Search and seizure brief overview and procedure.bose

Search and Seizure Assessment
Brief overview of law and
procedure

By
Shankar Bose
Inspector of Income-tax
MSTU, Puri

Section 132 of the Income-tax Act, 1961 empowers
certain income-tax authorities to carry out a search.
They may seize books of accounts, documents,
money, bullion, jewellery and other valuable articles
or things found as a result of the search.

The power to requisition books of accounts, etc,
taken into custody by any officer of authority under
any other law for the time being in force, is also
available to certain income-tax authorities u/s.132A

Power of Income-tax Authority

Power under provisions
• These two provisions enable income-tax
authorities to get hold of evidence being on the
tax liability of a person which he may be
withholding from the department. These
provisions also enable these authorities to get
hold of assets representing income believed to be
undisclosed and to apply so much of these assets
as may be necessary to discharge a tax liability,
including the tax liability arising out of the
assessment of undisclosed income as a result of
the search.

Income-tax authorities competent to
authorise search and seizure action
• An income-tax authority competent to
authorise search and seizure action can do so
only if he, in consequence of information in
his possession, has reason to believe that any
one or more of the circumstances referred to
in clauses (a), (b) and ( c ) of sub-section (1) of
section 132 exist in a case.

Contd…
• Under the administrative distribution of
functions, however, these powers are
ordinarily exercised by the Director of Income-
tax(Investigation) after obtaining
administrative approval of the Director
General of Income-tax(Investigation).
Consequential searches can also be
authorised by an Additional or Joint Director
of Income-tax(Investigation) to ensure
expeditious and effective action during the
course of a search.

Authorised Officer
• The officer authorised under sub-section (1) of
section 132 to carry out a search and seizure
action is called the Authorised Officer.

• Actions which the Authorised Officer is
competent to take:
• The officials competent to sanction a search
and seizure action can, by warrant, authorise
the Authorised Officer to take the following
actions:

Actions
• 1. Enter and search any building, place,
vessel, vehicle or aircraft where he has reason
to suspect that books of account or other
documents (referred to in clause (a) or clause
(b) of section 132(1) ), money, bullion,
jewellery or other valuable articles or thing
are kept.
• 2. Break open the lock of any door, box, safe,
almirah or other receptacle for exercising the
powers referred to at (1) above.

Actions
• 3. Search any person who has got out of, or is about
to get into, or is in, the building, place, vessel, vehicle
or aircraft, if the Authorised Officer has reason to
suspect that such person has secreted about his
person, any such books of account, other documents,
money, bullion, jewellery or other valuable article or
thing.
• 4. Require any person who is found to be in
possession or control of any books of account or other
documents maintained in the form of electronic record
as defined u/s.2(l)(f) of the Information Technology
Act, 2000, to afford the AO the necessary facility to
inspect such books of account or other documents.

Actions
• 5. Seize any books of account, other
documents, money, bullion, jewellery or other
valuable article or thing found as a result of
such search.
• 6. Place marks of identification on any books
of account or other documents or make or
cause to be made extracts or copies
therefrom.
• 7. Make a note or inventory of any such
money, bullion, jewellery or other valuable
article or thing.

Appropriate form for issuing a warrant
• Rule 112 of the Income-tax Rule, 1962 prescribes the
following forms of warrant of authorisation. The
warrant should be in writing under the signature and
seal of competent authority.
• Form No.45(See Rule 112(2)(a) )
• This form should be used where a search is authrised
under section 132(1) by the DG or Director or CC or
Commissioner or other competent authority
empowered by the Board in this behalf, for non-
compliance with summons under section 131 or notice
under section 142(1) or for possession of unaccounted
assets. This form is used in situations other than those
indicated in the first proviso to section 132(1).

• Form No,45A(See Rule 112(2)(b) ):
• This form should be used by the CC or
Commissioner in a situation referred to in the
first proviso to section 132(1), that is, where any
building, place, vessel, vehicle or aircraft but not
the person falls within the area of his jurisdiction.
He can authorise a search if he has reason to
believe that delay in obtaining the authorisation
form the CC or Commissioner having jurisdiction
over such person may be prejudicial to the
interests of the revenue.

• Form No.45B (See Rule 112(2)( c ) ):
• This form should be used by the CC or
Commissioner in a situation referred to in
section 132(1A) of the Income Tax Act, 1961,
that is, where in consequence of information
in his possession, he has reason to suspect
that the existing outhorisation is inadequate
because the books of accounts, money,
jewellery, or other valuable article or thing are
kept at some other building, place, vessel,
vehicle or aircraft.

Brief for search parties
• 1. Object of the search.
• 2. Particulars of the persons whose premises,
etc. are being searched and other persons likely
to be found in the premises searched.
• 3. Places etc. to be searched.
• 4. Time of strike.
• 5. Nature of business or profession or income-
earning activity of the person(s) whose premises
are being searched.
• 6. Gist of the information against the person,
including information gathered about modus
operandi for concealment of income and wealth.

• 7. Cases connected with the case/group of
cases in which searches are to be conducted.
• 8. Route map of the premises to be searched
and outlets of the building.
• 9. Information, if any, gathered about secret
chambers, underground cellars and hidden
places, etc.
• 10. Information, any available about computer
systems and other information technology
related equipments, etc. likely to be found in
the premises being searched.

• 11. Information, if any available about things
like, intercom systems or closed circuit TV sets
installed at the premises to be searched,
guards and watchmen patrolling the premises
and ferocious dog(s) likely to be found in the
premises.
• 12. Special instructions, if any, including those
relating to recording of statements under
section 132(4), handling of computer systems,
etc. found in the course of the search and
flashing of information to the control room.

• 13. Full information regarding the declared
assets, if any, of the persons whose premises
are being searched. These should be obtained
from the returns of income/wealth filed, so
that only undisclosed assets are seized as a
result of search for quantifying the concealed
income and appropriation of taxes on such
income.
• 14. Telephone numbers of the control room.

Provision of material to the search party
• The following material should be provided to
each search party:
• 1. Forms for appointing witnesses.
• 2. Panchnama forms.
• 3. Form of order under section 132(3).
• 4. Form of order under second proviso to
section 132(1).
• 5. Form of summons under section 131.
• 6. Form of authorisation under section
133A(1).

• 7. Form of recording statement under section
132(4).
• 8. List of duties of witnesses.
• 9. Copies of Taxpayer’s Charter indicating
rights and duties of the persons searched.
• 10. Bags for sealing seized material and bunks
with locks and cloth pieces.
• 11. Required stationary, including paper,
carbon paper, copying pencils, pen and pencil
sharpener.

• 12. Sealing material including sealing wax,
needles, thread, match box, candles, adhesive
tapes and gum.
• 13. Other articles and things that may be
required line, pins, clips, tags, stapler,
envelopes, battery operated torch, calculator
and scissors.
• 14. Copies of the Income-tax Act, 1961 and
Income-tax Rules, 1962.

Control Room
• The Investigation Unit conducting the search should
set-up a control room in a local Income-tax Office. The
control room should be manned by a group of
responsible officers, headed by the Additional/Joint
Director of Income-tax(Investigation) or
DDIT(Inv.)/ADIT(Inv.).
• Leaders of search parties should telephonically report
to the control room soon after the search party has
entered the premises and obtained the signatures on
the warrant of the owners/occupants and the
witnesses as well as all important developments and
whenever necessary should seek instructions from the
control room.

Rights of the persons searched
1. To see the warrant of authorisation duly signed and
sealed by the issuing authority.
2. To verify the idenentity of each member of the
search party.
3. To have at least two respectable and independent
residents of the locality as witnesses.
4. To have personal search of all members of the
search party before the start of the search and on
conclusion of the search.
5. To insist on a personal search of females by another
female only with strict regard to decency.

6. To have copy of the panchnama together with
all the annexures.
7. To put his own seals on the packages
containing the seized assets.
8. A woman occupying any apartment etc. to be
searched has the right to withdraw before the
search party enters, if, according to custom, she
does not appear in public.
9. To call a medical practitioner if he is not well.
10. To have his children permitted to go to
school, after examination of their bags.

• 11. To inspect the seals on various receptacles
placed in the course of the search and
subsequently reopened by continuation of the
search.
• 12. To have the facility of having meals etc., at
the normal time.
• 13. To have a copy of any statement before it
is used against him in an assessment or
prosecution proceedings.

• 14. To inspect books of account etc. seized or
to take extracts therefrom in the presence of
any of the authorised officers or any other
person empowered in this behalf.
• 15. To make an application objecting to the
approval given by the Commissioner for
retention of books and documents beyond
180 days from the date of the seizure.

Duties of the person searched
• 1. To allow free and unhindered ingress into the
premises.
• 2. To see the warrant of authorisation and put
signatures on the same.
• 3. To identify all receptacles in which assets or
books of account and documents are kept and to
hand over keys to such receptacles to the
authorised officer.
• 4. To identify and explain the ownership of the
assets, books of account and documents found in
the premises.

• 5. To identify every individual in the premises
and to explain their relationship to the person
being searched. He should not mislead by
personation. If he cheats by pretending to be
some other person or knowingly substitutes
one person for another, it is an offence
punishable under section 416 of the Indian
Penal Code.
• 6. Not to allow or encourage the entry of any
unauthorised person into the premises.

• 7. Not to remove any article from its place
without notice or knowledge or the
authorised officer. If he secretes or destroys
any document with the intention of
preventing the same from being produced or
used as evidence before the Court or public
servant, he shall be punishable with
imprisonment or fine or both, in accordance
with section 204 of the Indian Penal Code.

• 8. To answer all queries truthfully and to the
best of his knowledge. He should not allow
any third party to either interfere or prompt
while his statement is being recorded by the
authorised officer. In doing so, he should also
keep in mind that :
– If he refuses to answer a question on a subject
relevant to the search operation, he shall be
punishable with imprisonment or fine or both,
u/s.179 of the Indian Penal Code.

– Being legally bound by an oath or
affirmation to state the truth, if he makes a
false statement, he shall be punishable with
imprisonment or fine or both u/s 181 of the
Indian Penal Code.
– Similarly, if he provides evidence which is
false and which he knows or believes to be
false, he is liable to be punished u/s 191 of
the Indian Penal Code.

• 9. To affix his signature on the recorded
statement, inventories and the panchnama.
• 10 To ensure that peace is maintained
throughout the duration of the search, and to co-
operate with the search party in all respects so
that the search action is concluded at the earliest
and in a peaceful manner.
• 11. Similar co-operation should be extended even
after the search action is over, so as to enable the
authorised officer to complete necessary follow-
up investigation at the earliest.

Entry into the premises
The leader of the search party (the authorised officer)
should ensure that his party reaches the premises to
be searched exactly at the time, decided in advance
by the Investigation Unit, organising the search.
In case a search party reaches the locality in which the
premises to be searched is located before the
predetermined time, the leader should ensure that
the members of the search party do not actually reach
the premises before the appointed time. Persons in
occupation of the premises should not get any
advance information of the search party’s arrival.

• On reaching the premises, the leader should
ensure that members of the search party are
deployed at every entry and exit points and
under the windows. This will ensure that no
document, book of account, money, jewellery,
other valuable articles or things or assets etc. is
thrown out of the premises to be searched. If
intercom systems are installed at the entrance of
the premises or outside it, through which
interaction with the occupants is possible, the
authorised officer should take control over such
systems so that there is no advance intimation of
the arrival of the search party.

• A member of the search party should ring the call bell
or knock at the door. The authorised officer should
wait for a reasonable time for the occupant of the
premises to open the entrance door. If entry cannot be
easily obtained, the authorised officer should take the
assistance of police officers or other officers of the
Central Government available for the purpose. In such
situations, entry can also be effected by breaking open
any outer or inner door or window. Where the
premises to be searched are found locked, the
authorised officer should get in touch with the control
room for further instructions. He should, in the
meantime ensure that no one enters the same.

• If the place is in the actual occupancy of a woman who,
according to the sustom, does not appear in public, the
authorised officer should before entering such place,
afford her reasonable opportunity for withdrawing.
• Wherever it is found that the premises is occupied by a
person other than the one mentioned in the warrant of
authrisation, the authorised officer should check and
make sure that he has not come to a wrong place. He
should also try to ascertain the correct name and
address of the person with respect of whom search has
been authorised. Wherever necessary, he should
contact the control room for instructions.

Witnesses to the search
• Appointment of witnesses to the search.
• Before searching a premises, the authorised officer is
required to call upon two or more respectable
inhabitants of the locality to attend and witness the
search. Where a vessel, vehicle or aircraft is to be
searched, the requirement of the witness being from
the same locality would be inapplicable. The
authorised officer should serve upon the witness the
prescribed order in writing. The form for this order will
be provided by the Investigation Unit concerned. Non-
compliance with the authorised officer’s order entails
prosecution u/s 187 of the Indian Penal Code.

• While selecting witnesses the authorised officer should keep
in view the following points:
– The witnesses should be literate.
– They should not be related to the person whose premises
are being searched.
– They should not be in his employment.
– They should be major.
– They should be free from physical or mental infirmities.
– The legal advisor or consultant of the persons(s) whose
premises are being searched, should not be appointed as
witness.
– Religious sentiments of the party should be kept in view
while selecting witness.

–Persons with criminal record should
not be appointed as witnesses.
–While witnesses are to be selected by
the authorised officer alone, of the
party raises some objections against
selection of particular person, the
authorised officer should take such
objections into account before taking a
final decision.

Duties of a Witness
– Witness the search carefully right from its
commencement to its closure.
– Read and understand the warrant of
authorisation.
– See that the search and seizure operation is
carried out in an orderly manner without any
interference.
– See that there is no tampering or destruction of
valuable and documents.
– See that there is no undue influence or coercion at
the time of examination of any person on oath.

Duties of a Witness
– Not leave the premises without the permission of
the authrised officer.
– Initial all documents, packets containing seized
assets etc. for proper identification.
– See to it that a female is searched only by female
members of the search party.
– See to it that correct facts relating to search and
seizure are recorded.
– If he is witnessing the continuance of a search on
a subsequent date, see to it that the seals are
intact and that for continuance of the search,
these are broken in his presence.

Duties of a Witness
– See to it that the panchnama is correctly
and accurately recorded, sign the
panchnama and various annexures for
example, inventories of books of account
and documents, cash, money, bullion,
jewellery and ornaments and other valuable
articles and things.
– Attend as a witness under any proceedings
under the Income-tax Act, 1961, of and
when summoned.

Showing of warrant of authorisation, etc.
As soon as the members of the search party enter
the premises, to be searched, they should identify
themselves to the person in respect of whom the
warrant of authrisation has been issued or the
person in occupation and control such premises.
They should show the warrant to the aforesaid
person and obtain his signature as well as the
signatures of the witnesses to the search. The
person in occupation or in charge of the premises
and the witnesses are entitled to see the warrant
of authorisation and reach the same. They are,
however, not entitled to get a copy thereof.

Showing of warrant of authorisation, etc.
In case any person refuses to sign the warrant, the
fact should be noted, with the signatures of witnesses.
In addition to the warrant, the following should also
be shown:
- Valid official identity cards of the leader and members
of the search party.
- The Taxpayer’s Charter indicating rights and duties of
the persons to be searched. The signatures of the
person searched and witnesses should be obtained on
both the parts relating to his rights and duties. The
authorised officer should retain his document after
countersigning it.

Telephonic report to the control room
After getting entry into the building or place, etc.
to be searched, the authorised officer should
contact the control room. He should report to it,
the time on which the party gained entry, the
telephone numbers of the premises, etc. where
the search is being conducted. As far as possible,
no member of a party searching a premise should
directly contact over telephone any member of a
party searching another premises. All such
communications should be made through the
control room.

Offer of their personal search by the members of the
search party
• The members of the search party should
offer themselves for search by the person
whose premise, etc., is being searched.
This should be done in the presence of
the witnesses. Search of the lady
members of the search party can be
made only by a lady present in, or
occupying, the premises.

Initial Statement of the occupants of the premises
• On commencement of the search action, the
authorised officer should record statements of all the
adult occupants of the building or place, etc. where the
search is being conducted. If the number of occupants
is very large (like, in an office or a factory), initial
statements of all persons, which in the opinion of the
authrised officer, are likely to be useful for search
proceedings or any other proceedings under the
Income-tax Act, may be recorded. It will be useful to
record such statements in a pre-designed proforma so
that no relevant point is missed. The authrised officer
may, if so considered necessary by him, also ask
supplementary questions while recording initial
statements including specific questions about bank
lokers and accounts.

Other steps to be taken
• The authorised officer, the leader of the
search party along with other members of the
party should work as a team.
• There is optimum utilisation of available
manpower and that the search is conducted in
an efficient, fair and orderly manner.
• Money, assets and documents etc., are not
thrown out of the premises or taken out of
the premises or are not destructed or
damaged in any manner by any occupant,
being searched.

• Where the premises being searched has
telephones, intercom systems, telex systems,
FAX, public address systems or computer
systems with Internet or network facility etc.,
there is no such communications through
them between any person occupying the
premises and any other person, inside or
outside the premises as would jeopardise the
purpose and conduct of the search.

• Where the premises being searched has a
computer, no one gets an opportunity to
manipulate the system or damage it or erase any
data stored therein.
• The occupants of the premises should be
requested to lock all cupboards, etc., and hand
over all the keys to the leader of the search party.
• Where the premises being searched has
telephones, intercom. Telex, FAX, public address
or computer systems, the leader of the search
party should take over their control.

• No outsider, (except a medical practitioner, in
case required), should be allowed to enter the
premises during the course of the search
operations.
• Where the premises being searched is an office,
only those employees who are likely to be of use
in explaining or producing the relevant
documents etc., should be allowed to remain in
the premises.
• Children should not be prevented from going to
school. However, their school bags should be
searched to ensure that they do not contain any
documents, locker keys, valuables, etc.

• Movements of servants, drivers, other employees
etc., should be restricted to the minimum and if
they are allowed by the authrised officer to leave
the premises, their personal search should be
taken before they leave.
• The occupant or person in-charge of the building,
place, vessel, vehicle or aircraft or any other
person acting on his behalf should be permitted
to be present throughout the search. However,
the aforesaid persons are not entitled to have
their legal/tax advisors to be present during the
search.

• No food or refreshment should be accepted from
any occupant or the premises being searched as
it would be improper to accept such hospitality.
Secondly, there is also a risk of the members of
the search party being drugged.
• The entire premises should be thoroughly
searched to detect books of account and other
documents (including books of account and other
documents maintained in the form of electronic
record), money, bullion, jewellery and other
valuable articles or things.

• An authorised officer is empowered to break open the
lock of any door, box, locker, safe, almirah or other
receptacle when the keys thereof are not available. In
such circumstances, he should first demand the keys
from the owner, occupier, or the person in-charge and
allow reasonable time and opportunity for the
production of the keys. Only after the authorised
officer has satisfied himself that the keys are not
available despite all reasonable efforts should he break
open the locks. He should in such circumstances,
record the fact that the lock had to be broken open,
along with his reasons for doing so.


• Where a locksmith is called for this purpose,
his full name, address, time of arrival and
leaving the premises alongwith the sum of
money paid for his services should be noted
down. The note should be signed by the
authorised officer, the occupant of the place
or person in-charge and the witnesses to the
search. This should be appended to the
panchnama and made a part thereof.

Personal search
• The authorised officer has the power to search any person
who has got out of, or is about to get into, or is inside the
building, place, vessel, vehicle or aircraft. He may do so if
he has reason to suspect that such person has secreted
about his person, any books of account, other documents,
money, bullion, jewellery or other valuable ariticle or thing.
• Personal search should, however, not be carried out in an
indiscriminate and routine manner. When such a search
involves female, it should be carried out only by another
female with strict regard of decency.
• A list of all things found as a result of a personal search
should be prepared. This list should be signed by the
authorised officer, the person searched and the witnesses.
A copy of this list should also be given to the person
searched.

Restraint order under section 132(3)
• The AO may issue a restraint order u/s 132(3) of
the I.T. Act, 1961 when it is not practicable to
seize any books of account, other documents,
money, bullion, jewellery or other valuable article
or things. This power is invoked for reasons other
than those mentioned in the second proviso to
section 132(1) and is not deemed to be a seizure.
• With effect from 1.6.2002, an order issued u/s
132(3) issued by an AO will remain in force for a
maximum period of 60 days from the date of
issue.

Restraint order under section 132(3
• Some situations in which an order u/s 132(3)
can be issued:
– Where a warrant of authorisation for search of a
bank locker has been obtained following its
detection during a search, but it is not possible to
search the locker immediately. In such a situation,
an order u/s 132(3) should be issued and served
on the Bank Manager and the hirer of the bank
locker and the locker itself should be sealed. The
Board have issued administrative instructions that
search of such a locker should be completed
within 7 days.

Restraint order under section 132(3
– Where a search remained inconclusive on the day of
its initiation and its further continuation had to be
postponed for a subsequent day on account of some
valid reasons.
– Where verification and valuation of stock could not be
completed and is required to be postponed for a
subsequent day on account of some valid reasons.
– Where it is not practicable to seize any books of
account or documents or assets either because some
special arrangements are required to be made for
carrying or storing it or where the same are lying
under the control of some other authority.

Inventory of books of account, documents found in
the course of the search and their seizure
• Detailed inventories should be prepared of all the books of
account and documents found as a result of the search,
whether seized or not. It is necessary to record the exact
place from where the books of account and documents were
found as it may be relevant to establish their ownership later
on. Marks of identification in the form of the AO’s signatures
with date and seal should be placed on documents and books
of account. Pages of documents should be numbered
consecutively and mentioned in the inventory. Blank pages
should be cancelled and numbered. Signatures of witnesses
and the person from whose possession the books of account
and documents have been found should be obtained.
Separate inventories should be made of the books of account
and documents found and seized and books of account and
documents found but not seized.

• The AO should apply his mind and broadly
determine as to what books of account and
documents are required to be seized.
• Some useful inputs in this regard are:
– Where both duplicate set of books of account and
regular books of account are found, the AO should
seize both the sets.
– Documents and books of account pointing to an
economic offence or violation should be seized.


– Statement recorded u/s 132(4) and the
explanation offered by the person to whom the
books of account and documents belong, the
person in occupation of the premises or the
person who wrote the books of account or
documents or dealt with them (like, the
accountant of the owner) could also help in
deciding whether the books of account and
documents should be seized or not.

Inventory of money(cash), bullion, jewellery and other valuable
articles and things found in the course of search

• Detailed inventories should be prepared of
cash, bullion, jewellery and other valuable
articles and things found in the course of the
search, whether seized or not. It is significant
to mention in this connection that cash and
other assets found in the course of the search
can be seized only of these represent
undisclosed income or property.

Inventory of jewellery and ornaments found in the
course of the search and their seizure
• The AO should contact the control room for sending an
approved valuer for the purpose valuing jewellery and
ornaments found in the course of the search. It is
necessary to record the exact place from where the
jewellery and ornaments have been found as this fact
may be relevant for establishing ownership
subsequently. The inventory of the jewellery is
generally prepared by the approved valuer after noting
the full description of each item of jewellery, its gross
and net weights and value. The exercise of valuation of
jewellery should be carried out in the present of the
persons from whose possession the jewellery items
were found and the witnesses to the search.

• Jewellery, ornaments and other valuable
articles or things can be seized only of these
represent undisclosed income or property.
The Board’s Instruction No.1916 dated
11.5.1994 lay down the following guidelines
for seizure of jewellery:
– In case of the wealth-tax assessee, gold jewellery
and ornaments found in excess of the gross
weight declared in the wealth-tax return only
need be seized.

– In the case of a person not assessed to wealth-tax, gold
jewellery and ornaments to the extent of 500 gms. Per
married lady, 250 gms. Per unmarried lady and 100 gms
per male member of the family, need not be seized.
– The AO may, having regard to the status of the family and
the custom and practices of the community to which the
family belongs and other circumstances of the case, decide
to exclude a larger quantity of jewellery and ornaments
from seizure. This should be reported to the
Director/Commissioner authorising the search at the time
of furnishing the search report.
– In all cases, a detailed inventory of the jewellery and
ornaments found must be prepared, to be used for
assessment purposes.

Bullion found in the course of the search
• Gold or silver bullion and silver and gold coins
found in the course of the search should also be
got valued by the approved valuer. In the case of
bullion, the inventory should clearly mention the
markings of such bullion and its gross weight.
Where bullion with foreign marking is found, the
control room should be contacted for further
course of action whether these should be seized
or not or whether the information regarding its
detection needs to be communicated to any
other agency or authority.

Statutory procedure for seizure of bulion,
jewellery and other valuable articles or things

• The procedure for seizure of bullion, jewellery
and other valuable articles or things has been
given in Rule 112(10) of the Income-tax Rules,
1962

Cash found in the course of the search
• The cash found should be segregated according
to denomination and counted in bundles of
hundred notes. The person counting the notes
and the person checking the counted notes
should put their signatures on slips which should
be attached to the bundles.
• Where in the course of the search, fake Indian
currency is detected, information about the same
should be immediately passed on to the control
room so that the same can be communicated to
the appropriate authorities for appropriate
instruction to the search party

Cash found in the course of the search
• Where the person from whose possession cash is found
maintains a cash book, the cash balance shown in the cash
book should be compared with the cash found. If the cash
book has not been written up to date, the cash balance
should be determined with reference to documents like, cash
vouchers, counter foils of pay-in-slips and cheques, if found in
the course of the search. The explanation of the person
searched should be obtained for the cash found at the
premises. The person searched should also be given a
reasonable opportunity of furnishing evidence in support of
his explanation. Pointed queries in this regard should also be
made while recording his statement u/s 132(4). The AO
should, after taking into account all the aforesaid and other
relevant factors, decide whether the cash found or a part
thereof should or should not be seized.

Foreign currency found in the course of the search
• In the inventory of foreign currency or traveller’s
cheques in such currency, important details such as,
the name of the country of origin, denomination and
serial number(s) should also be mentioned. Pointed
inquiries relating inter alia to the nature of possession
and the source of acquisition should be made from the
person from whose possession these are found. His
statement on oath should also be recorded. The
control room should be contacted for instructions
about further course of action whether these should
be seized or not or whether the information regarding
detection of foreign currency and traveller’s cheques
in foreign currency need to be communicated to any
another agency or authority.

Promissory Notes found in the course
of the search
• Seizure of un-discharged promissory notes may at
times result in the debts becoming time-barred
and bad. Therefore indiscriminate seizure of
promissory notes has to be avoided.
• In case of seizure of promissory notes, bills of
exchange and other similar documents, marks of
identification should not be placed on the
instrument itself but instead a piece of paper
should be attached and marks of identification
should be placed thereon.

FDRs found in the course of the search
• Inventories of the FDRs should give the names of the
holders, the date of issue, the date of maturity, its
distinctive number, face value, amount payable on
maturity, rate of interest as well as the name and
address of the banker who issued it. The statement of
the person concerned regarding the nature of
possession and the source of acquisition of the FDRs
should also be recorded. Specific and pointed queries
in this regard should be made while recording the
statement u/s 132(4).
• Where a FDR is to be seized, marks of identification
should not be placed on the instrument but on a piece
of paper attached thereto.

Keys found in the course of the search
• Whenever any key is seized in the course of a search, its
number should be recorded to facilitate identifcation at a later
stage. In case it is not admitted that the key pertains to a bank
locker, the number alone should be mentioned without any
reference to any bank locker. The place from which the key
was found should also be mentioned. Where the bank locker
or other receptacles to which the key found pertains has been
identified, full particulars, like, bank locker number, name of
the bank and branch, particulars of receptacles and its
location, etc., should be recorded. The name of the person in
whose name the locker stands and its contents should also be
mentioned. Each key found and seized should be separately
tagged and marks of identification placed thereon together
with signatures of witnesses and the person concerned.
Inventory of all keys found and seized in the course of a
course of a search should be carefully prepared.

Keys found in the course of the search
• Where keys pertain to bank lockers, the control room should be informed
about the same immediately. All efforts should be made to get
information about bank lockers soon after the commencement of the
search, in the course of the initial statements of the persons concerned.
As soon as the information is received, all efforts should be made to
obtain the keys of the lockers, which should then be seized. This is
because a separate warrant of authorisation is needed for the search of
lockers. It is, therefore, necessary that the control room is informed as
early as possible about the existence of bank lockers and keys thereof so
that the appropriate authority can take a decision in the matter and
prevent operation of the bank locker in the mean time. Where a warrant
of authrisation is issued for search of the locker, the same should be
executed, immediately. Where it is not possible to search the locker
immediately an order u/s132(3) can be issued and the bank locker sealed
by the AO.

Antiquities or Works of Art are found in the course
of the search
• Where in the course of a search, an article is found
which prima facie appears to be an antiquity or of such
an artistic or aesthetic value as worthy of being
declared an “art treasure”, the AO should get in touch
with the control room. The in-charge of the latter
should advise the AO with regard to further
appropriate action in the matter. He should also take
steps to report the matter to the appropriate authority,
such as, the Superintending Archaeologist and seek his
advice. For proper identification, a white sheet of
paper should be pasted either behind or below each
article and the signatures of witnesses and the person
concerned should be obtained thereon. The AO should
also make inquiries regarding the source of acquisition
of each article.

Stock found in the course of the search
• Inventories should be made of the
stock found in the course of the
search. This should besides
mentioning the quantity of the stock
found, also mention its value. The
exercise relating to valuation of
stocks should be undertaken
carefully, in a systematic manner.

• The person whose premise is being searched should be given
an opportunity to offer his explanation about the stock found
and its value. Specific queries in this regard should also be
made while recording his statement u/s 132(4). Where the
person maintains a stock register, the stock found should be
compared with the entries made in the register. Wherever
necessary, purchase and sale vouchers and other documents
should also be examined. Depending upon the facts and the
circumstances of the case, suitable methodology for
verification of stock should be adopted. The purpose of this
exercise is to find out whether the stock found in the course
of the search stands explained with reference to the books of
account, and other records maintained on a regular basis. If
the stock found is in excess or deficient with reference to such
books or records, the person concerned should be asked to
explain the discrepancy.

• Where on suitable verification, it is found that the
stock found is in excess of what has been
recorded in the books of account, the excess
stock found can be treated as unaccounted and
seized.
• Where it is not possible or practicable to take
physical possession of any valuable article or
thing and remove it to a safe place due to its
volume, weight or other physical characteristics
or due to its being of dangerous nature, the AO
should act in accordance with the second proviso
to section 132(1). This is called deemed seizure of
the valuable article or thing.

• In the course of the search, excess or
unaccounted stock of perishable nature may be
found. Perishable stocks, if not released, could
deteriorate in quality and value. The Board have
decided that in such cases, the assets could be
released on the strength of an unconditional and
irrevocable bank guarantee to the full extent of
the value of the seized assets concerned. The
valuation is to be undertaken by the department
and the guarantee itself should be clear,
unequivocal, enforceable at any point of time.


• It should also be ensured that the seized
assets with specific evidentiary value in
prosecution proceedings are not be released
till such proceeding are complete.
• Contravention of an order under the second
proviso section 132(1), entails prosecution u/s
275A of the Act.

Indiscriminate seizure not to be made
• Effort should be made to prevent indiscriminate seizures causing
avoidable harassment to taxpayers. The categories of books of
account, etc. and the valuable articles seized should strictly come
within the ambit of clauses (a), (b) and ( c ) of section 132(1). This
would be possible only if the search party is provided with clear
information regarding the books of account already produced by
the party and valuables already disclosed. The search party should
also equip itself with full information regarding the declared assets
of the taxpayers from the returns of income/wealth filed, so that
only undisclosed assets are seized for purposes of quantification of
concealed income and appropriation of taxes due on such income.
Seizure of assets already reflected in the records filed with the
department should be avoided.
• In case assets disclosed in the regular books of account have been
seized, these can be released subject, of course, to recovery action
liable against any existing tax liability.

Continuation of search on the subsequent day
• As far as possible search of a premises should be concluded
on the same day. However, when it is not possible to do so
and it is considered necessary to continue the search on a
subsequent day, an order u/s 132(3) should be issued and
the premises sealed properly and placed under a police
guard along with some responsible persons of the
department. Where the sealing of residential premises
cannot be avoided, only that portion thereof should be
sealed, which is to be searched on the subsequent day so
that minimum inconvenience is caused to inmates. On the
subsequent day when the search is resumed, the seals
should be opened in the presence of witnesses. Where any
seal is found to be broken or tampered with, an immediate
police complaint should be lodged. Contravention of an
order u/s 132(3) of the entails prosecution under section
275A of the Act.

Search of Bank Lockers
• In a case where information is available
about a bank locker of a person and the
authority competent to authorise a
search is satisfied that the statutory
conditions laid down in section 132(1)
justifying its search are fulfilled, he will
issue a warrant of authorisation. The
locker can then be searched in pursuance
of such warrant.

• There can, however, be cases where there is no
advance information about the existence of any bank
locker and a search is in the process of being
conducted on certain premises. In such a situation, the
AO should ascertain whether the person concerned has
hired any bank locker. In the initial statement of such
persons, specific and pointed queries regarding hiring
of bank lockers should be make. If he gives information
about his possession of bank lockers, keys thereof
should also be obtained. The information collected
should be communicated immediately to the control
room. A separate warrant of authorisation is needed
for searching a bank locker. If more than one bank
locker is detected, separate warrants of authorisation
will be needed for each of them.

Contd..
Till such time as separate warrants of
authorisation for the lockers are issued, the
control room in-charge should take requisite
steps to prevent their operation or the removal of
assets or documents kept therein. If following the
warrant of authorisation for searching a bank
locker, it is not possible to search the same
immediately, an order u/s 132(3) should be
issued and served on the Bank Manage and the
person(s) in whose name it has been hired.

• The search party should ascertain the last date on
which the bank locker was operated as also the
details of locker rent paid and FDRs etc., kept by
the person with the bank. If keys are not
available, steps may be taken to break open the
locker.
• Inventories of the contents of a locker should be
prepared in the same manner as in the case of
search of any other premises. The decision with
regard seizure of such contents will also be
governed by the same consideration as the
search of any other premises.

Signature on the various inventories and lists etc.,
prepared in the course of the search
• All the inventories and lists etc., prepared in
the course of the search, should be signed by
the following :
– Authorised Officer
– Occupant of the building, place, vessel, vehicle or
aircraft, including the person in charge of such
vessel, vehicle or aircraft search
– Witnesses to the search.

Statement u/s 132(4) of I.T. Act, 1961
• Section 132(4) empowers the AO to examine on
oath, during course of the search and seizure
operation, any person who is found to be in
possession or control of any books of accounts,
documents, money, bullion, jewellery or other
valuable article or thing. Such examination may be
not limited to the contents of books of account, or
documents or the nature of assets found during of
the search, but could extend to all matters relevant
for any investigation connected with any proceeding
under the IT Act. Any statement made by such
person during such examination may also used in
evidence in any proceeding under the Act.

• One of the purposes of on-the-
spot examination on oath is to
elicit truth before a person whose
statement is sought to be
recorded, has an opportunity to
concoct an explanation or
fabricate evidence.

• Some points that should be dept in view while
recording a person’s statement are as under:
– The person whose statements are to be recorded
should not be allowed to brief one another or to
compare notes.
– The statement should begin with the identification
particulars of the person making the statement,
like, his full name, his father’s name, permanent
and local address, age, nationality, occupation,
permanent account number and whether he is
assessed to tax and if so, where, etc.

– Before recoding the statement, the AO
should administer an oath/affirmation and
warn the person concerned against making
any false statement. Refusal to take oath or
make a statement on solemn affirmation
should be specifically recorded and
signature of witness obtained. This is
necessary because such refusal is an
offence u/s.176 IPC. Secondly, such a refusal
may also enable the income-tax authorities
to draw an adverse inference.

– Specific and pointed queries should be make on
matters like, the nature of possession and source
of acquisition of money, bullion, jewellery and
other valuable articles and things, found in the
course of the search.
– The person whose statement is being recorded
should also be asked about the books of account
and documents found in the course of the search.
Documents shown to the person at the time of
recording of his statement should be properly
identified.

– Where foreign currency, traveler’s cheques
in foreign currency or fake Indian Currency
are found, mode and nature of their
possession and source of acquisition should
be inquired into.
– The person should be closely examined on
the excesses/shortages of stock found in the
course of the search.
– As far as possible statements should be
recorded in the exact words used by the
person.

– Where a person declines to answer on the pretext of
ill health, nervousness, or shock or fatigue or mental
tension, he should be given some time to take rest
before resuming questioning. If need be, a medical
practitioner may be called for examination. All
certificates used by the medical practitioner should be
made part of the panchnama.
– If in his statement, a person refers to the transaction
with, or any thing said to have been done or stated or
written by, any other person, the information should
be communicated to the control room so that such
other person is also examined on oath, before he
could be contacted by the first person.

Preparation of panchnama
• At the end of the search or when it is concluded for
the day, a panchnama is required to be prepared.
The form for such panchnama is provided to the
search party by the Investigation Unit organising the
search. This is a document of considerable
evidentiary value and should be prepared with due
care and caution. When the search is resumed on a
subsequent day, the panchnama prepared on the
subsequent day should refer to the immediately
preceding panchnama and also to the fact that all
the seals were inspected by the Officer(s) and the
witnesses and that they were found intact.

• The panchnama should mention all
significant events in the search in the
same sequence in which they
occurred. A specimen of the brass
seal used should also be put on the
panchnama. Even where nothing is
found or seized in the course of a
search, a panchnama should be
prepared in the usual manner.

• The following should also be appended to the
panchnama and made a part thereof:
– List/ Inventory of all books of account and
documents found and seized.
– List/Inventory of all books of account and
documents found but not seized (A mention may
be made of the marks of identification made.)
– List/Inventory of bullion, jewellery, ornaments and
gold and silver articles, etc. found and seized.
– List/Inventory of bullion, jewellery, ornaments and
gold and silver article, etc. found but not seized.

– List/Inventory of other valuable articles and things
found and seized.
– List/Inventory of other valuable articles and things
found but not seized.
– Inventories of cash found, with break-up of cash
seized and cash not seized.
– Inventory/List of other assets found, with break-
up showing those seized and those not seized.
– Inventory of stock found, with details of stock
seized, stock deemed to have been seized under
the second proviso to sec.132(1), stock restrained
u/s.132(3) and stock not seized.

Transport and safe custody of the
seized materials
• The seized documents and valuables
should, as far as possible, be transported
to the control room, under police
protection. Some members of the search
party must accompany the vehicles in
which the seized books of accounts,
documents and assets are being
transported.

Handing over of the seized books of account, etc.
and seized money to the custodian
• The AO, the leader of the search party, should hand over the
books of account, other documents and the sealed package(s)
containing the bullion, jewellery and other valuable articles or
things, seized during the course of the search to the
custodian. Any money seized in the course of the search
should also be deposited with him. As provided in rule
112(11), the custodian can be an income-tax authority, not
below the rank of the Income-tax Officer. This function should
ordinarily be performed by the Deputy or Assistant Director of
Income-tax(Investigation), as he would be present in the
control room to co-ordinate the search and receive seized
material, panchnamas, search report etc., from AO. He should
ensure that a sufficient number of other officials are available
in the control room to assist him in the performance of this
function.

Steps required to be taken by the
custodian for the safe custody of seized
books of account and other documents
and packages containing bullion, jewellery
and other valuable ariticles or things
• The custodian should take suitable steps for
the same custody of books of account and
other documents, and the packages, conveyed
to him by the Authorised Officer.

Steps required to be taken by the custodian
where any seized money is deposited with him;
crediting of the money in the Personal Deposit
Account.
– Rule 112(2)(iii), provides for the deposit of the
seized money in the Personal Deposit Account of
the Chief Commissioner or Commissioner.
– The deposits and withdrawals in the Personal
Deposit Account are subject to audit by Zonal
Accounts Officer(CBDT). The accounts are also
subject to audit by the officers of the Comptroller
and Auditor General, once in a year.

Account.
• Some times it becomes necessary to retain the
seized currency without deposing the same in the
Personal Deposit Account of the Commissioner
concerned to preserve the identity of currency notes
from the point of prosecution. For example, in a case
where currency notes were seized in the course of a
search, the assessee claimed to have obtained the
cash on a particular date, whereas the currency
notes were found to bear the RBI stamp which
indicated that the notes were actually issued on a
date subsequent to the date claimed by the
assessee.

Contd…
In a case of this type, the retention of
currency notes is necessary to prove the falsity
of the assessee’s claim as a piece of evidence
for launching prosecution. In such cases, the
Commissioner may, after consultation with
the prosecution counsel, retain the currency
in original form and record his reasons for
doing so. If retention of currency notes in its
original form is found necessary the same may
be placed in a package and kept in the safe
custody of a bank/treasury as specified in the
Rule(Board’s Instruction No.806 dated
30.11.1974.

Account.
In its letter No.380/5/84-IT(B) dated 31.03.1985, the
Board has stressed that the Personal Deposit Account
should be opened only with the approval of the Board.
It has been emphasised in the Board’s Instruction
No.1745 dated 22.01.1987 that in all cases where
money is seized as a result of a search, the same should
be deposited in the Personal Deposit Account. In case
there is no Personal Deposit Account, a formal request
should be made to the Board for opening such account.
The necessary Personal Deposit Account should be
opened only on receipt of the sanction of the
Board(Board’s Instruction No.1745 dated 22.01.1987).

Submission of report by the search party
• The leader of the search party should submit a report
to the JDIT(Inv.)/DDIT(Inv.)/ADIT(inv.) in-charge of the
search. The report should mention all salient features
of the search and seizure operation, including, the
problems, if any, faced by the search party, extent of
damage, if any, caused to the premises searched and
the reasons thereof, any untoward incident which took
place during the search, details of significant
information given to the control room, intimation, if
any given to other Government agencies, any
significant feature of the seized books of account or
other documents, highlights of statements recorded
under section 132(4), and any other relevant
information that the leader of the search party wishes
to make.

Handling over of the seized books of account,
documents and assets to the Assessing Officer
• Where the AO has no jurisdiction over the person
in whose case a search has been conducted, he is
required to hand over the seized books of
account or other documents or assets to the
Assessing Officer having jurisdiction over such
person within a period of 60 days from the date
on which the last of the authorisations for search
was executed. Thereafter the powers exercisable
by the Authorised Officer u/s 132(8) or 132(9)
shall be exercisable by such Assessing Officer.

Retention of seized books of account and
documents
• The books of account or other documents as well as
other assets seized as a result of the search initiated on
or after 1.6.2002 cannot be retained by the Authorised
Officer(Assessing Officer, after the books of account
and documents have been handed over to him) for a
period exceeding 30 days from the date of the order of
assessment under clause ( c ) of section 158C(This is as
per the provisions of sub-section 132(8), as amended
by the Finance Act, 2002, with effect from 1.6.2002.
Prior to this (that is, in case of a search initiate before
1.6.2002), the time-limit was 180 days from the date of
the seizure) unless the reason for retaining the same

Contd…..
are recorded by him in writing and the
approval of the CC, CIT, DGIT or Director for
such retention is obtained. However, such
approving authority shall not authorise the
retention of the books of account and other
documents for a period exceeding 30 days
after all the proceedings under the Act in
respect of the years for which the books of
account or other documents are relevant are
completed.

Person entitled to make copies of books
of account and documents

• The person from whose custody any books of
account or other documents are seized is
entitled to make copies thereof, or take
extracts therefrom, in the presence of the
Authorised Officer(Assessing Officer, after the
books of account and documents have been
handed over to him) or any other person
empowered by him in this behalf.

Power to requisition books of account,
etc., under senction 132A
• Section 132A empowers certain income-tax authorities
to requisition books of account, other documents and
assets taken into custody by other officers or authorities.
• While all the income-tax authorities mentioned at
section 132A(1) have the statutory power to authorise
the requisition books of account, etc., in view of the
administrative distribution of functions amongst various
functionaries of the department, these powers are
ordinarily exercised by the DI(Inv.). The officer authorised
u/s. 132A(1) to requisition books of account, etc. is called
the requisitioning officer.

Contd…
• The authority competent to authorise
requisition books of account, etc., can do so
only by issuing a warrant of authorisation in
Form No.45C(See Rule 112D(1) of the I.T. Rule,
1962). The procedures required to be followed
by the requisitioning officer and the delivering
officer or authority have been laid down in
Rule 112D.

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