The Central Board of Direct Taxes (CBDT) has introduced the revised Search and Seizure Manual 2025.
The Search and Seizure Manual has been an instrumental tool for tax authorities since its first publication in 1985. Over the years, it has undergone several revisions, with major updates in 1989 and 2007. However, given the significant advancements in technology, the manual required another overhaul to align with the current trends in digital evidence handling and the increasingly complex financial activities of taxpayers.
The Manual 2025 addresses the current challenges faced by tax officers, particularly the rise in digital transactions and the role of technology in investigations. Digital evidence, ranging from financial records to personal data, has become a primary aspect of modern tax evasion. The manual emphasizes the sensitivity required when handling such data, ensuring that officials are well-equipped to navigate both technological and legal complexities.
Key Features of the Search and Seizure Manual 2025
- Legal Framework and Authorizations:
The manual continues to operate within the provisions of Section 132 of the Income-tax Act, 1961, which grants tax authorities the power to conduct searches when they have reason to believe that tax evasion has occurred. In addition, the document outlines the role of officers authorized to issue warrants, such as the Director-General of Income Tax (Investigation) and various Deputy Directors. Importantly, the Manual 2025 highlights the necessity of ensuring that all actions comply with the constitutional principles laid out in the landmark judgments, which emphasize reasonable belief and safeguards against arbitrary power. - Technological Integration:
One of the most significant updates in this edition of the manual is the integration of technology in tax investigation procedures. In the past decade, digital data has surged, and the Manual 2025 addresses how investigators should manage digital evidence. This includes data from electronic devices, social media platforms, and online financial transactions, all of which may contain vital evidence of unaccounted income or assets. - Preparation and Execution of Searches:
The preparation phase for search and seizure operations is now more comprehensive, with a focus on gathering intelligence from both internal and external sources. The manual outlines detailed procedures, such as gathering data from the Income Tax Business Application (ITBA) system, which contains extensive taxpayer records, and the Financial Intelligence Unit (FIU-IND), which monitors suspicious financial transactions.
Logistics for search operations have been fine-tuned, with specific guidelines on the coordination of manpower, transport, and security arrangements. The manual also mandates the use of advanced tools like digital intelligence platforms and dark-web monitoring systems to track illegal activities across the internet. - Role of External Agencies:
The Manual 2025 emphasizes the importance of coordination with other law enforcement agencies such as the Enforcement Directorate (ED), Customs, and the Central Bureau of Investigation (CBI). This is particularly relevant for cases involving complex financial crimes that may span across jurisdictions or involve money laundering and foreign assets. Information sharing with foreign tax authorities through mechanisms like the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) is also included. - Post-Search Protocols:
Following a successful search, the manual outlines the next steps in processing the seized materials. This includes the preparation of an appraisal report, the handling of valuables like bullion and jewellery, and the securing of digital evidence. The manual stresses the importance of maintaining the integrity of seized data and assets through proper chain-of-custody documentation and the protection of personal data as per the Digital Personal Data Protection Act, 2023. - Penalties and Prosecutions:
The manual also touches on the penalties and legal actions that can arise from search operations, particularly in cases where tax evasion, money laundering, or violations under the Prohibition of Benami Property Transactions Act (PBPT Act) are detected. Detailed procedures are provided for reporting violations, which may lead to criminal charges and prosecution.
Improving Accountability and Transparency
An important feature of the Search and Seizure Manual 2025 is its push for greater accountability in the execution of search and seizure operations. This is achieved through the detailed documentation of each step of the process, from the issuance of the warrant to the final handing over of seized goods. The manual requires that search teams provide a two-hourly report (THR) during operations, ensuring that any irregularities can be quickly addressed. A panchnama (official report) documenting all actions during the search is also a mandatory step.
Additionally, the manual outlines procedures for safeguarding the rights of the person being searched, ensuring that the process remains fair and transparent.
Conclusion
The Search and Seizure Manual 2025 represents a significant step forward in the modernization of India’s tax enforcement system. By integrating advanced technology, enhancing coordination with other agencies, and emphasizing fairness and transparency, the manual provides the Income Tax Department with the tools necessary to tackle modern financial crimes effectively.
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