Section 253 Powers of survey.

Income-tax Act, 2025

At a Glance

The document is Clause 253 of the Income Tax Bill, 2025 - (Old Version), setting out powers of survey exercisable by income-tax authorities. It matters because it defines entry, inspection, assistance, impounding and related procedural limits affecting taxpayers, assessing authorities and compliance officers. Affected parties include taxpayers carrying on business/profession/charitable activities, their employees and custodians of records; the issuing or effective date is Not stated in the document.

Background & Scope

Statutory hook: Clause 253 of the Income Tax Bill, 2025, titled "Powers of survey." Coverage: authorises an income-tax authority to enter places where business/profession/charitable activity is carried on (including non-principal places and any place stated to contain books, cash, stock, valuables or computer systems). The clause addresses entry conditions, timing (business hours or after sunrise/before sunset), powers on entry (inspection, technical assistance, verification of assets/stock, recording statements on oath), impounding/retention of documents, inventory of assets, and enforcement powers (reference to section 246(1)). Definitions provided: "income-tax authority" with an enumerated list and inclusion of Inspector of Income-tax for specified sub-sections. The clause describes special entry for verifying TDS/TCS under Chapter XIX-B and permits certain restricted actions in those instances. It does not provide an effective date in the text.

Statutory Provision Mode

Text & Scope

The provision authorises entry into premises where business/profession/charitable activities are carried on, within the assigned area or where the authority exercises jurisdiction, or where authorised by another income-tax authority. Upon entry the inspecting authority may require persons present to provide technical/other assistance (including access codes) to inspect books, documents, computer systems, electronic media or virtual digital space; to provide facilities to check or verify assets/stock; and to furnish information relevant to any proceeding under the Act. Entry timing is constrained to business hours for business places, and to after sunrise/before sunset for other places. For verification of TDS/TCS (Chapter XIX-B), the authority may enter during daylight and require access to books, documents, electronic media, computer systems and virtual digital space. Powers on entry include marking identification on documents, making extracts or copies from electronic media/computer systems, recording statements on oath, impounding and retaining documents (with reasons) for specified periods, and making inventories of assets/stock.

Interpretation

The Bill reflects an intent to modernise survey powers to expressly reach electronic media and virtual digital space, and to require technical assistance including access codes. The text indicates a legislative purpose to equip tax authorities to access digital records and remote storage when verifying compliance. The presence of timing restrictions and a requirement to record reasons for impounding indicates an intent to balance intrusive powers with procedural safeguards. Reference to section 246(1) for enforcement suggests use of pre-existing coercive mechanisms rather than creation of new penal sanctions within the clause.

Exceptions/Provisos

The principal limitations are temporal (business hours or daylight), limitation on actions when entering for Chapter XIX-B verification (the authority acting under sub-section (4) shall only undertake actions referred under sub-sections (5)(a) and (5)(b)), and requirement to record reasons before impounding. There is also an implicit limitation that removal of assets/stock from the premises is prohibited ("shall, on no account, remove or cause to be removed from the place... any asset or stock" - Not stated in the document whether this prohibition is absolute or subject to any exception beyond what's written) .

Illustrations

• Example 1: A shop open for business is visited during business hours; the authority can require staff to provide access to on-premises accounting software and extract relevant records, mark documents, and, after recording reasons, impound ledger printouts for up to fifteen days.
• Example 2: For a charitable trust's event, after the function the authority may require the organiser to furnish information regarding expenditure and record statements on oath for use in subsequent proceedings.
• Example 3: In a TDS verification at a corporate office, the authority may require access to electronic media and virtual digital space to confirm deductions/collections, but may only carry out marking/copying of documents and recording of statements during that entry.

Interplay

The clause expressly invokes Chapter XIX-B (TDS/TCS) and section 246(1) (for enforcement), indicating interplay with existing assessment and enforcement provisions. There is no textual reference to subordinate rules, guidelines, data-protection statutes, or procedural safeguards beyond the recording of reasons and approval requirements for impounding beyond fifteen days. Not stated in the document: any cross-references to evidence law, privacy law, or specific Board instructions governing access to virtual digital spaces.

Differences between the two provisions and practical impact

• Scope of electronic material: The Bill (Document 2, "Old Version") expressly includes "computer system, or any other material connected with such system including virtual digital space" and, in another sub-clause, "electronic media ... or virtual digital space." The Act version (Document 1, Section 253) uses narrower phrasing: "information in electronic form or on a computer system."
  • Practical impact: The Bill's language is broader and expressly captures cloud/virtual data and ancillary material connected with computer systems; the Act text reduces express reach to "information in electronic form or on a computer system," which may narrow or at least create interpretive questions about whether remote/virtual storage and ancillary system material fall within survey powers.
• Assistance required on entry: Both versions require provision of "necessary technical and other assistance (including access code)." The Bill's clause (1)(i) explicitly refers to "computer system, or any other material connected with such system including virtual digital space," while the Act omits the phrase "any other material connected ... including virtual digital space" and refers instead to "information in electronic form or on a computer system."
  • Practical impact: The Bill's wording gives clearer authority to demand assistance for inspecting connected materials and virtual spaces; the Act may be read as focused on retrievable information rather than the broader system context.
• Inspection powers under Chapter XIX-B verification (sub-section (4)): The Bill expressly grants access to "access to electronic media or computer system, or virtual digital space" for verifying TDS/TCS compliance. The Act restricts the language to "books of account or other documents, or information in electronic form or on a computer system."
  • Practical impact: Enforcement relating to TDS/TCS may have broader reach under the Bill wording; the Act's phrasing may require interpretive expansion to cover virtual digital spaces.
• Impounding and retention wording: The Bill states the authority may "impound and retain in custody any books of account or other documents inspected by it, after recording reasons for doing so, for a period-(i) of fifteen days (exclusive of holidays); or (ii) exceeding fifteen days ... with prior approval." The Act states the authority may "impound after recording reasons for doing so, any books of account or other documents, or any computer system inspected by it, and retain it for a period-(i) up to fifteen days (exclusive of holidays); or (ii) exceeding fifteen days ... with the prior approval."
  • Practical impact: The Act explicitly adds "any computer system" to the list that may be impounded and clarifies retention periods as "up to fifteen days" (versus Bill's "of fifteen days"), arguably the same practical effect but with different drafting emphasis on computer systems in the Act.
• Restriction on actions under sub-section (4): Both texts state that an income-tax authority acting under sub-section (4) shall undertake only specified actions. The Act (Document 1, sub-section (6)) explicitly states those are the actions under sub-sections (5)(a) and (5)(b). The Bill has parallel wording but formatting differs.
  • Practical impact: Substantively similar; Act wording makes explicit which actions are permissible during TDS/TCS verification entry.
• Definition of "proceeding": The Act (Document 1, sub-section (11)(B)) contains an express definition of "proceeding" (covering pending, completed, and subsequently commenced proceedings in respect of any year). The Bill (Document 2) does not include that definition.
  • Practical impact: The Act's explicit definition broadens clarity that survey material can be used for multiple stages of assessment or later proceedings; the Bill leaves this potentially ambiguous.
• Inclusion of Inspector of Income-tax: Both versions include Inspector of Income-tax for limited purposes, though the Act sets out the inclusion within sub-clause labelling (11)(A)/(B) and specifies subordinate relationship "as specified by the Board."
  • Practical impact: Largely administrative/drafting differences; both permit limited use of Inspectors for designated actions.
• Other drafting and structural differences: Minor differences in clause sequencing and phrasing (e.g., use of "exclusive of holidays," "up to" vs "of"), and the Act's explicit prohibition on removal of assets (sub-section (7)) mirrors the Bill but with slightly different placement.
  • Practical impact: Mostly interpretive/drafting; the Act is marginally more detailed in certain definitions (notably "proceeding") and in expressly including computer systems for impoundment, while the Bill more explicitly referenced virtual digital space and electronic media.

Practical Implications

• Compliance and risk areas: Taxpayers should be prepared to provide technical assistance and access codes on survey entry; failure or evasion exposes them to enforcement u/s 246(1). The express reach to electronic media and virtual digital space increases exposure of cloud-stored records during surveys.
• Record-keeping/evidence: Taxpayers should maintain accessible copies of records, documented chain of custody for electronic records, and contemporaneous explanations of transactions likely to be scrutinised. Given the power to mark and copy, maintaining integrity and availability of archives and backups is important. Not stated in the document: retention periods or specific standards for electronic evidence preservation beyond usual record-keeping obligations.

Key Takeaways

• Clause 253 authorises robust survey powers, including entry, technical access (including access codes), marking, copying and impounding of records.
• The Bill explicitly targets electronic media and virtual digital space, reflecting attention to digital records; it also permits access for TDS/TCS verification.
• Temporal limits apply: business-hours or daylight entries and distinct restrictions when entry is for TDS/TCS verification.
• Impounding requires reasons to be recorded; retention beyond fifteen days needs prior approval.
• Non-compliance with survey requisitions triggers enforcement powers u/s 246(1).
• The Bill lists authorised officers and permits Inspectors of Income-tax to act for limited purposes; however, some procedural and privacy safeguards are not detailed in the clause.

Full Text:

Section 253 Powers of survey.