After the shocking suicide of businessman and Confident Group Chairman C.J. Roy, his family accused the Income Tax Department of exerting intense pressure during raids, which they alleged drove Roy to take his own life. However, police have now recovered a diary containing key details suggesting that Roy had contemplated suicide well in advance.
In the diary, Roy reportedly apologised to his family and gave instructions on how the Confident Group should move forward. There are also writings suggesting that he faced crucial setbacks related to foreign investments. The Income Tax Department has been at the centre of controversy, with many accusing it of pushing Roy to his death. Questions have also been raised about why the firearm was not seized if a raid was indeed in progress.
THE WEEK examined these allegations and the nuances of Income Tax Department procedures.
Was it a raid or not?
In income tax terminology, there is no procedure officially called a “raid”; the law recognises only “search” and “survey”. Section 132 of the Income Tax Act, 1961, authorises tax officers to conduct search-and-seizure operations on suspicion of tax evasion. Statements recorded during such searches can be used as evidence in subsequent income tax proceedings.
Section 133A, meanwhile, empowers officers to conduct a “survey” by entering business premises to verify accounts, cash, and stock. While officers may inspect documents and record statements during a survey, they are not permitted to seize cash or remove documents.
Sources in the Income Tax Department say the operation conducted at Confident Group was a search, and that the search proceedings at Roy’s company premises had temporarily concluded in December itself. Roy, they said, was not present during these search operations. At the time, similar search operations were also underway on the premises of three other Kerala-based builders.
Following these searches, a prohibitory order (PO) was issued on certain documents in Roy’s office. Similar prohibitory orders were reportedly served on other builders as well.
A prohibitory order under Section 132(3) of the Income Tax Act, 1961, is issued by an authorised officer during a search to freeze assets, documents, or bank accounts when immediate physical seizure is impractical. It restrains the owner or possessor from transferring or dealing with these items without permission. A PO does not amount to a formal seizure, but acts as a temporary measure to prevent the disposal of suspected undisclosed assets. Such an order must be served in the presence of a third-party witness.
Every prohibitory order under Section 132(3) has a limited validity period.
The Income Tax Department usually lifts a PO under three circumstances: when it decides to formally seize the assets and move them into its custody; after verification of the sources of the assets; or when the statutory time limit expires. By law, a PO automatically ceases to have effect 60 days from the date it was last executed.
Why was the gun not seized beforehand?
Once the authorised officer is satisfied that documents under a PO should be released, a satisfaction note is recorded and a formal revocation or release order is issued. If the PO relates to a bank account or locker, the revocation order is sent directly to the bank manager. For physical items kept at the premises, the officer or an inspector visits the site to lift the seals.
Sources say the Income Tax team had been in the process of lifting seals on PO-bound documents at the Confident Group premises since January 28. Since this exercise was not technically a search or survey operation, the officers did not seize any other material, including the gun allegedly used by Roy to shoot himself. Roy was reportedly asked to be present to wind up the seal-lifting process on January 30—the day he died.
What follows a search?
Once a search formally concludes, the authorised officer who led the operation prepares a comprehensive report summarising the findings, statements recorded under oath under Section 132(4), and the inventory of seized assets or incriminating documents. The team that conducts the search—the Investigation Wing—is usually different from the team that carries out the final tax assessment.
The report is handed over to the Assessing Officer in the “Central Circle”, specialised units that deal exclusively with search-and-seizure cases to ensure higher scrutiny. The Assessing Officer does not accept the report at face value, but follows a statutory process before issuing a demand. Only after providing an opportunity to be heard does the officer pass an assessment order against an individual or institution.
The demand notice, issued along with the assessment order, specifies the exact amount of tax, interest, and penalties. This can be challenged at multiple levels, including in court. The Income Tax Department rarely moves towards prosecution or arrest, except in exceptional cases involving forgery or obstruction of duty.