New CBDT rule on I-T raids opens a pandora’s box

livemint.com:

Hindi movie Raid was loosely based on the income tax (I-T) search operations at the house of a Kanpur-based businessman. In the movie, the protagonist and his team were able to find undisclosed cash and jewellery hidden in the civil structure of the premises. In reality, such a discovery is incriminating enough to justify the additions in the tax assessment pursuant to the search action. But what happens if no incriminating material is found during the search? Is any addition in the assessment then justified? The answer is clearly in the negative.

A ‘search’ action is considered an extreme measure of tax administration and its legislative mandate is given in section 132 of the Act. If the competent I-T authority, in consequence of any information in its possession, believes that any person is having any undisclosed income in the form of money, bullion, jewellery, or other similar valuables, then it can issue a search warrant against such person, and enter and search such person’s business and residential premises. During such searches, I-T officials are empowered to break open the lock of any door, locker, safe, vault, almirah, or other civil structure in the premises and impound or seize the valuables found therein.

Until fiscal 2021-22, the assessments pursuant to such searches were governed by separate provisions of sections 153A and 153C of the Act and could be reopened for past six years. From fiscal 2022-23 onwards, search related assessments have been subsumed in the new reassessment regime under sections 147-151 of the Act. The appellate authorities have recognised and held that, after subjecting the taxpayer to the extreme invasion of privacy and trauma and hardship of a search action, I-T authorities are