Procedure for expeditious disposal of search &seizure cases. - Income Tax - 1621/CBDT

INSTRUCTION NO. 1621/CBDT Dated: June 4, 1985 While inaugurating the conference of Commissioners of Income-tax in April 1985 the Finance Minister stressed the need for stepping up the tempo of searches and for expeditious disposal of search and seizure cases. The Finance Minister also expressed the view that searches should be conducted on a selective basis. 2. You will kindly appreciate that the recent liberalisation in the limit for summary assessments vide Board's Instruction No.1617 dated the 18th May, 1985(F.No.201/109/85-ITAII) is only one limb of the policy to ensure better voluntary compliance from tax payers. The other essential limb of the same policy is intensive scrutiny and relentless investigation in the remaining cases so as to leave no doubt in the minds of tax payers that the Department means business and that they cannot get away with anything they declare in their returns. The increased tempo of searches and seizures is thus an essential step in the implementation of the total policy package which reposes increasing faith in the tax payer and seeks to ensure at the same time that this faith is not abused. 3. It has been observed that inspite of instructions issued from time to time, the reports regarding searches are either not received on time or are incomplete. This causes avoidable embarrassment. Similarly the deterrent effect of searches is lost due to delay in completion of assessments in search cases. Early assessment in search cases will go a long way in improving the collection of taxes as well as enhancing the image of the Department as a technically competent limb of the Government 4. The decisions taken in the Mini Conference of Chief Commissioners and some selected Commissioners of Income-tax on 24-11-84 were communicated by the Board vide their letter F.No.286/158/84-IT(Inv-II) dated 4th December, 1984. Some of t he matters discussed in detail in the Commissioners conference 1985 and the recommendations made in this conference were examined by the board. The following decisions taken in this regard are communicated for the guidance of all concerned. 5.(a) A roster of officers to be deployed for search and seizure operations should be maintained in each Commissioners charge and the deployment of such officers as authorised officers should be by rotation. (b) The preliminary report about a search should be sent to the Board within 24 hours of the search through telex/telegram containing the following information:- (i)Names and addresses of the persons searched. (ii)Natures of business/profession of the persons searched (iii)Number of premises covered. (iv)Number of search warrants executed. (v)Man-power utilised. (vi)Value of asset seized giving separate figures for cash, bullion, jewellery and other assets. Copy of the Telex/Telegram shall also be endorsed to D.I. in case the search was authorised by C.I.T. (c)Within 3 days of the completion of search, a detailed report should be sent high-lighting the points which came to the notice of the department during the search operations to enable the board to appraise the Minister of state(Finance) and the Finance Minster in the matter. This report will also indicate the name and designation of the assessing officer IAC/CIT who will be handling the search case. A copy of the report shall also be endoresed to the concerned D.I. in the case the search was authorised by C.I.T. (d) The officers of the Investigation wing need not scrutinise the seized documents as was being done hitherto but should only make enquiry in hot pursuit cases emerging from the actual search and seizure operation as for example verification of explanation given for sources of investment in the statements recorded by authorised officers and location of locker keys needing search of lockers etc. The appraisal report should contain the information on the basis of which search was authorised and should highlight the matters which have come to the notice of the Authorised officers in the course of the search and also contain the material at (b) and (c) above. (e)The scrutiny of seized material and other investigations must be completed by the assessing officer early and he should ensure that after the assessee has been confronted with the evidence which is going to be used against him, the concealed income is quantified within 120 days of the search. This will also enable the Department to cover all the items of undisclosed income in the order u/s.132(5) and the Department will be enabled to safeguard its interests by retaining possession of sufficient assets seized in cases where large demands are likely to be created on the basis of scrutiny of seized documents. (f) References to a search case in these instructions apply to all the searches conducted in relation to one assessee or group of assessee on the basis of common information. It may be that several premises are covered in such a case, but it will be counted only as one case for purposes of deployment of manpower though for statistical purposes each warrant is treated as a separate search. How many such cases an officer can be expected to dispose of in a year will depend on the nature and extent of the material seized, the competence skill and experience of the officer assigned to process the case and so on. (g) It has also been decided that all search and seizure cases brought forward as on 1-4-85 should be disposed of by 31-12-85 and current search and a seizure cases should be completed within 6 months of the search excepting when there is a legal impediment. It is also clarified that the mere filing of an application before the settlement commission does not operate as a bar to assessment proceedings and therefore, examination of seized material and necessary investigation should be continued and qualification of concealed income proceeded with. While sending the quarterly report to the board the C.I.T.'s should separately indicate the pendency of such search and seizure cases, where petitions have already been actually admitted by the settlement commission. (h) Each C.I.T. will nominate the officers who will be assigned search cases of his charge. To ensure that the assessments in search and seizure cases are completed within the period stated in (f) above, the C.I.T. should deploy sufficient number of officers to handle their search and seizure cases. Allotment of cases to the nominated officers will be done by the DI/CIT authorising the search. It has also been decided that an officer dealing with search and connected cases will not ordinarily be assigned any other cases except with the approval of Member(Investigation). Those officers will be associated with the search case from the very beginning and would take the assistance of Investigation Wing wherever considered necessary. (i) Copies of orders u/s.132(5), 132(12) assessment orders and appellate orders should be forwarded to the concerned Director of Inspection(Inv) and the Board should also be kept informed of the developments in all sensitive cases. Any special information coming to the notice of Investigation wing/Assessing officer in course of proceedings should also be communicated to the Director of Inspection(Investigation) as well as the Board, if it is felt that the same will be useful in other cases of the same trade or industry. e.g. a new modus operandi of tax evasion in a particular line of trade/industry. (j) Commissioner of Income Tax will also take steps to ensure that appeals in search and seizure cases are finalised at the earliest. 6. These instructions may be brought to the notice of all the officers working in your charge.