers get suspended during the execution of search warrant however that is not a case during survey proceedings under Income tax Act.
• Before the Finance Act of 2002, the authorities had no power to seize any asset during the surveys. However, after the amendment, the authorities can impound the books and documents surveyed but only after recording the reasons for doing so. Also, they cannot be retained for over ten days without the permission of the Chief Commissioner, Commissioner, Director General or Director.
• In search and seizure operations, the authorities can seize any document or asset except the stock-in-business. They can break any locks if they are not provided with the keys. They can take the help of police officers or any other central government officer for the whole process.