Panchnama in Income Tax Act of India
In Indian income tax, a panchnama is a formal, legally binding document prepared during a search and seizure operation (commonly known as a raid) to record the proceedings and inventory of items found. It is not a document defined in the Income-tax Act but is drawn up in accordance with the Code of Criminal Procedure (CrPC), and it has significant legal value as evidence.
Key aspects of a panchnama
- Purpose: The main purpose of a panchnama is to provide a detailed, contemporaneous record of what transpired during a search operation. It documents everything that is seen, heard, and done by the witnesses.
- Witnesses (Panchas): The search must be conducted in the presence of at least two independent and respectable residents of the locality. These witnesses are known as “panchas,” and they are present from the beginning until the conclusion of the search.
- Contents: The panchnama records the following details:
- The date, time, and location of the search.
- The names and designations of the tax officers involved.
- The names of the witnesses (panchas).
- A list of all documents, books, valuables, and other items found and seized.
- Details of any prohibitory orders issued, such as restraining the assessee from accessing certain items.
- The statements recorded from the concerned parties during the search
- Legality and transparency: An accurately prepared and signed panchnama ensures transparency and adds evidentiary weight to the seized material. Any infirmities, like incomplete details or missing signatures, can lead to the document being questioned in court.
- Copy for the assessee: After the panchnama is finalized and signed by all parties, a copy must be provided to the person whose premises were searched.
- Evidentiary value: The panchnama acts as a critical piece of evidence in subsequent assessment and prosecution proceedings. It is used to justify the initiation of assessment proceedings and to determine the limitation period for their completion.