Section 132 of the Income Tax Act

Section 132(1) - Authorization for Search

• Initiation of search: When a designated income tax authority, such as a principal director general, principal director, director general, director, principal chief commissioner, chief commissioner, or commissioner, has credible information, they might initiate a search operation.
• Grounds for Belief: The authority must have a reason to believe that -
  • A person has omitted or failed to produce requested books or documents.
  • A person will not produce relevant books of accounts or documents.
  • A person possesses undisclosed income or property represented by money, bullion, jewellery, or other valuable articles.
• Authorization of Officers: The designated authority may designate specified officers, including additional commissioners, additional directors, additional joint commissioners, joint directors, assistant directors, deputy directors, deputy assistant commissioners, or income tax officers referred to as authorized officers.
• Powers Granted to Authorized Officers: Authorized officers have the following powers -
  • Enter and search any building, place, vehicle, vessel, or aircraft where suspected items could be kept.
  • Break open locks when keys are not available.
  • Search individuals if you suspect of concealing items.
  • Inspect electronic records kept as books of accounts or documents.
  • Seize the books of accounts, documents, bullion, jewellery, money, and valuable articles found during the search.
  • Make marks of identification on seized items
  • Create copies of the books of accounts
• Exception for Stock-in-trade: Bullion, jewelry, and other assets classified as stock-in-trade of a business are not seized but are noted or inventories.
• Jurisdiction Provision: When the search location falls under the jurisdiction of a different authority, the initiating authority can exercise search powers if the delay in obtaining authorization from the jurisdictional authority is considered detrimental to revenue interests.
• Provisions for Physical Characteristics: If it is not possible to practically seize valuable articles or things, due to weight, volume, or danger, the authorized officer might give an order to prevent removal without prior permission.
• Restriction on Authorizations: No authorization can be issued after 1st October, 2009, unless the board has empowered the officer.
• Secrecy of Reason to Believe: The reason to believe recorded by the Income Tax Authority is not disclosed to any person, authority, or appellate tribunal for confidentiality.

Section 132 (1A) - Extended Authorization

• Additional Authorization: If a high-ranking Income Tax Authority suspects that the items subject to authorized action are in a location not specified in the initial authorization, they might authorize officers to act in such locations.
• Reason to Suspect Confidentiality: The reason to suspect recorded by the Income Tax Authority, is not disclosed to any person, appellate tribunal, or authority.

Section 132(2) - Requisition of Services

• Requisition of Assistance: The authorized officer can requisition the following services -
  • Any Police officer or Central Government officer, or both.
  • Any person or entity approved by the Principal Chief Commissioner, Principal Director General, Chief Commissioner, or Director General, following the prescribed procedures.
• Compliance Duty: It is the duty of the requisition officer, entity, or person to comply with the authorization officer’s request for specific purposes under subsection (1) or (1A).

132(3) - Order to Prevent Removal

• Impracticability of Seizure: When it is not practical to seize the books of account, money, bullion, documents, jewelry, and other valuable things for re the authorized officer can serve an order.
• Restrictions on Possession or Dealing: The order instructs the owner or possessor not to remove or deal with the items without prior permission. The authorized officer can take the necessary steps to ensure compliance.
• Explanation - No Deemed Seizure: Serving such an order is explicitly declared not to be deemed as seizure under clause (iii) of subsection (1).

Section 132(4) - Examination on Oath

• Examination Authority: The authorized officer can examine on oath any person found in possession or control of books of account, money, documents, jewelry, bullion, or other valuable articles during a search or seizure.
• Usage in Proceedings: Statements made during such examination are admissible as evidence in any proceeding under the Income Tax Act.
• Expanded Scope of Examination: The examination is not limited to the items found during the search but includes all the matters relevant to the investigations related to proceedings under the Indian Income Tax Act, 1961.

Section 132 (4A) - Presumptions

Presumptions regarding Possessions

When books of account, documents, bullion, jewelry, money, or other valuable articles are found during the search, certain presumptions might apply. The following are the presumptions -

• Belonging to the person in possession
• The truthfulness of the contents of books and documents
• Validity of signatures and other aspects of handwriting.

Presumption of Stamped Documents

For stamped, executed, or attested documents, it is presumed that they are duly stamped and executed or attested by the person indicated.

Section 132(8) - Retention of Seized Documents

• Duration of Retention: The books of accounts and other documents seized must not be retained by the authorized officer for more than 30 days from the date of assessment or reassessment, or recomputation under specific sections.
• Approval Requirement: Approval for retention beyond 30 days must be obtained from the principal chief commissioner, chief commissioner, principal commissioner, or commissioner.
• Limitation on Retention: The authorized officers cannot retain the Books of accounts and other documents beyond 30 days after completion of all proceedings under the Indian Income Tax Act.

Section 132(8A) - Limitation on Order

Validity Period of Order: Any order under subsection 3 is not valid for a period exceeding 60 days from the date of the order.

Section 132(9) - Copying of Seized Documents

Permission to make copies: The person from whose custody documents are seized is allowed to make copies or take extracts in the presence of an authorized officer or a person empowered by the officer. This should happen at the time and place appointed by the authorized officer.

Section 132(9A): Handing Over of Seized Assets

Transfer of Seized Assets: If the authorized officer does not have jurisdiction over the person mentioned in subsection (1), they must hand over the seized assets to the correct Assessing Officer within 60 days from the date of the last search authorization.

Jurisdictional powers: Once the Assessing Officer receives the assets, they can exercise the powers granted to the authorized officer under subsections (8) and (9).

Section 132(9B): Provisional Attachment

Provisional Attachment: The authorized officer can provisionally attach any property belonging to the assessee after recording reasons in writing and obtaining prior approval from the Principal Director General or Director General. The provisions of the Second Schedule apply to such attachments.

Section 132(9C): Validity Period of Provisional Attachment

Limited Duration: A provisional attachment under subsection (9B) remains valid for six months from the date of the attachment order.

Section 132(9D): Property Valuation

Valuation Reference: During the search or within 60 days after the last search authorization, the authorized officer may refer the property for fair market valuation to a Valuation Officer or an approved person or entity.

Prescribed Procedure: The valuation report must be submitted within 60 days from the date of reference. The valuation process should follow the procedure prescribed.

Section 132(10): Objection to Approval

Right to object: A person who is legally entitled to the seized documents can object to the approval given under subsection (8).

Application Contents: They must submit an application to the Board, stating the reasons for objection and requesting the return of the books or documents.

Board’s Authority: The Board, after giving the applicant a chance to be heard, may issue appropriate orders.

Section 132(13): Applicability of the Code of Criminal Procedure, 1973

Applicability of Criminal Procedure Code: The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, apply—so far as possible—to actions taken under subsection (1) or (1A).

Section 132(14): Power to Make Rules

Rule-Making Authority: The Board has the authority to frame rules for searches and seizures under this section.

Rule Content: These rules may include procedures for gaining access to premises with restricted entry and ensuring the safe custody of seized books, documents, or assets.

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