Explained | What is Income Tax survey and how is it different from I-T search?

The Income Tax Department continued the survey operation at BBC offices in Mumbai and Delhi for the second day on February 15

The Income Tax (I-T) Department continued its survey operations at BBC offices in Mumbai and Delhi for the second day on Wednesday.

Tax officials are investigating an alleged tax evasion by the British broadcaster in India. The move, however, has drawn scathing criticism from the Opposition over its timing, which comes weeks after the broadcaster aired a documentary critical of the Prime Minister Narendra Modi's handling of the 2002 Gujarat riots.

As the survey continues, let us understand what an Income Tax survey is and how it is different from a search or a raid.

Also Read — BBC 'survey': India’s latest attack on press

What is an Income Tax survey?

A survey, like the name suggests, is an exercise solely to collect information such as books of account, cash, stock, or other valuable article or thing, from companies, which the Income Tax Department believes could aide in any proceeding under the I-T Act. The sole purpose of the survey operation is to uncover hidden or unreported income and property.

These surveys are carried out under various provisions of the Income Tax Act, 1961, such as Section 133A, which grants the I-T Department the power to enter any place of business or profession or charitable activity within their jurisdiction to verify the books of account and other documents to understand a company's financial position. This gives the I-T officials an insight into whether a person or a business has correctly maintained books of accounts.

The provisions introduced by the Finance Act, 2002, allow I-T officials to "impound and retain any books of account or other documents" for up to 15 days. To hold on to the documents any longer, the officials need to seek an approval of a senior officer, including the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner.

Also Read — BJP slams BBC's 'venomous' reporting on India, says I-T department should be allowed to do its work

And what is an Income Tax search?

In case of a search, Income Tax officials can enter and search any building, place, vessel, vehicle or aircraft where they have a reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept.

As per the Section 132 of the I-T Act, during a search, the officials can "break open the lock of any door, box, locker, safe, almirah" as well as "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". The officials can also seize any such books of account, other documents, money, bullion, jewellery or other valuable article.

An I-T search can even be carried out when "any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding" under the Act.

It is commonly referred to as a "raid" but there's no mention of the term in the I-T Act of 1961.

So what is the difference between a "search" and a "survey"?

An I-T search is a more serious proceeding than a survey. I-T officials can only inspect books of account and verify cash and inventory during a survey; however, in a search, they can inspect the entire premises to unravel undisclosed assets with the help of police.

While a search can take place anywhere within the jurisdiction of the authorised officer, a survey can only be conducted within the limits of the area assigned to the officer — or at any place occupied by any person in respect of whom he exercises jurisdiction — at which a business or profession, or an activity for a charitable purpose, is carried on.

In addition, a survey can be carried out only during working hours on business days, whereas a search can happen on any day after sunrise and continue until the procedures are completed.