Search and Seizure AY 2026-27
Introduction
The Income-tax Act empowers authorised officers to conduct search and seizure operations to detect undisclosed income or assets. These powers include entering and searching premises, seizing books of account and assets, issuing restraint orders, and recording statements, subject to statutory conditions and procedural safeguards. Legal presumptions apply in respect of material found during such actions.
Statutory Framework and Purpose
Search and seizure provisions are contained primarily in Section 132. These provisions enable tax authorities to collect evidence of undisclosed income or wealth and to seize related assets for securing tax or penalty demands.
Section 132B governs the application and release of assets seized.
Section 132A empowers requisition of books, documents or assets from other authorities; once delivered, such material is treated as seized under the Income-tax Act, and the concerned person is regarded as having been searched.
Authority to Approve Search
Search action may be authorised by senior officers, including Principal Director General, Director General, Principal Chief Commissioner, Chief Commissioner, Principal Director, Director, Principal Commissioner or Commissioner.
These authorities may empower officers such as Additional Directors/Commissioners, Joint Directors/Commissioners, Assistant or Deputy Directors/Commissioners, or Income-tax Officers to execute the search.
Circumstances for Authorising Search
Under Section 132(1), search can be authorised only when the competent authority has information and reason to believe that statutory conditions exist.
Search may be initiated where a person has failed or is likely to fail to produce books or documents required under the Act, or is in possession of money, bullion, jewellery or other valuable articles or things representing undisclosed income.
Powers of Authorised Officers
Section 132 , read with Rule 112 , empowers the authorised officer to:
• Enter and search premises where books, documents or assets are suspected to be kept.
• Break open locks where keys are unavailable.
• Search persons in or entering/exiting the premises.
• Access and inspect electronically maintained books or documents.
• Seize books, documents, and assets (other than stock-in-trade).
• Issue restraint orders.
• Place identification marks and make extracts or copies.
• Prepare inventory of assets.
Manner of Conducting Search
Search operations must follow prescribed procedures and ensure transparency. The authorised officer prepares a panchnama documenting the search process, details of seized items and their location. Seized materials are marked, packaged and either retained by the authorised officer or placed with a designated custodian; cash is deposited in a designated bank account.
Seizure of Books and Assets
Only undisclosed assets may be seized; immovable property cannot be seized. Books of account and documents relevant to proceedings may be seized, subject to statutory exclusions for stock-in-trade and disclosed bank accounts.
Interest under Sections 234A , 234B and 234C may be waived or reduced where delay in filing return or payment of advance tax is attributable to seizure of books or cash during search and authorities are satisfied that such delay is not reasonably attributable to the assessee.
Restraint Order (Section 132(3))
The authorised officer may issue a restraint order to allow reasonable time for evaluating whether books, documents or assets should be seized. This ensures adequate opportunity for examination of evidence and appraisal of assets, while allowing the assessee to produce proof of disclosure or to admit undisclosed income under Section 132(4) before the search concludes.
Recording of Statement (Section 132(4))
During search, the authorised officer may examine any person on oath and record statements regarding books, documents or assets found. Such statements have evidentiary value under the Act.
Admission of undisclosed income during the statement may enable the assessee to avail penalty mitigation provisions, including those under Section 271AAB for specified previous years.
Presumptions Under Section 132(4A) and Section 292C
Where books of account, documents or assets are found in a person’s possession or control during search or survey, statutory presumptions apply that:
• They belong to such person.
• Their contents are true.
• Signatures or handwriting are of the person purported to have signed or written them.
• Execution or attestation is genuine.
These presumptions apply only to the person from whose possession such material is found and do not extend to third parties.
Retention and Provisional Attachment of Assets
Under Section 132(8), seized books and documents may be retained until completion of assessment proceedings, subject to reasons recorded and approval of higher authorities for extensions.
Section 132(9) permits the assessee to obtain copies of seized documents for continuing business activities.
Provisional attachment may be made to protect revenue interests where necessary.