Section 259 Power to call for information by prescribed income-tax authority.

Income-tax Act, 2025

At a Glance

This document compares Section 259 of the Income-tax Act, 2025 (as enacted) with Clause 259 of the Income Tax Bill, 2025 (old version). Both texts address the power of a prescribed income-tax authority to call for information for verification purposes. The enacted Section 259 adds an express definitional link for the term "proceeding." Affected parties include taxpayers and other persons from whom the prescribed authority may require information, and the tax department in its investigatory and verification functions. Effective dates are Not stated in the document.

Background & Scope

Statutory hooks: the texts are presented as Clause/Section 259 within instrument(s) captioned Income Tax Bill, 2025 (old version) and Income-tax Act, 2025 respectively. Both entries concern powers of "prescribed income-tax authority" to call for information and reference a "scheme notified u/s 260." Definitions or further explanations contained in the texts are limited: the enacted Section 259(3) provides that "proceeding" has the meaning assigned in section 253; other definitional material is Not stated in the document. The scope in both texts is focused on verification of information "in the possession of the prescribed income-tax authority" and furnishing of information "as may be useful for, or relevant to, any inquiry or proceeding under this Act."

Statutory Provision Mode

Text & Scope

Both the Bill (old version) and the enacted Section provide three core elements (two in the Bill text):

• Power to issue notice: The prescribed income-tax authority may issue a notice to any person requiring the furnishing of information.
• Purpose limited to verification: The notice power is framed "for the purposes of verification of information" in the authority's possession and is limited to information "useful for, or relevant to, any inquiry or proceeding under this Act."
• Form, manner and time: The information may be required "in such form and manner and within such time, as specified in such notice."
• Processing under scheme: Both texts permit the prescribed authority to "process and utilise such information and document received by him as per the scheme notified u/s 260."
• Definition of "proceeding": The enacted Section 259 contains subsection (3) stating that "proceeding" shall have the meaning assigned in section 253. The Bill (old version) does not include this explicit definitional link.

Interpretation

The language confines the notice power to verification functions and to information already "in the possession of the prescribed income-tax authority." The words "as may be useful for, or relevant to" indicate a relevance standard rather than an absolute or unlimited information demand. The specification that compliance is in "such form and manner and within such time, as specified in such notice" allows the authority procedural flexibility. Provision for processing and utilisation "as per the scheme notified u/s 260" indicates that statutory or delegated scheme rules will govern handling, storage, processing and downstream use; the text itself does not describe the scheme. The enacted insertion of an explicit definitional cross-reference (Section 259(3)) signals legislative intent to anchor the scope of "proceeding" to the definition set out in section 253, thereby reducing interpretive uncertainty about the ambit of proceedings for which information can be called.

Exceptions/Provisos

No express exceptions, provisos or thresholds (for example, limits based on amount, time period, confidentiality safeguards or judicial oversight) are contained in either version of the provision. Any carve-outs, protections or procedural safeguards are Not stated in the document.

Illustrations

• Example 1: A prescribed income-tax authority holds tax return data and issues a notice u/s 259 requiring a third party to furnish corroborative invoices "in such form and manner and within such time, as specified." This is consistent with the text. Further procedural details about format, electronic submission, or penalties for non-compliance are Not stated in the document.
• Example 2: A notice seeks bank account statements from a taxpayer for verification of entries in the authority's possession. The authority may process and utilise the information under the scheme notified u/s 260. The contents of that scheme are Not stated in the document.

Interplay

The provision expressly refers to section 260 (scheme for processing/utilisation) and-only in the enacted version-section 253 (meaning of "proceeding"). Any further interaction with other statutory provisions, rules, notifications, or judicial precedents is Not stated in the document.

Differences Between the Provisions and Practical Impact

Identified difference:

• Addition of subsection (3) in the enacted Section 259: The enacted text contains a new subsection (3) stating that "For the purposes of this section, the term "proceeding" shall have the meaning assigned to it in section 253." The Clause 259 (old Bill version) does not include this clause.

Practical impact of the change:

• Clarifies scope of "proceeding": By expressly tying "proceeding" to the definition in section 253, the enacted provision reduces ambiguity about which proceedings justify the use of Section 259 notices. This narrows interpretive variance that might have arisen if courts or practitioners sought to define "proceeding" from context or broader administrative notions. The precise content of section 253 is Not stated in the document, so the practical breadth of the narrowing or clarification cannot be further specified here.
• Predictability and defensibility of notices: The definitional cross-reference allows recipients of notices to assess whether the information requested legitimately relates to a "proceeding" as defined in section 253, which may facilitate more focused challenges or compliance assessments. The Bill's omission would have left room for broader administrative interpretation of "proceeding."
• Potentially limits overreach: If section 253 defines "proceeding" more narrowly than general administrative enquiries, the insertion may limit the range of inquiries for which notices can be issued u/s 259. Conversely, if section 253 is broad, the insertion merely cements that breadth. The document does not state which is the case.
• Procedural coherence with related sections: The cross-reference fosters statutory coherence between investigative powers (Section 259) and the definitional framework elsewhere in the Act, aligning interpretation across provisions such as section 260 (scheme) and other investigatory or adjudicatory provisions that rely on the term "proceeding." The specific interactions beyond the textual cross-reference are Not stated in the document.

Practical Implications

• Compliance and risk areas: Persons receiving notices should verify that the notice relates to an inquiry or "proceeding" as defined in section 253 before furnishing information, since the enacted text makes that definitional link explicit. The document does not provide the definition in section 253, so recipients must consult that provision (Not stated in the document).
• Record-keeping/evidence points: The provision contemplates furnishing information "in such form and manner and within such time, as specified in such notice," and permits processing under a scheme in section 260. Entities should therefore maintain records in accessible formats and preserve documentary evidence that may be required. Details on required formats, retention periods or specific compliance modalities are Not stated in the document.
• Administrative use and safeguards: The authority's ability to "process and utilise" information under a notified scheme indicates that procedural and data-handling rules will be set out elsewhere (section 260). The content of that scheme, including privacy safeguards, access controls or permitted uses, is Not stated in the document.

Key Takeaways

• Both the Bill (old version) and the enacted Section 259 grant prescribed income-tax authorities the power to issue notices requiring persons to furnish information relevant to verification for enquiries or proceedings under the Act.
• Both versions permit specification of form, manner and time for compliance and permit processing/utilisation of received information under a scheme notified u/s 260.
• The primary textual change in the enacted law is the addition of subsection (3), expressly defining "proceeding" by reference to section 253.
• The addition improves statutory clarity by anchoring the scope of notices to the definition in section 253; the substantive effect depends on the content of section 253 (Not stated in the document).
• No procedural safeguards, exceptions, timelines, penalties for non-compliance or details of the section 260 scheme are provided in the texts reviewed; these matters are Not stated in the document.
• Stakeholders should consult section 253 and section 260 to determine the operative meaning of "proceeding" and the processing/utilisation rules; those sections are Not stated in the document.

Full Text:

Section 259 Power to call for information by prescribed income-tax authority.