BBC I-T survey: What is income tax survey? How is it different from a search or raid?

The Income Tax department survey operation against the British Broadcasting Corporation (BBC) offices in New Delhi and Mumbai continued for the second day with the sleuths understood to be making copies of electronic and paper-based financial data of the organization.

The tax department knocked on the doors of several BBC offices in Delhi and Mumbai on 14th February as part of an investigation into alleged tax evasion against the India unit of the British broadcaster.Many get confused between surveys, searches and raids by the investigative agencies. It is worth noting that there is a huge difference between all three.

Need for a survey

Income tax surveys are conducted to identify the taxpayer who has not properly filed income tax returns despite receiving taxable income, and thereby prompting the assessees to pay the requisite taxes along with the penalty or interest, as the case may be.

A survey is also conducted as a surprise inspection in order to ensure the proper and correct maintenance of books of accounts. During the survey, the officials also collect information relevant to the assessment or re-assessment. Searches or raids are conducted when the agencies have confirmed information or concrete evidence against the suspected person or company.

Jurisdiction of I-T officials in survey

To conduct a survey, the income-tax officials may enter any place within the limits of the area assigned to them, or, any place occupied by any person or company in respect of whom the suspect exercises jurisdiction, or, any place in respect of which the officials are authorised by the income-tax authority.

During the survey, the I-T officials may seek the assistance of a representative from the suspect or suspected company to afford them the necessary facility to inspect books of accounts or other documents which may be available at such places. During the process, tax officials may verify the cash, stock or other valuable article or thing which may be found therein, and they can ask to furnish information or documents which may be useful for, or relevant to, any proceeding under this Act.

During searches and raids, officials can even enter premises linked to suspected firm and personal properties of its officials.

To conduct a survey, the tax officials can only enter any place of business or profession during the hours at which such place is open for the conduct of business and, in the case of any other place, only after sunrise and before sunset.

In case of searches, the officials can enter the premises anytime after sunrise. In case of raids, officials can enter the premises of suspects at any time.

During the survey, the income-tax officials may place marks of identification on the books of accounts or other documents inspected by them.

Can officials seize anything during survey?

I-T sleuths can not impound any books of account or other documents except after recording the reasons for so doing or even retain in their custody any such books of account or other documents without obtaining approval from higher authorities.

During searches and raids, the officials are allowed to seize any documents or article or material.

Can officials record statements during survey?

If required, the officials may record a statement of a person which may be useful for or relevant for the probe. However, they can’t take any action against that person.During searches, the officials are allowed to record statements. Few agencies like CBI or state police are even allowed to arrest a person during raids and searches.

Power to seize cash or valuables?

Tax officials during a survey can not remove any cash, stock or other valuable article or thing. During searches or raids, officials can seize accounts or valuable articles.

What is a raid?

The term ‘raid’ has been highly dramatised by the film and television industry, which often show the drill as a massive crackdown on an individual or an organisation for some heinous tax evasion.

However, a raid, in the real world, is based on information about tax evasion or accumulation of black money the tax department gets and collates on a continuous basis from various sources such as banks, the Financial Intelligence Unit (FIU) and the Central Information Bureau.

After IT officials get their hands on data and other seized items during a raid, a statement of all items is issued, which is verified and signed by the suspects as well as the search team. A separate statement of the suspects is also recorded before the raid is called off.