Key Highlights
- Search authorised under Section 247, ITA 2025 by Principal Commissioner or above
- Grounds: reason to believe undisclosed income or assets exist based on information
- Powers: search premises, vehicles, lockers, seize books, cash, jewellery, documents
- Assessment after search: Section 248 — assessment for 6 preceding years
- Seized assets: held for up to 120 days — released on providing security
- Penalty after search: 30%–60% of undisclosed income (in addition to tax)
Legal Reference
Section 247 (search and seizure), Section 248 (assessment after search), Section 253 (survey), ITA 2025 | Corresponds to Sections 132, 153A of ITA 1961
1. When Can Search Be Authorised?
A search can be authorised by the Principal Commissioner or above when there is reason to believe that:
- A person has suppressed income or assets not disclosed in returns
- Books, documents, or valuable articles are concealed and will not be produced
- The person is in possession of money, bullion, or assets not accounted for
The word "reason to believe" is important — there must be credible, specific information (not mere suspicion). Courts have held that search orders without proper reason to believe are invalid.
2. What Happens During a Search?
- Officers arrive with a valid warrant authorising search at specific premises
- They are entitled to search any part of the premises — including lockers, safes, vehicles, offices
- All persons present can be required to stay during the search
- Books, documents, electronic records, cash, jewellery, and other assets can be seized
- A panchnama (seizure memo) is prepared in the presence of witnesses
- The person being searched has the right to be present and to make statements
3. Taxpayer Rights During Search
- Right to see the search warrant — verify it is authorised by the correct authority
- Right to have a witness present during search
- Right to receive a copy of the panchnama (seizure memo)
- Right to inspect seized books and documents
- Right to make statements (but statements made during search can be used as evidence)
- Right to not answer self-incriminating questions
4. Assessment After Search: Section 248
After a search, the AO can assess income for up to 6 preceding Tax Years. The normal reassessment limitation periods are overridden — the search opens a fresh 6-year window regardless of earlier assessments. During this period, returns filed earlier may be re-examined and income assessed at higher values based on seized documents.
5. Penalty and Prosecution After Search
| Default | Penalty/Consequence |
|---|
| Income not recorded in books of account | 30%–60% penalty on undisclosed income + tax |
| False explanation of seized assets | Higher penalty |
| Deliberate concealment | Prosecution under Chapter XXII |
6. Why TaxClue
Facing an income tax search is stressful — proper handling during and after search is critical to minimise tax liability and avoid prosecution. TaxClue provides expert representation and post-search assessment advisory. Contact us if you have received a search or need pre-search advisory under ITA 2025.
Disclaimer
This article is for general informational and educational purposes only. It does not constitute legal, financial, or professional tax advice. Readers are advised to consult a qualified Chartered Accountant or tax professional before making any decisions. TaxClue Consultech Pvt Ltd accepts no liability. All case studies and examples in this article are illustrative only and do not represent actual persons or transactions.
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❓ Frequently Asked Questions
What is an income tax search (IT raid)?
An income tax search under Section 247 of ITA 2025 is an authorised action by Income Tax officers to search specified premises and seize undisclosed assets, books, and documents. It is authorised by the Principal Commissioner or above based on credible information suggesting the person has suppressed income or concealed assets. It is not a routine inspection — it requires specific reason to believe and proper authorisation at a senior level.
What can income tax officers seize during a search?
During an authorised search under Section 247 of ITA 2025, officers can seize: cash and bank notes; jewellery, bullion, and precious stones; books of accounts, documents, and electronic records; and any other article that is likely to be relevant to income tax proceedings. A detailed panchnama (seizure memo) is prepared listing all seized items in the presence of witnesses. Seized assets are held for up to 120 days and can be released on providing security.
What are my rights if my premises are searched?
During an income tax search, you have the right to: see and verify the search warrant and the authorised officer identity; have a witness present; receive a copy of the panchnama listing all seized items; inspect seized documents; make voluntary statements (note that statements made during search are admissible as evidence); and not be compelled to self-incriminate. Any search without a valid warrant or conducted outside its scope can be challenged in court.
How many years can be assessed after an income tax search?
Under Section 248 of ITA 2025, the AO can assess or reassess undisclosed income for up to 6 preceding Tax Years from the Tax Year of the search. This overrides the normal reassessment limitation periods of 3 or 5 years. All six years are opened for assessment based on the evidence found during the search — even years where assessments were already completed can be reopened if search evidence indicates undisclosed income.
What is the penalty for undisclosed income found in a search?
Undisclosed income detected during search proceedings attracts penalties in addition to regular tax. Income not recorded in books of account typically attracts 30% to 60% penalty on the undisclosed amount. If the person provides a false explanation for seized assets or deliberately conceals income, higher penalties apply. Wilful tax evasion can lead to prosecution under Chapter XXII of ITA 2025, which provides for imprisonment in addition to financial penalties.
