Income Tax Raid, Survey and Search — How the Department Picks Targets (AIS, SFT, GST Data, Informants), the Difference Between a Section 133A Survey and a Section 132 Search, Your Rights and Duties During the Action, Jewellery and Cash Limits, Block Assessment at 60%, and How to Prepare Before It Ever Happens
132 vs 133A
Search and seizure (warrant, any place, seizure) versus survey (business premises, business hours, no seizure of cash)
500 g / 250 g / 100 g
Gold jewellery per married woman / unmarried woman / male member not seized under CBDT Instruction 1916
60%
Flat tax on undisclosed income of the block period for searches initiated on or after 1 September 2024
₹5 crore
Maximum reward to an informant under the Income Tax Informants Reward Scheme 2018
Guide by BookMyCA's Chartered Accountants · pan-India serviceLast verified against official guidelines on 6 September 2026.
Video Explanation & Insights
Why income tax raids happen, who informs the department, and why notices come
4 videos on this topic
How the department finds you
- •AIS and the Statement of Financial Transactions (SFT): banks, registrars, mutual funds, brokers, credit-card issuers and companies report cash deposits above ₹10 lakh, property above ₹30 lakh, credit-card spends above ₹1 lakh in cash or ₹10 lakh otherwise, fixed deposits above ₹10 lakh, share and fund investments above ₹10 lakh, and foreign remittances — the return is matched against all of it automatically.
- •GST–income tax data sharing: turnover in GSTR-3B versus the ITR, e-way bill volumes, and TDS/TCS in 26AS; a mismatch above thresholds generates a computer-selected case under CASS.
- •Project Insight and the risk engine: social-media and property listings, luxury purchases, foreign travel, and the network of related parties.
- •Informants: the Income Tax Informants Reward Scheme 2018 pays up to ₹5 crore for specific information on undisclosed income (and up to ₹1 crore for benami property) — employees, partners, competitors and ex-spouses are the usual sources the 2017 video called your 'khabri'.
- •Cash: the FIU-IND cash-transaction reports, section 269ST breaches, demonetisation-era deposits, and cash found in vehicle checks during elections.
- •Third-party searches: a search on a supplier, buyer, builder or hawala operator produces documents naming you — section 158BD lets the department proceed against the 'other person'.
Survey (133A) and search (132) compared
| Point | Survey — section 133A | Search and seizure — section 132 |
|---|---|---|
| Authority | Assessing officer or inspector authorised by the Joint/Additional Commissioner; no warrant | Warrant of authorisation from the Principal Director / Director / Commissioner on 'reason to believe' |
| Where and when | Business or professional premises (and places where books are kept), only during business hours | Any building, vehicle, vessel or locker, at any time; the team can break open doors and lockers |
| What they can do | Inspect books, verify cash and stock, place identification marks, impound books (with reasons, for up to 15 days without approval), record statements (not on oath) | Search persons, seize cash, jewellery, documents, digital data; record statements on oath under 132(4); restrain (prohibitory order) movable property that cannot be removed |
| Cash and jewellery | Cannot be seized in a survey | Can be seized if unexplained; stock-in-trade is not seized but inventoried |
| Aftermath | Findings feed the regular or reopened assessment; penalty for unexplained items | Block assessment under Chapter XIV-B for the six preceding years plus the current period |
| Refusal to cooperate | Powers of section 131 (summons) can be invoked | Section 275B prosecution for obstructing access to electronic records; false statements are perjury |
During the action
- •Ask to see the warrant and the identity cards; note the names of the authorised officers and the two independent witnesses (panchas). A search without a valid warrant is illegal.
- •You may call a lawyer or CA, but the search does not wait for them; a doctor can be called for a medical need; children can go to school after their bags are checked; women are searched only by women officers.
- •Do not sign blank papers or a statement you have not read; you may add your own remarks. A statement under 132(4) is evidence — answer what you know, say 'I will verify from records' where you do not, and retract in writing promptly if made under pressure (courts accept a retraction supported by evidence).
- •Take copies or extracts of seized documents (allowed under 132(9)) and the panchnama with the inventory; verify the inventory of cash and jewellery before signing.
- •Jewellery within CBDT Instruction 1916 (11 May 1994) — 500 g per married woman, 250 g per unmarried woman, 100 g per male — is not seized even without bills; declare bills, wealth-tax returns of earlier years, gifts and inheritances for the rest.
- •Cash must be explained from the cash book of the business and the household withdrawals; unexplained cash is seized and, if the tax liability is not met, adjusted after assessment.
- •Do not destroy, hide or move records after the team arrives — that converts a tax problem into a criminal one.
Assessment, tax and penalty after a search
| Item | Rule |
|---|---|
| Block assessment | For searches initiated on or after 1 September 2024, Chapter XIV-B (reintroduced by the Finance (No. 2) Act 2024): one consolidated assessment of 'undisclosed income' for the block period — the six assessment years before the search year plus the period up to the search — to be completed within 12 months |
| Tax rate | 60% flat on undisclosed income of the block period, plus surcharge and cess; no deductions or set-off of losses against it |
| Penalty | 50% of the tax on undisclosed income (section 271AAD as inserted), unless the income is declared in the block return and tax paid |
| Regular years | Income already disclosed in filed returns continues under the normal assessment; only the undisclosed part goes to the block |
| Unexplained cash, credits, investments | Sections 68, 69, 69A–69D taxed at 60% plus 25% surcharge and cess under section 115BBE (about 78%), with penalty under 271AAC |
| Prosecution | Section 276C for wilful evasion; 277 for false statements; 278 for abetment; compounding is possible for most offences on payment of compounding charges |
| Release of seized assets | Cash is adjusted against the liability; jewellery and other assets released after assessment or on furnishing security, on application under 132B |
Making the business raid-proof
- 1Keep a daily cash book and reconcile physical cash monthly; keep household withdrawals proportionate to lifestyle — the department estimates expenditure from the cars, schools and travel it can see.
- 2Match stock to the books: quarterly physical verification, GST returns that agree with the sales register, e-way bills for every dispatch.
- 3Document every large receipt — loans with agreements and bank trail, gifts with deeds and the donor's capacity, sale proceeds with registered deeds — and report them in the return's schedules.
- 4Reconcile AIS every quarter and respond to feedback; file returns and audit reports on time; pay advance tax so the return is not the first the department hears of the income.
- 5Family jewellery: keep bills, valuation reports, wills and the earlier wealth-tax returns in one file; declare foreign assets and bank accounts in Schedule FA — non-disclosure is a Black Money Act offence with a ₹10 lakh penalty per year.
- 6For partners and directors: keep personal and business money separate; unexplained credits in a partner's account are the commonest route from survey to search.
Raids and surveys: questions we are asked
No — a survey is limited to business premises during business hours. A search under section 132 can cover the residence, with a warrant.
Up to 500 g per married woman (250 g unmarried, 100 g per male) is not seized under the CBDT norms; the rest is explained with bills, inheritance or earlier returns.
A disclosure in the 132(4) statement, followed by the block return and payment, avoids the 50% penalty on that income. Take advice before quantifying — a wrong figure is hard to retract.
The block period covers six assessment years before the search plus the current period; reassessment for other reasons is limited to three years (ten years for escaped income of ₹50 lakh or more, with a tighter regime since September 2024).
Yes — laptops, phones, cloud accounts and accounting software; refusing to provide passwords invites prosecution under 275B.
Yes — presence during the action, statement preparation, retraction where needed, block-assessment returns and appeals.