Search, Seizure & Survey and Special Procedure for Assessment of Search Cases [Sections 132, 132A, 132B, 133A, 153A to 153D)

The Income Tax Act, 1961 contains provisions related to search, seizure, survey, and special procedures for assessment in search cases. These provisions are crucial for tax authorities to combat tax evasion and ensure compliance. Below is a detailed explanation of the relevant sections:

1. Section 132: Search & Seizure

• Objective: To authorize tax authorities to conduct searches and seize undisclosed income, assets, or documents.
• When can a search be initiated?
  • If the tax authority has reason to believethat a person has failed to disclose income or evade tax.
  • Based on information from intelligence agencies, complaints, or other sources.
• Powers of Authorized Officers:
  • Enter and search any building, place, or vehicle.
  • Break open locks if necessary.
  • Seize undisclosed money, bullion, jewellery, or documents.
  • Retain seized assets for investigation.
• Post-search Procedures:
  • A warrant of authorizationmust be issued by senior officials (Joint Director/Commissioner or above).
  • A panchnama(witnessed inventory) must be prepared.
  • Seized assets can be retained for up to 30 days, extendable with approval.

2. Section 132A: Power to Requisition Books of Account, etc.

• Allows tax authorities to requisition assets/documentsfrom other government departments (e.g., Customs, Enforcement Directorate) if they believe these items represent undisclosed income.
• Similar to seizure but involves taking custody of assets already in possession of other agencies.

3. Section 132B: Application of Seized/Retained Assets

• Governs how seized assetsare to be handled:
  • Can be adjusted against existing or pending tax liabilities.
  • If no liability exists, the assets must be returned after proceedings conclude.
  • Interest is payable if seized cash is retained beyond a certain period.

4. Section 133A: Survey

• Surveyis a softer measure compared to a search.
• Objective: To collect information and verify books of accounts at the taxpayer’s business premises.
• Powers during Survey:
  • Enter any business place (not residential).
  • Inspect books, verify cash, stock, or other assets.
  • Record statements.
  • Cannot seizeassets (unlike Section 132).
• No prior notice

5. Sections 153A to 153D: Special Assessment Procedures for Search Cases

These sections deal with assessments in search cases:

Section 153A: Assessment in Case of Search

• Applies when a search is conducted under Section 132.
• The Assessing Officer (AO) can assess or reassess 6 previous years + current year(total 7 years).
• The taxpayer must file returns in response to notice.
• Assessments must be completed within 2 yearsfrom the end of the financial year in which the search was conducted.

Section 153B: Time Limit for Completion of Assessment

• Specifies time limits for completing assessments:
  • Normally 21 monthsfrom the end of the financial year of search.
  • Extended to 33 monthsif the case involves foreign transactions.

Section 153C: Assessment of Other Persons (Not Searched)

• If incriminating documents/ assets belonging to another person(not searched) are found, the AO can assess that person’s income.
• Similar to Section 153A, but applies to third parties.

Section 153D: Prior Approval for Assessment Order

• No order under Sections 153A/153Ccan be passed without the approval of the Principal Commissioner/Commissioner.
• Ensures checks and balances to prevent arbitrary assessments.

Key Differences Between Search & Survey