When substantial sums of money are seized during income tax raids, a strict protocol is implemented to ensure transparency and accountability. The process begins with bank officials meticulously counting the seized cash as independent witnesses, which safeguards the integrity of the procedure.
Once counted, the seized funds are deposited into a designated treasury account maintained by the Income Tax Department at the State Bank of India. This account serves as a secure holding point for the funds, which are subject to legal and administrative scrutiny.
The Income Tax Department is then responsible for preparing an appraisal report. This critical document must be finalized within 60 days post-raid and includes comprehensive details about the seized funds, as well as the tax obligations the assessee is believed to have evaded.
This appraisal report is forwarded to the central circle of the department for a thorough assessment. During this phase, all related cases of tax evasion involving the individual or firm are examined. Importantly, the accused has the opportunity to present their case and challenge any claims made against them.
Upon completion of the investigation, the department issues an assessment order detailing the tax liabilities. The assessee can either accept the order and settle the case or contest the findings through an appeal process, which may escalate to the Supreme Court.
Throughout this period, the seized funds remain in the treasury account. In the event of a conviction, the money is attached, while acquittal results in its return. It is essential to note that only sums that cannot be substantiated as legitimate earnings are seized.
Under Section 132B of the Income Tax Act, the assessee has the right to request the release of seized assets within 30 days following the raid. The decision to release the funds is at the discretion of the adjudicating income tax officer, based on specific criteria met by the assessee.
The comprehensive assessment after a raid typically wraps up within 12 months from the end of the financial year in which the raid was conducted. Although there is no fixed time frame for how long the seized funds may remain unused in the treasury accounts, resolutions often align with the assessment order.
If the entire seized amount remains unaccounted, the income tax officer issues a notice to the assessee, seeking an explanation regarding the source of the funds. Moreover, the resolution of the tax assessment may lead to concurrent investigations by other law enforcement agencies, such as the Enforcement Directorate, especially if there are indications that the funds could be proceeds of crime.
Q1. What happens to seized cash during an income tax raid?
Answer: Seized cash is counted by independent bank officials and deposited into a treasury account of the Income Tax Department for legal scrutiny.
Q2. How long does the Income Tax Department have to prepare an appraisal report?
Answer: The appraisal report must be finalized within 60 days after the raid and details the seized funds and tax obligations.
Q3. Can the taxpayer contest the assessment order?
Answer: Yes, the taxpayer can accept the assessment order or appeal against it, potentially reaching the Supreme Court.
Q4. What legal rights does the taxpayer have regarding seized assets?
Answer: Under Section 132B, the taxpayer can appeal for the release of seized assets within 30 days post-raid.
Q5. Are there any further investigations after the tax assessment?
Answer: Yes, other law enforcement agencies may initiate investigations if the funds are suspected to be proceeds of crime.
Question 1: What is the initial step taken by bank officials during an income tax raid?
A) They prepare the appraisal report.
B) They count the seized cash.
C) They issue a notice to the assessee.
D) They release the funds.
Correct Answer: B
Question 2: Within how many days must the appraisal report be finalized after a raid?
A) 30 days
B) 60 days
C) 90 days
D) 120 days
Correct Answer: B
Question 3: What can taxpayers do if they disagree with the assessment order?
A) Ignore it
B) Accept it
C) Contest it through an appeal
D) Request a refund
Correct Answer: C
Question 4: Under which section can taxpayers appeal for the release of seized assets?
A) Section 132A
B) Section 132B
C) Section 133
D) Section 134
Correct Answer: B
Question 5: What happens to the seized funds if the taxpayer is convicted?
A) They are returned immediately
B) They are attached
C) They are released
D) They are frozen
Correct Answer: B
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