Income Tax Raid, Search and Seizure: What, When, and How

Under Section 132, Income Tax Raids or Search and Seizure actions are initiated by senior officers of the Income Tax Department—such as the Principal Director General, Director General, Chief Commissioner, and others—when they suspect that an individual possesses wholly or partially undisclosed income, assets, cash, jewellery, or other valuables. These operations may also take place if a person ignores notices or summons from the department or is expected not to comply. During a raid, officials are authorised to enter and inspect premises, break locks, search individuals, and seize assets. The primary goal of these raids is to curb the circulation of black money in the country.

What Is Black Money?

Black money refers to income earned through illegal means or funds on which taxes have not been paid. Any wealth concealed from tax authorities or kept without proper disclosure is considered black money. Holding unaccounted cash, jewellery, or other assets can increase the likelihood of an Income Tax raid. Even when keeping someone else’s money, the individual must ensure that it is properly explained and accounted for to avoid suspicion.

What Happens During a Search and Seizure?

During a search and seizure operation, senior tax officials have the authority to undertake the following actions:

Entry and Inspection: Officials may enter and search any property, vehicle, aircraft, or location where they believe unreported cash, jewellery, documents, or assets may be hidden.
Break Locks: If keys are unavailable, officers can break open locks to access the premises.
Search Individuals: Any person present at, entering, or exiting the location can be searched.
Seizure of Evidence: Cash, jewellery, books of accounts, or documents related to income or property can be seized.
Recording Statements: Individuals found with undisclosed assets or documents may be questioned under oath, and their statements are recorded as evidence.
Freezing Bank Accounts: Officials can instruct banks to freeze suspected accounts to prevent the transfer of funds.
Access Electronic Records: Tax authorities may check electronic devices like laptops and mobile phones to gather digital evidence.
Seizure of Assets: Undisclosed items such as cash, gold, jewellery, or papers related to hidden property can be confiscated.
Marking and Copying Documents: Important documents may be marked as evidence. If some documents are essential for ongoing business activities, copies may be taken instead of seizing the originals.
Assessment and Tax Recovery: After the raid, tax officials evaluate all declared and undeclared income, assets, and properties. The assessee receives a notice to file returns for the previous six assessment years. Based on the findings, the department computes the total tax liability, including penalties, interest, and possible prosecution for hiding income or assets.

When Does a Raid Take Place?

An Income Tax Raid—formally known as a Search and Seizure operation—is a major tool used by the Income Tax Department to curb black money. It is legally recognised and is carried out under specific circumstances. A raid may be initiated when any of the following situations arise:

Reliable evidence of tax evasion, such as inputs received from the Intelligence Wing of the Income Tax Department.
Information shared by other government departments.
Details traced from a taxpayer’s assessment records.
Signs of expenditure far exceeding declared income, such as extravagant spending unsupported by reported earnings.
Tampering with books of accounts, invoices, vouchers, or related financial records.
Unlawful investment in immovable properties.
Unexplained cash credits, suspicious share transactions, and similar irregularities.
To tackle unreported funds, enforce tax laws, and maintain financial transparency.

Who Is Empowered to Conduct an Income Tax Raid?

Under Section 132(1) of the Income Tax Act, officials such as the Additional Director, Additional Commissioner, Joint Director, Assistant Commissioner, Assistant Director, Deputy Director, Assistant Commissioner, or Deputy Commissioner may carry out a search.
However, the raid must be authorised by the Principal Director General, Director General, Principal Director, Director, Principal Chief Commissioner, Principal Commissioner, or Commissioner.

A raid can only be approved if the authorizing officer has “reason to believe” that:

The taxpayer has not complied with summons or notices issued by the Department, or
The taxpayer possesses money or assets that represent wholly or partly undisclosed income or property.

Courts have clarified that taxpayers do not have the right to access the information used by the department to justify the search, as revealing it may obstruct the investigation. Only the High Courts or Supreme Court can examine such material.

Assets That Can Be Seized

During a search, authorised officials can seize the following:

Undisclosed cash and jewellery
Books of accounts, diaries, challans, and similar records
Data storage devices such as computer chips
Property-related documents, including conveyance deeds
Private buildings or land
Any type of vehicle
Bank lockers and financial lockers
Securities, bonds, and shares

Assets That Cannot Be Seized

Certain items cannot be taken during a raid, including:

Stock-in-trade of a business (other than cash)
Assets or cash already disclosed to the Income Tax or Wealth Tax Department
Assets recorded in the books of accounts
Cash explained with proper documentation
Jewellery declared in the wealth tax return
Gold up to 500 grams for each married woman, 250 grams for each unmarried woman, and 100 grams for each male member

Rights of a Person During a Tax Raid

A woman has the right to be searched only by another woman, ensuring complete respect for privacy and dignity.
The search must take place in the presence of at least two respectable, independent local witnesses.
A woman residing in the premises may withdraw before officers enter if customs prevent her from appearing before strangers.
In case of a medical emergency, the person may call a doctor.
Children may be allowed to leave for school after their bags are checked.
The person is entitled to have meals and basic necessities at normal times.
The individual may verify the seals placed on containers or cupboards during the search and again at the time those seals are opened.
A copy of the panchanama, along with all annexures, must be provided.
The person has the right to obtain a copy of any statement that the department later relies on.
Inspection of seized books, documents, and records is permitted, and extracts can be taken in the presence of an authorised officer.
The assessee may request to see the search warrant, and the search must occur before two witnesses to prevent planted evidence or tampering.
The assessee must answer questions truthfully. Statements recorded under oath may be used as evidence. While silence may lead to negative implications, the person cannot be forced to admit undisclosed income or assets.

Rights of a Person After a Tax Raid

The individual from whose possession documents or books are taken may make copies or take extracts in the presence of an authorised officer.
If the taxpayer believes the search was unjustified, he may file a writ petition in the High Court.
The assessment arising from the raid may also be challenged before the Commissioner of Income Tax (Appeals).

Duties of a Person During a Tax Raid

Provide unhindered access to the premises.
Identify all storage places containing books, documents, or valuables and hand over their keys to the authorised officers.
Explain the ownership of all assets, documents, and books found during the search.
Identify everyone present and clarify their relationship to the person being searched; impersonation or presenting another person dishonestly is an offence under Section 416 of the IPC.
Ensure that no unauthorised individuals enter the premises during the search.
Do not remove or shift any item without the officer’s knowledge; destroying documents to prevent their use as evidence is punishable under Section 204 of the IPC.
Answer all questions honestly and do not permit third-party interference while the statement is being recorded.
Statements made under oath must be truthful; false declarations are punishable under Section 181 of the IPC.
Providing knowingly false evidence is an offence under Section 191 of the IPC.
Sign the recorded statements, inventories, and panchanama.
Maintain calm and ensure cooperation throughout the search so that it concludes smoothly and quickly.
Continue to cooperate with the authorities even after the search to facilitate follow-up investigations.

Procedure for Assessees Wrongly Subjected to a Raid

If an assessee believes a raid was conducted without proper justification or that the Income Tax Department acted erroneously, they may challenge the search by filing a writ petition before the High Court. Additionally, the assessee can contest the raid or any resulting assessment before the Commissioner of Income Tax (Appeals) if they feel they were unfairly targeted. Once documents or suspected undisclosed assets are seized, the department is empowered to reassess the previous six assessment years preceding the year of the raid whenever it considers it necessary.

How to Prevent a Raid

The assessee must keep proper records and maintain all legally required books of account.
Income tax returns should be filed on time and due taxes must be paid promptly.
Any information or documents requested by the tax department through notices or summons must be furnished without delay.

Reasons for Income Tax Raids

Raids are usually carried out when credible information suggests the existence of undisclosed income or assets above ₹1 crore, or involvement in illegal activities such as fraud, smuggling, or terrorism.
They may also be triggered by verified reports of extravagant spending (such as on weddings), seizures by enforcement agencies, tips from informants or associates, and confirmed findings from tax assessments or intelligence units. All actions are taken only after cross-checking facts and avoiding assumptions.

Income Tax Search vs. Survey

Both search and survey are mechanisms used to detect tax evasion, but they vary widely in their scope and powers.
A search is conducted to uncover hidden income or assets and may take place at any location or time, including homes or vehicles. Authorities can seize documents and valuables and record statements under oath, and searches require approval from senior officers.
A survey, however, is confined to business premises and conducted only during working hours. It focuses on obtaining information related to disclosed activities and does not allow seizure of assets, physical searches, or searches of individuals. Officers may inspect or copy records but cannot take possession of them.

Conclusion

Income Tax Authorities exercise their powers of search and seizure only after preliminary inquiries and gathering sufficient information. Assessees should refrain from giving incorrect details and should refer to their books or supporting documents before responding to any question, especially regarding past years. Cooperation during and after the search is essential, and individuals must be aware of their rights and responsibilities during a survey or search operation. When unsure or uneasy about any aspect, seeking professional guidance is always recommended.

FAQ’s

How many days can an income tax raid last?

There is no specific time limit prescribed under the Income Tax Act for completing an income tax raid. The duration varies depending on factors like the number of premises covered, the volume of documents and assets to be examined, digital data recovery, and the level of cooperation from the assessee.

What is the penalty related to income tax raids?

Under Section 270A, if income is found to be under-reported, a penalty of 50% of the tax payable on such income is levied. In cases of misreporting, the penalty increases to 200% of the tax payable. These penalties apply to discrepancies discovered during search and seizure operations.

How can I contact the Income Tax Department during a raid?

During a raid, you cannot directly contact assessment officers for intervention. Instead, you should immediately consult a qualified tax professional or legal expert who can guide you and communicate on your behalf when permitted.

Can the Income Tax Department search my relative’s house?

Yes. If the department has credible information that undisclosed assets, money, or documents are kept at a relative’s or friend’s residence, those premises can also be included in the search.

What happens if I voluntarily declare hidden income during the year?

Voluntary disclosure of unreported income can reduce the penalty exposure, but you will still be required to pay the applicable tax along with interest. Early disclosure generally results in a more lenient outcome compared to discovery during a raid.

How can I stop or challenge an income tax raid?

If you believe the raid is unjustified or conducted without proper grounds, you may challenge the action by filing a writ petition before the High Court. You can also contest the assessment or additions made during the raid before the Commissioner of Income Tax (Appeals).

Will the officers seize my phone or laptop during the raid?

Yes. Digital devices such as mobiles, laptops, hard drives, and pen drives can be impounded if officers believe they contain relevant information. Data may be cloned or examined by forensic experts.

Can I use my phone during a raid?

Generally, the use of mobile phones is restricted during a raid. Communication is allowed only with permission from the search team.

Are income tax raids conducted without prior notice?

Yes. Income tax raids (search operations under Section 132) are always conducted without prior intimation to prevent destruction or concealment of evidence.

Can I have my CA or lawyer present during the raid?

You may inform your CA or lawyer, but they are not permitted to interfere in the search process. However, they can guide you on your rights and obligations throughout the operation.

Will I receive documents after the raid is completed?

Yes. A copy of the panchnama, list of seized items, and other relevant documents must be provided to you once the search concludes.

Can raids happen during night hours?

A raid can begin only between sunrise and sunset, but once started, it may continue at night until completion.

What rights do I have during an income tax raid?

You can ask for the identification of officers.
You can request a copy of the panchnama.
Female occupants have special protections as per law.
You must be treated respectfully throughout the process.