Reasons why the Income Tax Department conducts Tax Raids and Seizures

Reasons why the Income Tax Department conducts Tax Raids and Seizures

The Income Tax Department conducts various tax raids to ensure whether the people have paid their taxes or not. It is mainly done to stop the process of tax evasion. This is a hectic and troublesome process for those who are going through this. It is a matter of anxiety and discomfort. It is the process which gives the IT Department the right to search any house, office, etc and seizure the valuables. Its purpose is to stop the accumulation of black money. We all should join our hands to stop tax fraud since it is no less than a crime and spread this awareness all over and everybody pays his/her tax on time.

Following are some of the reasons for which the Income Tax Department conducts tax raids:

  1. Evidence which indicates unaccounted income/assets with respect to the  tax paid by the assessee or where the expected concealment is more than Rs. 1 crore.
  2. Evidence which indicates hidden unaccounted assets that arises out of terrorism, smuggling, fraud, fake currency, etc.
  3. Evidence of lavish expenses in marriage.
  4. Information on tax evasion through rumors.
  5. Reports on Tax Evasion received from Ministry of Finance & Investigation Report by the Intelligence wing of the department.
  6. Report about tax seizure by the Police and other law enforcement agencies of the State and Central governments.
  7. Verified Information from Income Tax Assessment Records.
  8. Information given by the relatives, employees, business associates which is related to the assessee’s works
  9. Evidence of copy of books of accounts.
  10. If the assessee holds large amount of undisclosed cash, undisclosed income at banks, home, offices, business premises, etc.
  11. If the person shows less amount consistently.
  12. Contradictory information to the records.
  13. Suspicious business activities, transactions, movement to another country, etc.
  14. If the assessee is caught doing illegal business activity on social media.
  15. Information from government departments.
  16. If the assessee’s Balance Sheet and Statement of Affairs does not show cash, assets, investments, etc.
  17. Illegal investments in real estate and properties.
  18. Non disclosure/omission of the turnover in VAT, sales tax, service tax, etc.
  19. Transactions done from Companies that do not exist at all.
  20. Discrepancy in Inventories.
  21. Discrepancy in cash, debtors, creditors, and personal accounts.
  22. Income Tax Returns not filed after so many years.
  23. A person holding multiple PANs in different cities.

Related Post: Investments that can be made under Section 80C

There are numerous reasons to be named which prompt the Income Tax Department to conduct tax raids. But one thing is clear that any illegal activity is a call for a lot of problems. So, it is better to pay taxes on time and escape all the troubles.

For any help on ITR Filing feel free to consult the tax experts at Taxraahi. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return and Bulk Return.

By | 2018-08-08T07:49:49+00:00 July 14th, 2016|Categories: Income Tax Guide|0 Comments

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