Income tax search actions are complex operations that take immense preparation and precise planning: From identifying the target to pinpointing the locations, the people, the investigating team, timing and logistics, down to the last detail. All this, with utmost secrecy. Such meticulous planning and preparation does not lend itself to ad hoc or impromptu action at the behest of political whim, as is sometimes believed…..
Unlike the regular tax desk which is manned by a tax officer whose job is to levy tax on you, this desk is manned by a non-serving tax officer who wishes to share his experience of 35 years in the tax department, while, discussing tax provisions. It is advantageous to know how the tax department thinks and acts when, as said by Benjamin Franklin, “In this world nothing is certain except death and taxes”
I remember my days with the Income Tax Department with a lot of nostalgia. Once, I had a tough time explaining to my newly- wed wife as to what I was doing in the office when I did not come back home for a few days. My only interaction during those days was to inform her telephonically that I was alright and there was nothing to worry about. At that time, I was a young officer posted in the investigation wing of Mumbai and the last minute planning for the big search action prevented me from going home for a few days.
Small search actions covering less than ten premises can be planned quickly but where many premises are targeted, particularly when premises are in more than one state, a detailed logistical planning is required to be done. The planning has to be done maintaining full secrecy for any successful search and this makes the job difficult and time consuming. Planning an all India search within a stipulated time frame while maintaining secrecy of the highest order becomes a big event management job. The success of the search action depends on foreseeing and planning the minutest of details.
There are many stages involved before a search action is executed. The first step is the identification of the target. This requires collecting and processing information against the targeted person who is suspected of tax evasion. The information can either be self-generated by the department or acquired through informants. Self-generated information is preferred, as there is no cost involved in the form of reward payable to the informant, and at the same time, it
gives job satisfaction to the concerned investigating officer. The self-generated information comes out of mining available data or by physically pursuing a clue to its logical conclusion. Finally, only those cases are selected for search where the amount of suspected tax invasion is substantial. The information is processed to arrive at a credible proof that the information received is prima-facie true. The department does not believe in hurting innocent people but only goes after those who are tax evaders and against whom there is an objective belief. While processing the information, efforts are made to find out the modus-operandi of tax evasion adopted by the identified targets so that the search action does not become an act of fishing in the dark.
The second stage is the identification of premises for the search. This requires getting details about the persons who are very close to him with whom the targeted person may be keeping his unaccounted assets or secret documents. This will mean getting addresses and road maps of the places collected after physical inspection by the investigating officer. Normally, premises include residences, offices, factories, and godowns of the targeted persons along with the premises of his close relatives, personal assistants, accountants and his very intimate allies. Sometimes, there is specific information about the places whereThe second stage is the identification of premises for the search. This requires getting details about the persons who are very close to him with whom the targeted person may be keeping his unaccounted assets or secret documents. This will mean getting addresses and road maps of the places collected after physical inspection by the investigating officer. Normally, premises include residences, offices, factories, and godowns of the targeted persons along with the premises of his close relatives, personal assistants, accountants and his very intimate allies. Sometimes, there is specific information about the places where the targeted person has kept his belongings in hiding and in such cases, these places are also selected for search.
"Only those cases are selected for search where the amount of suspected tax invasion is substantial. The information is processed to arrive at a credible proof that the information received is primafacie true. The department does not believe in hurting innocent people but only goes after those who are tax evaders”
It is very important for the investigating officer to prepare a distinct road map for the premises to be searched so that the deputed search party can reach the place without loss of time and without creating any suspicion in the locality that the income tax search party is visiting the area. The premises selected for search may include motor cars, aircrafts, ships and bank lockers. Against specific information inputs, search at the premises of servants, drivers and relatives have been very successful.
The third stage is the preparation of the satisfaction note before the issue of warrants for search. The satisfaction note is a legal document as per section 132 (1) of the Income Tax Act. The preparation of this document requires the application of mind by officers at three levels, which starts with a Deputy Director and ends with a Director General. A detailed note is prepared recording the objective reasons for the search action against the identified person at the chosen premises of the search. A search cannot be authorised unless the officers at the three senior levels of the department agree.
The document is kept in utmost secrecy even after the search to protect the name and safety of the informant, or even when the information is self-generated. In the rarest of rare cases, the higher courts can call for the satisfaction note for their perusal when the validity of the search action is challenged. Even the courts are not supposed to reveal the contents of the satisfaction note to the agitating litigants. Warrants are signed based on the contents in the satisfaction note and simultaneously search briefs are prepared for the search parties. The brief is important, as it enlightens the search parties as to what they have to look for at the various premises of the search.
The fourth stage is the logistic support arrangements. This stage becomes very arduous where it involves large-scale all India searches. The job is in two parts. Firstly, manpower planning, creating search parties for each premises, involving requisition of officers, staff and security personnel. Even outstation personnel are called in case of shortage at the local levels. Security personnel are taken mainly from the state government, but sometimes, to maintain secrecy, even central government police are called. Secondly, transport is arranged for the search parties. Arrangement for hotel stay is made in advance for the outstation officers and staff. Planning is also done for lunch and dinner for the search parties. All this planning and arrangement is made in topmost secrecy so that there is no whisper in the town about the impending search action by the Income Tax department.
For each search party a team leader is selected, who is normally the senior most. A plan of blue print is maintained at the search control room in the main office for the officers and staff who man it. The job of the control room is normally to coordinate the search teams and assist them if needed. The control office is headed by a senior officer.
At this stage of planning the date and time of striking the search is decided, and planning is done in such a way that each search party reaches each allocated premises at exactly the same time. The search parties are not supposed to open the envelopes containing the warrant and other related secret documents until they reach the landmark specified on the face of the sealed envelope, which is always very near the selected place of search, to ensure secrecy. Kits for the search parties are also prepared which include all necessary items like paper, forms, notices, tapes, candles, scissors, sealing materials, etc., thus making each search party self-sufficient. Some cash is also given to each party for legitimate expenses while conducting the search. Special needs for specific premises are foreseen and provisions are made for the same.
The search commences after elaborate planning in different stages and the same take considerable time with big searches. After the search has commenced, the need may arise to call registered valuers for valuing the jewellery that has been found. Sometimes government engineers are also called to measure the properties. Needs also arise for carpenters and lock and key makers during the search and they are accordingly called. Two panchas (witnesses) are called from the neighbourhood as per the requirement of the search proceedings.
The search proceedings means looking for evidence of tax evasion and for this, documents and valuables hidden at the premises of the search are hunted for by the search parties. Statements of the people at the premises of search are recorded. Statements of the main person before starting the search and at the conclusion of the search are a must. The search commences by showing the warrant of search to the main occupant of the premises and taking his signature on the warrant, and it concludes with the drawing of a panchanama. Valuables and documents seized are recorded in the panchanama. The panchanama is counter signed by the witnesses, besides bearing the signature of the main person and the leader of the search party. The names of officers and staff comprising the search party are mentioned in the panchanama. The search party carries the seizure and panchanama and other related documents to the control room and hands them over. The search proceedings ends there and thereafter the investigation wing makes the post search enquiry and gives a detailed report (Appraisal report) to the assessment wing and the process of assessment or re-assessment starts.
The actual proceedings of the search becomes very important for the department as the future of the case depends upon the credibility and quality of evidence collected. Unlike other central enforcement agencies, the income tax department does not have the power of arrest, and consequently of custodial interrogation of the alleged tax evader. The search proceedings get dragged for many days if any bank lockers are discovered, the keys for which are not given by the searched person. Search proceedings also get prolonged if stock checking in warehouses and factories are required to be done.
The elaborate search process with its various stages shows us that a search action is not a quickly thought-of operation, particularly when many premises have to be searched. It is something like the process of a daughter’s marriage, which starts with the selection of the bridegroom, followed by the arrangements at the venue for the various functions leading up to the actual wedding. In such a situation, any allegation against the department that the search action was hurriedly taken against a specified person for some malafide intention or on the bidding of higher-ups is misplaced.
The morale of the investigating officers requires to be boosted in their thankless job of fighting against black money. The search action is the ultimate deterrent action to clean our system of black money, and the same should be respected and also feared. The deterrent action may not be liked but it helps to boost our economy. Recent statistics have shown that in the aftermath of demonetisation, there has been a huge jump in the number of personal income tax returns filed so far this year, which is 25% more than last year. Advance income tax payment has jumped by 41%.
Income tax raids carried out against the big guns of the society will have a positive ripple effect, and people below will automatically fall in line. Honest people need not fear as search action is taken only against corrupt tax evaders. On the contrary, the honest citizens should help the department by informing it about the existence of black money in the neighbourhood. The battle against corruption and black money should be the battle of a civil society and the same should not be limited to a few officers of the Income Tax department.
The elaborate search process with its various stages shows us that a search action is not a quickly thoughtof operation, particularly when many premises have to be searched. Any allegation against the department that the search action was hurriedly taken against a specified person for some malafide intention or on the bidding of higher-ups is misplaced”
It is painful to see that there is continuous discussion on politics and politicians in our country instead of the social and economic health of the country. We do not discuss as to how to improve our resources and how to clean out social evils. We do not discuss as to how to make our defence forces more powerful when we are being confronted by two inimical neighbours. Even the media gives headlines to issues, which are more saleable rather than highlighting positive news which can unite the country. Governments will come and go, but if our country is weakened where will we go?
We have to understand these things and we have to nourish our institutions and not demolish them by unwanted criticism. There are black sheep everywhere but there are good people in every department, as well as in our armed forces who think for the country and do their jobs honestly. There are people amongst us who do things for publicity and not for the love of the country. These people should introspect and change their behaviour. We have to resolve to make our country great. After 70 years of independence, it is sad to see the bad things, but we have to start positively before it is too late.
By S K Jha
