I-T after 'big fish', raids up 60%

The value of assets seized during raids by the Income Tax Department has more than doubled in last five years, as the department started going after the ‘big fish’. In its quest, the department has been aided by sophisticated information technology tools and intelligence received under tax agreements with other countries.

The number of raids rose from 3,281 in 2007-08 to 5,260 in 2011-12, a rise of 60 per cent, while the value of assets seized rose from Rs 427 crore in 2007-08 to Rs 905 crore in 2011-12, a 111 per cent increase.

However, the number of surveys fell from 6,071 in 2007-08 to 3,706 in 2011-12. Despite the decline, the undisclosed income detected during these surveys increased from Rs 3,059 crore to Rs 6,572 crore.

Officials said raids have turned more effective, as the department now acts on more specific information received from foreign jurisdictions. “We are getting a lot of information under double taxation avoidance agreements. This is helping us target the right people,” said a finance ministry official, adding information technology had also helped the department keep a track of suspected tax evaders.

Through raids, carried out under section 132 of the Income Tax Act, investigators can conduct searches at offices and residences of suspected tax evaders any time, without a prior notice, and seize the documents they feel are relevant to the case.

A director of investigation or commissioner of income tax can issue a warrant for such a search operation.

However, through surveys, carried out under section 133A, investigators can enter office premises of suspected tax evaders only during business hours. Also, they cannot seize documents or take away any valuable. A survey is carried out on the instructions of a joint commissioner or a joint director of the department.

To add to incentives for disclosure, the Finance Act 2012 stated if undisclosed income was declared during a search, a penalty of 10 per cent would be applicable; if it was disclosed while filing returns, the penalty would be 20 per cent.

If undisclosed income was detected the assessment period after a search, the penalty would be 30-90 per cent.

TAXING TIMES
Financial year	No of surveys conducted	Undisclosed income  detected  (Rs cr)	No of search warrants executed	Value of seized assets  (Rs cr)	Undisclosed income admitted  (Rs cr)
2007-08	6,071	3,581	3,281	427	4,160
2008-09	5,777	3,059	3,379	550	4,613
2009-10	4,680	4,857	3,454	963	8,101
2010-11	3,911	5,894	4,852	774	10,649
2011-12	3,706	6,572	5,260	905	9,289
Source: Finance ministry

Information collected by the department from various sources such as annual information returns, tax deduction at source, the Central Information Branch and the online tax accounting system is collated in an integrated taxpayer data management system to create accurate profiles of high net worth individuals. Cyber forensic labs in Delhi and Mumbai have also thrown up results in many search-and-seizure cases. The Income Tax Department’s investigation wing has developed a software audit tool to analyse computerised books of accounts to assist tax officers in their assessments.