The Lok Sabha passed the Finance Bill, 2017 with a voice vote on March 22 with a string of new legislations. One of the provisions added to the bill which is a nightmare for even an honest, taxpaying citizen is that taxmen are now free to raid our homes on a whim. If this doesn’t scare you enough, the inability to challenge the raid before the tax tribunal, will. There are many contentious aspects in the bill. They are elaborated below.
Taxmen need not provide any reason for the raids
As per section 132 of the Income Tax (IT) Act, 1961, to conduct a search and seizure operation, authorities must have “reasons to believe” that a person is in possession of undisclosed assets or is unwilling to comply with the summons to provide the required information to the IT department.
However, amendments to this provision clarify that authorities need not disclose the ‘reasons to believe’ to the person being raided and the Income Tax Appellate Tribunal as well.
Any property can be provisionally seized during a raid
The IT Act, 1962, previously granted the authorities the right to seize only those assets that formed the subject of the raid or were in the books of accounts. Meaning, a baseless raid did not cause you any loss of property.
But not anymore.
The new legislations provide taxmen with the authority to provisionally seize any property of the person being raided for the vague reason – “interest of the revenue”. The property could be your personal asset or your business asset, thus rendering you bankrupt. A clause added to this absurd provision is that the provisional seizure is only for six months.
The legislation provides no provisions on how the seized property will be safeguarded during those six months, the procedure of return of the property to the owner, or what needs to be done if the property is not returned or is damaged.
Surveys on charities permitted
Tax authorities now have unrestricted access to raid any property holding a charity event, to conduct ‘surveys’ of the property, and also demand the proprietor or any employee to provide any information they want.
Furthermore, any person present at the place, even a volunteer assisting the charitable event, can be questioned to provide any information regarding the books of accounts of the charity or any other information
The Logical Indian take
As a money bill, any suggestions made to the new legislation by the Upper House of the Parliament are only a formality. Therefore, it is only a matter of time before the bill becomes a law.
Every citizen of this country, including honest taxpayers, should be terrified of its repercussions.
Firstly, it violates the privacy of the person being raided as the taxmen need not provide any reason for the search. Please note that the provision does not say that reasons do not exist, but clarifies that they need not be mentioned during the raid.
So tax authorities can simply break the lock of your house and shoulder their way in, even when denied access to your private property. And there is no escaping the harassment because their “search and seizure” cannot be challenged even before the tax tribunal.
The bill gives the taxmen the right to act with impunity and the only way to challenge the validity of the raid is to file a writ before the High Court or the Supreme Court. And we’re all aware how quickly our judicial system resolves issues.
Not to forget, if you have a previously pending case where you had challenged a search operation, all your efforts in the case have been in vain because the amendment is retrospective, going back to 1962.
The set of proposals also gives the IT department the authority to temporarily confiscate any property, personal or business, of the person being raided on grounds of “interest of revenue”. As you may have guessed, “interest of revenue” is a vague term that has no legal explanation. Even though the provision mentions ‘6 months of provisional seizure’, your entire livelihood could come to a halt due to its ambiguity.
Unrestricted rights to enter any property and questioning any person regarding a charitable event being held makes the bill even more draconian than it already is. Tax authorities can abuse/harass any charity if they feel like and disrupt its activities.
It is essential, as taxpaying citizens of this country, that we understand the dangers of the bill. The government claims that the amendments are a crackdown on India’s black money market but they’re actually nothing more than a breach of our privacy. Its potential to abuse even honest taxpaying citizens is staggeringly high. Tax authorities can use the provision to feed their personal grudges against anyone, and someone who has the right friends in the department can easily escape its wrath. Similarly, corrupt practices might lead to a raid in the house of an honest taxpayer just because of someone else’s personal vendetta.
You can read the contents of the Bill here: prsindia