Income tax raids at big restaurants amid suspected Rs 70,000 crore evasion by Hyderabad-based biryani maker

The Income Tax Department has kicked off search operations at major restaurants across the country after a Hyderabad-based biryani manufacturer was learned to have engaged in tax evasion amounting to thousands of crores of rupees.

The alleged evasion amounts to Rs 70,000 crore, according to sources.

What prompted income tax officers to launch raids against other restaurants?

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According to the sources, other large restaurants, undergoing I-T raids, use the same software as by the Hyderabad biryani chain.

Income Tax Department authorities suspect that these restaurants may be evading taxes through software in a similar manner as the Hyderabad biryani company, said one of the sources.

I-T authorities can launch search and seizure operations on any premises in the country based on credible suspicion, under certain specific conditions.

A search can be conducted if a senior tax authority has reason to believe that a person or entity person has:

• Failed to produce books of accounts or documents when required;
• will not produce such documents even if summoned, or
• possesses undisclosed cash or valuables like jewellery etc.

Here are answers to a few frequently asked questions (FAQs) about income tax investigations in India:

What is an income tax search?

An income tax search -- popularly referred to as a raid -- is carried out by the Income Tax Department.

This operation involves investigators searching the premises of individuals or entities suspected of tax evasion.

Which law are income tax raids conducted under?

Income tax raids are held under Section 132 of the Income Tax Act, 1961.

What prompts income tax authorities to launch a raid?

An income tax raid is conducted when the taxman has information that supports suspicion of income tax evasion. The searches are to find evidence supporting such suspicion.

Who authorises an income tax search?

These raids are authorised by senior I-T officers.

Can digital devices and documents be seized during these searches?

Yes.

What is an income tax survey? Is it different from a raid?

An income tax survey is a procedure conducted by the taxman mainly to collect information about an assessee’s business operations, covering details ranging from assets to financial books.

These surveys are authorised under Section 133A of the Income Tax Act, 1961.

Typically, these surveys are performed at the business premises during normal business hours, to verify records, ascertain income, and collect details for assessment purposes.

This action is different from an income tax raid.

Also known as searches, income tax raids are typically a 'search and seizure' operation under Section 132 of the Income Tax Act that enables the taxman to enter any location -- including residential or office premises -- at any time, with investigators having powers to seize cash, valuable items, or any other kind of suspected evidence.

Can a taxpayer challenge a search?

Yes.

Are Income Tax searches made public?

The department does not officially disclose names or details unless it leads to prosecution or a public statement is warranted.

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