Search and seizure actions - Income Tax - F. No. 289/10/2001-IT (lnv. II)

F. No. 289/10/2001-IT (lnv. II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Date of issue : 7.3.2001 To All DGs IT (lnv.) All CCs IT Sub : Search and seizure actions Sir, In order to make search and seizure action an effective tool for detection of concealment of income without avoidable harassment to the taxpayers, the Board are of the view that the following procedure are to be strictly adhered to before undertaking further searches: (i) DGsIT (lnv.) are to exercise greater control by reviewing and monitoring of search cases to ensure that law and procedure for issue of warrants and completion of search proceedings are strictly followed and warrants are issued only for the purposes for which the search is authorised. Henceforth, DIT (lnv.) will obtain administrative approval of DGIT (lnv.) before a search warrant is issued. (ii) Efforts should be made to prevent indiscriminate seizure causing avoidable harassment to the taxpayers. For this purpose, the search party should equip itself with full information regarding the declared assets of the taxpayer from the returns of income/ wealth filed, so that only undisclosed assets are seized as a result of search for quantifying the concealed income and appropriation of taxes due on such income. A quarterly report is required to be sent by DGsIT to Member (Inv.), CBDT revealing the undisclosed assets/documents actually seized with reference to the projections of seizure as recorded in the satisfaction note drawn for undertaking searches. (iii) In case an asset has been wrongly seized during search operations conducted earlier, the Board s instruction F. No, 286/247/98-IT (lnv. II) dated 2nd Feb., 1999 shall be acted upon strictly to mitigate hardship caused to person searched. (iv) The present time limits, both statutory and administrative, should be strictly followed for completion of search procedure and preparation of Appraisal Reports. (v) No investigation Unit should be allowed to take up a new search before completion of the report for the earlier search, (vi) At present, DsIT(lnv.) review all restraint orders u/s 132(3) after 30 days for continuance of such orders. Henceforth, the extension of restraint orders beyond 30 days may be allowed only with the administrative approval of DGsIT(Inv.) . (vii) The information on all highly sensitive cases may be brought to the notice of Member (Inv.) and Chairman, CBDT at the earliest so that the Board stand fully aware. (viii) Steps should be taken to ensure that no information is given to the Press on search cases. This is based on the fact that search operation is only a tool of investigation and all the details gathered at the time of search are to be examined before coming to any conclusion. It would be premature to give any information at that stage. (ix) DIT (System) is being asked to develop a software for capturing data containing basic assessment information for last 3 years for all individual assessees having income over Rs. 5 lakhs. It is suggested that information be networked among the DGsIT(lnv.) on their computers and no DGIT should be authorised to delete any information from the Data Bank. (x) The list to top 20 taxpayers of each CCIT/DG1T charge and of corporate assessees with income above Rs. 10 crore in Mumbai, Delhi, Calcutta and Chennai and above Rs. 1. crore in all other places may be placed in the Data bank. Efforts should be made to revive High Flyers Taxpayers List for metropolitan charges. (xi) The Taxpayers Charter indicating Rights and Duties of the Taxpayers issued by CBDT (ITR Vol. 208 (St) 1994) is enclosed herewith. This charter, will henceforth become a part of the search kit to be handed over to the person searched by the authorised officer at the commencement of the search to prevent avoidable harassment to persons searched. Yours faithfully, Sd/- A.Bandopadhyay Director (Inv.II III) Encls: Annexures A B Annexure A Rights of the person to be searched 1. To see the warrant of authorisation duly signed and sealed by the issuing authority. 2. To verify the identity of each member of the search party. 3. To have at least two respectable and independent residents of the locality as witnesses. 4. To have personal search of all members of the party before the start of the search and after conclusion of the search. 5. To insist on a personal search of females by another female only with strict regard to decency. 6. To have a copy of the panchnama together with all the annexures. 7. To put his own seals on the packages containing the seized assets. 8. Woman having the occupancy of any apartment etc., to be searched has right to withdraw before the search party enters, if according to the customs, she does not appear in public. 9. To call medical practitioner if he is not well. 10. To have his children permitted to go to school, after the examination of their bags. 11. To inspect the seals placed on various receptacles sealed in course of searches and subsequently reopened by continuation of searches. 12. To have the facility of having meals, etc., at the normal time. 13. To have a copy of any statement before it is used against him in an assessment or prosecution proceedings. 14. To have inspection of the books of accounts, etc., seized or to take extracts therefrom in the presence of any of the authorised officers or any other person empowered by him. 15. To make an application objecting to the approval given by the Commissioner of Income tax for retention of books and documents beyond 180 days from the date of the seizure. PARTY S SIGNATURE Date : Witness 1 Witness 2 Countersigned Authorised Officer Note : A copy of this invariably be served on the person searched in the presence of witnesses by the authorised officer of the search party on entering the premises. Annexure - B Duties of the person searched 1. To allow free and unhindered ingress into the premises. 2. To see the warrant of authorisation and put signature on the same. 3. To identify all receptacles in which assets or books of account and documents are kept and to hand over keys to such receptacles to the authorised officer. 4. To identify and explain the ownership of the assets, books of account and documents found in the premises. 5. To identify every individual in the premises and to explain their relationship to the person being searched. He should not mislead by impersonation. If he cheats by pretending to be some other person or knowingly substitutes one person for another, it is an offence punishable under section 416 of the Indian Penal Code. 6. Not to allow or encourage the entry of any unauthorised person into the premises. 7. Not to remove any article from its place without notice or knowledge of the authorised officer. If he secretes or destroys any document with the intention of preventing the same from being produced or used as evidence before the court or public servant, he shall be punishable with imprisonment or fine or both, in accordance with section 204 of the Indian Penal Code. 8. To answer all queries truthfully and to the best of his knowledge. He should not allow any third party to either interfere or prompt while his statement is being recorded by the authorised officer. In doing so, he should keep in mind that: i) If he refuses to answer a question on a subject relevant to the search operation, he shall be punishable with imprisonment or fine or both, under section 179 of the Indian Penal code; ii) Being legally bound by an oath or affirmation to state the truth, if he makes a false statement, he shall be punishable with imprisonment or fine or both under section 181 of the Indian Penal Code; iii) Similarly, if he provides evidence which is false and which he knows or believes to be false, he is liable to be punished under section 191 of the Indian Penal Code 1. To affix his signature on the recorded statement, inventories and the panchnama. 2. To ensure that peace is maintained throughout the duration of the search, and to cooperate with the search party in all respects so that the search action is concluded at the earliest and in a peaceful manner. 3. Similar cooperation should be extended even after the search action is over, so as to enable the authorised officer to complete necessary follow-up investigations at the earliest. PARTY S SIGNATURE Date: Witness 1 Witness 2 Countersigned Authorised Officer Note : A copy of this invariably be served on the person searched in the presence of witnesses by the authorised officer of the search party on entering the premises.