Section 247 Search and seizure.

Income-tax Act, 2025

At a Glance

Clause 247 of the Income Tax Bill, 2025 (Old Version) (Document 2). This provision sets out powers and procedures for search and seizure by authorised income-tax officers, including access to electronic records, presumed inferences, provisional attachment and use of valuation officers. It matters because it governs invasive investigative powers affecting taxpayers, third parties, and enforcement agencies. Who is affected: taxpayers (individuals and entities), authorised officers, evaluating authorities and third parties holding electronic records or assets. Effective date or decision date: Not stated in the document.

Background & Scope

Statutory hooks: Clause 247 of the Income Tax Bill, 2025; cross-references within the clause to section 246(1), section 268(1), the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, section 241, section 413 and section 514. The clause covers search and seizure powers where the competent authority, based on information, believes that summoned or noticed persons will not produce relevant books, documents or electronic information, or where undisclosed income or property is present. Definitions: the clause uses terms such as "books of account", "other documents", "computer systems", "electronic media", "virtual digital space" and invokes the Information Technology Act, 2000 (for the definition of "electronic record" in specified sub-clauses). No standalone definitional section for terms used in the clause is provided. The scope expressly includes both physical and electronic forms of information and assets, and covers premises, vessels, vehicles, aircraft and virtual digital spaces.

Statutory Provision Mode

Text & Scope

Clause 247 empowers an approving authority to authorise named officers (Joint Director/Joint Commissioner/Assistant Director/Assistant Commissioner/Income-tax Officer) to enter and search premises, vessels, vehicles, aircraft and virtual digital spaces where there is reason to suspect books, documents, assets or electronically stored information relevant to tax proceedings. The trigger conditions are: (a) failure or anticipated failure of a person to produce books, documents or electronic information in response to summons u/s 246(1) or notice u/s 268(1); or (b) possession by a person of assets or information relating to assets representing undisclosed income or property for the purposes of the Act or the Black Money Act. The clause expressly covers physical and electronic forms, requires reasonable technical assistance (including access codes), permits forcible entry or overriding of access codes, authorises search of persons, marking and copying of documents including from computer systems, inventory and seizure (excluding stock-in-trade), and provision for deemed seizure orders where physical seizure is impracticable.

Interpretation

The text shows legislative intent to equip tax authorities with robust tools to access both physical and electronic evidence, including remote/virtual repositories. The cross-reference to the Information Technology Act for definitions indicates an intent to anchor electronic evidence concepts to existing IT law definitions. The inclusion of presumptions indicates an intent to ease evidentiary burden for the revenue once material is found during a search. The reference to the Bharatiya Nagarik Suraksha Sanhita, 2023 suggests an effort to harmonise procedural safeguards and processes with general search-and-seizure law. No explicit legislative statement of safeguards, limitations or oversight mechanisms beyond prior approvals and prescribed procedures is present.

Exceptions/Provisos

Carve-outs and conditions present in the clause include: (i) stock-in-trade is excluded from seizure; (ii) orders restricting dealing with items (non-deemed seizure orders) last not more than sixty days; (iii) provisional attachments require prior approval of senior officers and recording of reasons and are valid for six months from the end of the month of the order; (iv) use of valuation officers and timeline for valuation report is limited to sixty days from receipt of reference. No further procedural limitations or notice requirements before entry are specified in the text. Where physical seizure is impracticable due to volume, weight or dangerous nature, service of a deemed seizure order is permitted. No express limitation on hours of searches or requirement for judicial authorisation is stated.

Illustrations

• Example 1: A summons u/s 246(1) to a taxpayer for production of books electronically stored receives no response and the competent authority believes relevant material is on the taxpayer's laptop. An authorised officer may enter the premises, require technical assistance to access the laptop, override the access code if unavailable, copy electronic records and seize the laptop (subject to stock-in-trade exclusion).
• Example 2: A large sculpture suspected to be undeclared wealth located at a taxpayer's premises cannot be removed due to size; the authorised officer may serve an order of deemed seizure (clause (1)(viii)) preventing the owner from parting with it.
• Example 3: During a search, several external hard drives and cloud-storage credentials are found; the authorised officer can mark identification, make copies of data, and rely upon presumptions that the contents belong to the possessor and are true, subject to rebuttal.

Interplay

The clause cross-references the Information Technology Act (for definitions), the Bharatiya Nagarik Suraksha Sanhita, 2023 (for search/seizure procedures), section 413 (rules for provisional attachment), and section 514 (valuation registration). The clause contemplates further rules and procedures to be prescribed by the Board or notification (prescribed) for requisition and valuation; however, the text does not display the prescribed rules themselves. How these provisions interact operationally with existing criminal search-and-seizure jurisprudence is Not stated in the document.

Differences Between Document 1 (Section 247 of the Income-tax Act, 2025) and Document 2 (Clause 247 of the Income Tax Bill, 2025 (Old Version)) and Practical Impact

• Terminology and cross-references: Document 2 (Bill) principally refers to "this Act" in describing purposes; Document 1 (Act) additionally cross-refers to the Income-tax Act, 1961 explicitly in certain sub-clauses.
  • Practical impact: slight change in drafting emphasis - Document 1 clarifies investigatory link with Income-tax Act, 1961, while Document 2 keeps the investigatory frame internal to the proposed Act. This may affect interpretation of which statutory proceedings trigger the powers where overlap exists. (Not stated in the document whether this was intentional.)
• Electronic material language: Document 2 uses more expansive language - "any information stored in any electronic media or a computer system", "virtual digital space", and expressly imports definitions from section 2(1) of the Information Technology Act, 2000 for electronic records. Document 1 uses "information in electronic form or on a computer system" and does not expressly reference virtual digital space or specific IT Act sub-clauses.
  • Practical impact: Document 2 appears broader and more detailed on digital sources and expressly contemplates virtual/remote storage, which increases the practical reach of search powers to cloud or off-site electronic repositories.
• Power to override access codes/virtual spaces and breaking locks: Document 2 explicitly states that access may be gained by "overriding the access code" or entering "virtual digital space." Document 1 uses "override the access code to any computer system" but is less explicit about virtual digital spaces.
  • Practical impact: Document 2 may be read to give clearer authority to override access to remote/virtual environments; Document 1 relies on broader wording but is less specific.
• Deemed seizure vs. statutory structuring: Document 2 places an express clause (1)(viii) for "serve an order of deemed seizure" where physical seizure is impracticable because of volume/weight/dangerous nature - explicitly described as a deemed seizure. Document 1 includes similar provisions split across sub-section (4)(a) and (b) but structures them differently and distinguishes deemed seizure (4)(a)(ii) and other orders (4)(b).
  • Practical impact: The Bill's single enumeration of deemed seizure in clause (1)(viii) consolidates the ground for deemed seizure into the primary powers; the Act version separates deemed seizure and non-deemed orders. Practically, this may alter ease of invoking deemed seizure and clarity of whether an order constitutes formal seizure.
• Presumptions language: Both documents provide presumptions where items are found in possession during search. Document 2 expressly includes "virtual digital space" and "electronic records, data, communication" within the presumptions and states that electronic exchanges are presumed to be between the parties thereto. Document 1 lists specific presumptions including exchange of information in electronic form.
  • Practical impact: Document 2's language broadens the evidentiary presumptions to modern electronic communications; this increases evidentiary leverage for the department in proceedings but is subject to legal challenge based on weight and rebuttal.
• Requisition of external assistance: Document 2 refers to approval and procedure "as prescribed" and uses slightly different syntax regarding requisition compliance. Document 1 contains substantially similar provisions but includes a catch-all for persons/entities approved by specified senior officers and for compliance duties.
  • Practical impact: Differences appear stylistic; practical effect is minimal unless read with enabling rules which are "Not stated in the document."
• Reference to other statutes: Document 1 explicitly imports provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 for search and seizure application "so far as may be". Document 2 contains identical cross-application.
  • Practical impact: No substantive difference here; both point to application of that statute's search/seizure norms to the tax search/seizure context.

Practical Implications

• Compliance and risk areas: Persons subject to summons/notices must ensure timely production of physical and electronic records; failure increases risk of intrusive search, seizure, and presumptive adverse inferences. The explicit coverage of virtual digital spaces and cloud storage expands the universe of accessible evidence.
• Record-keeping/evidence: Taxpayers and custodians should maintain clear indexing of electronic records, log access credentials and third-party custody arrangements. The clause's power to require access codes and technical assistance makes preservation and documented chain-of-custody practices important. Preservation steps and access facilitation may lessen the need for forced override actions.

Key Takeaways

• Clause 247 grants broad search and seizure powers covering both physical and modern electronic/virtual media, including authority to override access codes and access virtual digital spaces.
• The Bill (Document 2) expands and clarifies electronic reach compared to the Act text (Document 1), expressly importing IT Act definitions and referencing virtual digital space.
• Presumptions apply to possession, authenticity and electronic exchanges found during search, strengthening evidentiary position of the revenue unless rebutted.
• Deemed seizure and non-deemed restraint orders are provided for when physical seizure is impracticable; separate limits (sixty days for restraint orders; six months for provisional attachment) are specified.
• Provisions envisage use of valuation officers and external persons/entities with prescribed procedures, but the implementing rules and safeguards are Not stated in the document.
• Interplay with the Bharatiya Nagarik Suraksha Sanhita, 2023 is expressly provided; operational details on procedural safeguards and judicial oversight are Not stated in the document.

Full Text:

Section 247 Search and seizure.