An income tax raid is a search under section 247.

The powers

What the search party may do, and what it may not.

Section 247(1) lists seven powers. They are worth reading in the order the statute puts them, because the sequence of a search follows them, and because two of the seven are new.

Your phone, your email and your cloud account are inside the power

This is the largest practical change between the two Acts, and it is not achieved by any words about digital searches in section 247 itself. It is achieved by a definition. Section 261(e) defines a computer system to include the remote server or cloud server or virtual digital space, and section 261(j) defines virtual digital space to include email servers, social media accounts, online investment accounts, trading accounts and banking accounts, any website used for storing details of ownership of an asset, remote and cloud servers, digital application platforms, and any other space of a similar nature. Read section 247(1)(ii) and (iii) with those definitions and the position is plain: a refusal to give an access code is not an obstacle the officer has to work around, and the absence of one is a case for overriding it.

Stock-in-trade cannot be seized

The bar appears twice. Section 247(1)(vii) excepts stock-in-trade from the seizure power, and section 247(4)(a)(i) excludes it from the deemed seizure route described below. What the officer does instead is make a note or an inventory under section 247(1)(vi). The wording has widened since the 1961 Act, where the proviso to section 132(1)(iii) barred seizure only of bullion, jewellery or other valuable article or thing being stock-in-trade; the 2025 Act simply excepts stock-in-trade of the business. For a jeweller, a bullion dealer or a builder holding unsold inventory, the distinction between stock-in-trade and a personal asset is the whole argument, and it is settled at the premises, in the inventory, not afterwards.

Personal jewellery: the 500, 250 and 100 gram limits

CBDT Instruction No. 1916 dated 11 May 1994 (F.No.286/63/93-IT(INV.II)) directs that, in the case of a person not assessed to wealth-tax, gold jewellery and ornaments need not be seized to the extent of 500 grams for each married lady, 250 grams for each unmarried lady and 100 grams for each male member of the family, and permits the authorised officer to leave a larger quantity having regard to the status of the family and the custom and practice of the community, reporting that decision in the search report. A detailed inventory of everything found must be prepared in every case. Although the Instruction is directed at seizure, the Gujarat High Court in CIT v. Ratanlal Vyaparilal Jain (2011) 339 ITR 351 held that it takes account of the quantity of jewellery normally held in an Indian family, so that unless the Revenue shows otherwise the source of jewellery within those limits stands explained. Two cautions: not every High Court reads it that way, and the Instruction was issued under the Income-tax Act, 1961. Whether it applies of its own force to a search under section 247 has not yet been tested.

Deemed seizure, and a restraint order, are different things

Where it is not possible or practicable to take physical possession of a valuable article and remove it, because of its volume, weight, other physical characteristics or dangerous nature, section 247(4)(a) allows an order to be served that it is not to be removed or dealt with, and section 247(4)(a)(ii) provides that this is deemed to be a seizure under section 247(1)(vii). Where seizure is not practicable for any other reason, section 247(4)(b) allows a restraint order over books, documents, an asset, a bank locker, a bank account or a computer system, and section 247(4)(b)(iii) provides that this is not a seizure. The difference decides which consequences follow. A restraint order has a hard life: section 247(4)(b)(ii) provides that it shall not remain in force for more than sixty days from its date. Diarise that date on the day the order is served.

The document that starts the clocks

What is a panchnama, and why does its date matter?

The panchnama is the record of the search, drawn by the authorised officer in the presence of witnesses, listing what was found, seized, restrained or recorded, with the seizure list and the inventories annexed to it. It is signed by the witnesses and by the person in occupation, and a copy is given at the conclusion of the search.

The word itself is borrowed from criminal procedure, and the Income-tax Act uses it sparingly. In the Income-tax Act, 2025 it appears in one place: section 301(d), in the interpretation provision for block assessment, which deems the last of the authorisations to have been executed on the conclusion of the search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued, irrespective of whether or not any seizure is recorded in such panchnama. Section 247 itself never uses the word, and section 301 operates only for the purposes of this Part, meaning block assessment. The bridge for the search provisions themselves is section 261(f), the interpretation clause for that Part, which defines the date on which the last of the authorisations for search was executed as the date of conclusion of the search recorded in the last panchnama. Both roads lead to the same document. In the 1961 Act the equivalent deeming sits in Explanation 1 to section 132, substituted by the Finance Act 2023 with retrospective effect from 1 April 2022, and it governs the windows in sections 132(9A), (9B) and (9D).

That is why the date on the last panchnama is the most consequential date on the file. It is not the date the officers first arrived, and it is not the date of the assessment order. Everything below runs from it, or from the date the search was initiated, and the two are often weeks apart.

The sequence after the search, the abatement of pending assessments, Form ITR-BN and the block return are set out at length in After an income tax search: from the panchnama to the block notice.

At the premises

Your rights during a search.

The Income Tax Department publishes its own statement of the rights and duties of a person searched, tied to the Taxpayers’ Charter, and the rest comes from the Act and the search rules. The summary below draws on all three. It is worth knowing, because most of it can be put to the search party without argument; note that the Department’s page is still written on the Income-tax Act, 1961.

• To be shown the valid warrant before the search begins, and to verify the signature, the seal, the name and the premises. A copy of it is not supplied.
• To verify the identity of every officer in the search team, and to deny entry to anyone who will not establish it.
• To have the members of the search party personally searched before and after the search, so that nothing is planted or removed; a personal search of a lady officer is to be done by a woman of the household, with decency.
• To continue ordinary daily activities so far as they do not obstruct the search, to take meals at the usual times and to perform religious worship.
• To medical assistance from a doctor of choice, including hospitalisation if advised.
• To let children go to school or tuition, after the search team has checked their bags.
• To have an authorised representative present, except where personal appearance is required for a summons or for the recording of a statement.
• To be present, personally or through a representative, throughout the search proceedings.
• To make copies of, or take extracts from, seized books and documents.
• To have at least two respectable and independent residents of the locality present as witnesses to the search.
• To inspect the seals placed on receptacles, and to affix your own seals on packages containing seized assets.
• To a copy of the panchnama with its annexures at the conclusion of the search.
• To a copy of any statement recorded from you before it is used against you in assessment, penalty or prosecution proceedings.
• The authorised officer has no power of arrest in the course of a search. Arrest and detention appear elsewhere in the Act, in the recovery machinery and on prosecution, but not as part of a search.

Two points often stated loosely elsewhere. The presence of two or more respectable and independent witnesses is also an obligation cast on the authorised officer by the search rules, so it is not something that has to be asked for. And the duty to sign the warrant is an acknowledgement that it was shown, not consent to anything. On the other side, the list of duties is equally real: free ingress on production of a valid warrant, identification of receptacles and provision of keys and passwords, explanation of the ownership of assets and documents, and truthful answers.

The assessment that follows

Which scheme applies turns on one date.

The date the search was initiated decides which assessment scheme governs, not the date of the assessment order and not the year being assessed. Four windows are live at the moment, because appeals from all of them are still running.

Each scheme carries its own limitation, its own approval requirement, its own return, its own rate and its own penalty provision, and a ground that is decisive under one is unavailable under another. The commonest error in a file that arrives late is a submission built on section 153A jurisprudence for a search that fell after 31 August 2024, or a section 148A argument for a search-origin notice where section 148A never applied at all. The doctrine is set out scheme by scheme on the search assessments page.

What it costs if undisclosed income is determined

For a search initiated on or after 1 April 2026, undisclosed income of the block period is charged at 60 per cent under section 192(1) of the Income-tax Act, 2025, increased by any surcharge levied by a Central Act (section 192(2)). Section 297 excludes interest under sections 423 to 425 and penalty under section 439 for the block period. Section 298(1) charges simple interest at 1.5 per cent a month where the block return is furnished late or not at all, and section 298(2) imposes penalty at 50 per cent of the tax on the undisclosed income determined. That penalty is not imposed where the block return is furnished, the tax is paid and evidence of payment filed with it, and the returned income is not appealed (section 298(3)); where income above the returned figure is determined, the penalty applies only to the excess (section 298(4)).

For a search initiated before 1 September 2024, penalty ran under section 271AAB of the 1961 Act on the undisclosed income of the specified previous year. The scale depends on a second date. For a search initiated on or after the assent to the Taxation Laws (Second Amendment) Bill 2016, in December 2016, and before 1 September 2024, section 271AAB(1A) applied at 30 per cent where the income was admitted in the section 132(4) statement with the manner of earning specified and substantiated, the tax and interest paid and the return furnished, and at 60 per cent in any other case. For a search initiated between 1 July 2012 and that assent, section 271AAB(1) applied on a lower and differently structured scale. The section was given a sunset at 1 September 2024 by the Finance Act 2025, with retrospective effect from that date; there is no equivalent provision in the 2025 Act, and penalty in search cases now runs only through the block scheme.

Gujarat

The authorities that govern a search matter in Ahmedabad.

An appeal from a search assessment in Ahmedabad is heard by the Commissioner (Appeals) and then by the Ahmedabad benches of the Income Tax Appellate Tribunal, and it is bound by the Gujarat High Court. That makes a handful of decisions of that Court and those benches worth more in a Gujarat file than a larger body of authority from elsewhere.

• Jewellery within the Board's limits is explained. CIT v. Ratanlal Vyaparilal Jain (2011) 339 ITR 351 (Guj) reads Instruction No. 1916 as reflecting the quantity of jewellery normally held in an Indian family, so that unless the Revenue shows otherwise the source of jewellery within the 500, 250 and 100 gram limits stands explained, and not merely exempt from seizure.
• A statement recorded at midnight. Kailashben Manharlal Chokshi v. CIT (2010) 328 ITR 411 (Guj) held that in normal circumstances it was too much to give any credit to a statement recorded under section 132(4) at that hour, and that an addition needs material substance rather than speculation.
• A disclosure with nothing behind it. Chetnaben J. Shah v. ITO (Gujarat High Court, 14 July 2016) held that a voluntary disclosure under section 132(4) cannot found an addition where no evidence was detected in the search to corroborate it, and that the lateness of the retraction did not matter in that situation.
• Loose papers that prove nothing. The Ahmedabad Tribunal in Nishant Construction Pvt. Ltd. v. ACIT (ITA No. 2732/Ahd/2016, order dated 25 September 2019) deleted an addition of over Rs. 18 crore founded on an unsigned, undated loose paper lacking identifying particulars, where the Department had made no independent enquiry of the vendors. The paper there was impounded in a survey rather than seized in a search, but the reasoning about what a loose sheet can be made to prove is the same.
• Material seized from somebody else's premises. In PCIT v. Kamlesh Prahladbhai Modi (R/Tax Appeal No. 331 of 2018 and connected appeals, judgment dated 18 April 2018) the Gujarat High Court dismissed the Revenue’s appeals against a finding of the Tribunal that sheets headed “projections”, found not at the assessee’s premises but at a third party’s, were dumb documents. The Court declined to disturb it as raising no question of law, which is how most of these points are finally decided.
• The test, stated against the taxpayer. Rajesh Trade Link (P) Ltd v. ACIT (Gujarat High Court, Tax Appeal No. 626 of 2012, judgment dated 11 March 2013) sets out the four ingredients a seized document must supply, the name of the assessee, the nature of the transaction, the quantum and the period, failing which it is a dumb document; on the facts the Court found all four present and an addition survived, though at a small fraction of the figure the Assessing Officer had taken. It is worth citing for the test with that outcome stated, rather than leaving it to be pointed out.

People look for this work under a number of names: an income tax raid lawyer, a search and seizure consultant, a block assessment or section 132 consultant in Ahmedabad. The work is the same in each case: the assessment that follows the search, the appeal from it, and the penalty proceedings that run alongside.