It’s the season of tax raids. In a predawn swoop on a Thursday, Income Tax officials supported by CRPF personnel, conducted raids at Karnataka minor irrigation minister CS Puttaraju and his nephew’s residence. Three teams of CRPF personnel raided the residence of Puttaraju in Mandya and his nephew’s residence at Mysuru.
After demonetization and GST, there’s a singular focus on going after black money. As Income tax officials raid residences in search of black money, an important question remains to be answered. What to do in an income tax raid?
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Black money is illegal income on which taxes are not paid. Black money is illegally hoarded and hidden from tax authorities. If you keep undeclared money or jewellery or any kind of wealth, its black money. The tax department is very interested in black money and conducts raids to catch it. If you have black money or hidden someone’s black money, chances of an income tax raid are high.
Income tax raid is also called Search and Seizure. It is the income tax department’s weapon against black money. There’s more bad news for black money hoarders. Income Tax Raids are backed by the Constitution of India.
If the Intelligence Wing of the Income Tax Department gets credible information on tax evasion, it conducts an income tax raid. Information could be from Government Departments and assessment records of tax payers.
If you indulge in disproportionate spending vis-à-vis income, (this is lavish spending not in proportion to income you earn), expect an Income Tax Raid. The other common reasons of an IT raid are illegal investments in real estate (Benami Properties), manipulation of books of accounts and vouchers and unexplained cash credits/share transactions.
Evidence of duplicate sets of books of accounts, people in possession of huge amounts of cash, gold jewelry on arrival at Domestic and International airports, possessions of lots of money in accounts on a person earning low income, undisclosed income at banks and business premises, all of this leads to an income tax raid.
Let’s say a taxpayer doesn’t respond to income tax notices and summons. This person has in his possession, disproportionate amounts of cash, valuables far in excess of income or undisclosed property, then the IT Department conducts tax raids.
SEE ALSO: Income Tax Raid
These people can conduct an IT Raid:
The Income Tax Board can authorize an officer, not below the rank of income tax officer to conduct an income tax raid.
The authorized income tax officer enjoys these powers during an income tax raid.
The income tax officials can seize undeclared cash, jewelry, diaries, challans, books of accounts, computer chips and data storage devices like pen drives and optical drives. If the tax department suspects undisclosed property, it seizes property documents like conveyance deeds.
The income tax department searches people, books of accounts or documents which are not likely to be produced after an income tax notice. Tax officials are interested in people who are likely to be in possession of undisclosed income and property.
Stock-in-trade of a business, assets declared in books of accounts, cash/assets declared or disclosed before IT Department and Wealth Tax Department.
Assets declared in the book of accounts of the business, cash from duly explained sources, jewelry declared in wealth tax return, gold up to 500 grams for a married woman and 250 grams for an unmarried woman. It’s 100 grams for a male member.
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