156 Bags of Cash, Total ₹200 crore Seized in Income Tax Raid: A Complete Guide

Income Tax Raid in India

In India, income tax raids are carried under the provisions of the Income Tax Act of 1961. It grants the Income Tax Department the ability to conduct search and seizure of operations in suspicion of undisclosed income or assets not stated in tax returns.

These search and seizure operations are governed by two official sections:

Section 132

Section 132 allows the department to execute raids on a reasonable suspicion that you possess income or assets, not declared in tax assets.

Section 132A

Section 132A allows the department to execute raids on a valid belief that you possess money, bullion, gold or anything that represents hidden income or assets.

Also, during an Income Tax raid, authorities inspect financial records, accompanied by law enforcement agents. This helps to guarantee appropriate tax payments, assuring accurate bifurcation of the legal and illegal holding of income. 

The Rights You Have During An Income Tax Raid

Whenever an Income Tax raid happens at your home, business or anywhere you must check whether the agents hold an official search warrant adhering to Section 132 and Section 132A, to avoid a fake Income Tax raid.

Officially,

1. You have the right to ask for an official search warrant
2. You have the right to remain quiet or silent and not incriminate yourself
3. You have the right to seek lawyer’s assistance to record the seized inventory

Assets That Can Be Seized During An Income Tax Raid

Assets that are associated with undisclosed income can be seized by authorities during an Income Tax raid including cash, documents, jewellery, bullion and other valuable equipment.

Assets That Cannot Be Seized by the Income Tax Department

Assets that are associated with reported income with explained tax returns cannot be seized by authorities during an Income Tax raid including cash, stock-in-trade, documents, jewellery, bullion and other valuable equipment.

However, verified assets are subjected to sale for the recovery of tax dues.

(Source: Wikipedia 1)

(Official Source: Income Tax Department of India 2)

(Official Source: Income Tax Department of India 3)

Case Study: ₹200 Crore Odisha Income Tax Raid, Jharkhand

In December 2023, a huge financial event occurred in Odisha that caught the attention of both the political and general public. This case study delves into the complexities of the event wherein an Income Tax raid was undertaken on the facilities of an Odisha-based Congress MP, with a focus on the unfolding events, reactions and broader consequences.

(Official Source: PTI 2)

Background of ₹200 Crore Odisha Income Tax Raid

The genesis of this case study is inspired by Prime Minister Modi’s tweet on X highlighting an Income Tax raid report. It is associated with Congress Rajya Sabha MP Dhiraj Prasad Sahu, wherein massive hidden income and assets not stated on tax returns were discovered.

Who is Dhiraj Sahu?

Dhiraj Sahu has been a Congress Member of Parliament (MP) from Jharkhand in the Rajya Sabha since 2010. He is also a businessman with ties to Baldev Sahu Infra Pvt Ltd group of company of Boudh Distilleries, both being raided by the Income Tax Department of India. 

With a family background associated with the Congress party, the raid has put Sahu under considerable scrutiny with BJP accusing Congress of corruption. Moreover, PM Modi underlined the happening in an official tweet, leading to igniting a political storm and calls for accountability.

This further led to the resignation of Jharkhand Chief Minister Hemant Soren. 

The Timeline of Events in the ₹200 Crore Odisha Income Tax Raid

1. The Income Tax Department conducted raids in Odisha, Jharkhand and West Bengal in several locations related to the distillery group. 
2. The raid included a wide range of locations, including naxal-affected districts, providing several obstacles for the officers in charge.
3. Videos showing bundles of notes within almirahs went viral, laying the groundwork for a lengthy probe.
4. Income Tax agents uncovered 156 bags of cash, complicating the counting.
5. The three dozen counting machines encountered difficulties when the volume of money surpassed its capabilities day by day.
6. With counting still proceeding, the total money recovered has reached ₹220 crore.
7. PM Modi emphasised returning every looted money to the public in the social media post.
8. His mention of the ongoing raid ignited political controversy, with several union ministers verbally attacking the Congress.
9. The Congress Party backed MP Dhiraj Prasad Sahu, underlining the longevity and continuity of the party. 

Challenges in Raid Faced by the Income Tax Department

Since the amount of cash, jewellery, bullion and other valuable assets exceeded the prediction, the counting procedure was delayed due to the restricted capacity of the counting devices, which required precise attention to detail.

Moreover, the raids were conducted in naxal-affected areas which caused another challenge for the Income Tax Department, necessitating a careful approach. 

Conclusion of the ₹200 Crore Odisha Income Tax Raid Case Study 

Tax raids are critical to guarantee financial openness within a country. This event illustrates the government of India’s commitment to tackling tax evasion. As the mission continues, there can be more cash to count but one thing is for sure, always be updated with the rights. 

Understanding the rights and protected assets is also critical for individuals and corporations subject to such inquiries. This can help you save a few of your valuable assets and also potentially from a fake Income Tax raid.

What is an Income Tax Raid?

An income tax raid is a legal search and seizure operation carried out by the Income Tax Department of India. It is carried out to uncover and disclose hidden income or assets of an individual under suspicion of holding black money with unaccounted tax returns. 

An income tax raid is authorised by the requirements of official documents under the Income Tax Act of 1961. This allows the Income Department of India to examine premises, seize relevant assets and scrutinise financial records. 

The overall intention of an income tax raid is to ensure tax compliance and identify potential tax evasion. 

(Official Source: Income Tax Department of India 4)

What is Income Tax Raid Section 132?

Section 132 of the Income Tax Act legally allows the Income Tax Department of India to search a taxpayer’s premises. This section defines the particular rights granted to the tax authorities allowing them to seize certain assets including money, bullion, jewels and other valuable items.

What Happens to the Raided Money by the Income Tax Department?

The Income Tax Department of India takes custody of the seized money, bullion, jewellery and other valuable items. These seized items are then placed in sealed boxes and kept in secured locations, potentially SBI or Treasury strong rooms. 

The seized items can be recovered if the aggrieved party presents reliable evidence attesting to the legitimate source of the funds and tax payment. In the absence of proof or claims, the money is credited to the central government after the necessary legal procedures. 

(Official Source: I-T Department 5)

(For More Info Official Source: Income Tax Department of India 6)