During the course of Search, inspection or investigation, the concerned officer is authorized to seize the assets which he may consider to be relevant for the purpose of tax recovery. In order to safeguard the interest of the taxpayer, the Income Tax Department has prescribed certain guidelines for deposit of tax during Search, inspection or investigation.
As per the guidelines, the tax is required to be deposited when the concerned officer seizes any assets during the Search, inspection or investigation. The tax amount to be deposited is 30% of the fair market value of the asset so seized.
Tax is not required to be deposited in the following cases:
1. When the asset seized is already disclosed in the books of accounts and tax has been paid on it.
2. When the asset seized is of such a nature that it cannot be sold without causing undue hardship to the assessee.
3. When the asset seized is not likely to fetch the amount of tax demanded by the concerned officer.
The tax can be deposited by way of a demand draft or a cheque drawn in favor of the Assessing Officer. The demand draft or cheque should be accompanied by a covering letter stating the name and PAN of the assessee, the date of Search, inspection or investigation, the amount of tax deposited and the details of the asset seized.
If the tax is not deposited within the prescribed time, the concerned officer may proceed to sell the asset seized and recover the tax amount along with interest and penalty. This may cause undue hardship to the assessee as the asset seized may be of sentimental or commercial value.
The tax is required to be deposited within 7 days from the end of the month in which the asset was seized. If the tax is not deposited within this time limit, the concerned officer may proceed to recover the tax along with interest and penalty as mentioned above.
During the course of Search, inspection or investigation, the concerned officer is authorized to seize the assets which he may consider to be relevant for the purpose of tax recovery. In order to safeguard the interest of the taxpayer, the Income Tax Department has prescribed certain guidelines for deposit of tax during Search, inspection or investigation.
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