Section 246 — Power regarding discovery, production of evidence, etc. Successor to s.131 of the 1961 Act.
Section 246 is in Chapter XIV — Tax Administration, which runs from section 236 to section 261.
Sub-section (1) vests the Assessing Officer, Joint Commissioner, Joint Commissioner (Appeals), Commissioner (Appeals), Commissioner or Principal Commissioner, Chief Commissioner or Principal Chief Commissioner, and the Dispute Resolution Panel referred to in section 275(17)(a), with the same powers as a court under the Code of Civil Procedure, 1908 when trying a suit, in respect of four matters: discovery and inspection; enforcing the attendance of any person, including any officer of a banking company, and examining him on oath; compelling the production of books of account and other documents; and issuing commissions.
Sub-section (2) extends those powers to certain authorities even where no proceedings are pending before them or any other income-tax authority in respect of the person or class of persons: clause (a), any income-tax authority not below the rank of Assistant Commissioner of Income-tax notified by the Board, for an inquiry or investigation in respect of an agreement referred to in section 159; clause (b), the Principal Director General, Director General, Principal Director, Director, Joint Director or Assistant Director, for an inquiry or investigation into any concealment of income where he has reason to suspect that income has been or is likely to be concealed by such person or class of persons within his jurisdiction; and clause (c), the authorised officer referred to in section 247(1), before taking action under section 247(1)(i) to (vii) or during that action, on the same reason to suspect.
Sub-section (3) allows an income-tax authority exercising these powers to impound and retain in its custody, for such period as it thinks fit, any books of account or other documents produced before it in a proceeding under the Act, subject to the rules made in that behalf. Sub-section (4) qualifies that for two officers: the Assessing Officer or the Assistant Director must record reasons for impounding and may retain the impounded material only up to fifteen days, exclusive of holidays, or for such further period with the prior sanction of the approving authority.
An income-tax authority is not a court, so it needs an express grant if it is to compel attendance, examine on oath or force the production of records. Sub-section (2) answers a different problem: the most useful inquiry is often the one made before any proceeding exists, so specified investigation officers are given the powers without a pending case, on a stated suspicion of concealment. Sub-section (4) then puts a short leash on the most intrusive part of it — an Assessing Officer or Assistant Director keeping someone's books must record why and must go back for sanction after fifteen days.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Period for which the Assessing Officer or Assistant Director may retain impounded books or documents | Up to fifteen days, exclusive of holidays | Reasons for impounding must be recorded; a longer period requires the prior sanction of the approving authority | Sub-section (4) |
| Minimum rank of an authority notified for section 159 inquiries | Not below the rank of Assistant Commissioner of Income-tax | The authority must also be notified by the Board in that behalf | Sub-section (2)(a) |
The powers are the court's powers under the Code of Civil Procedure, 1908, but only for the four listed matters, and only for the purposes of the Act — this is not a general judicial jurisdiction. The important distinction is between the two sub-sections: the authorities in sub-section (1) exercise these powers in proceedings, while the officers in sub-section (2) may exercise them with no proceedings pending before them or before any other income-tax authority, which is what makes pre-assessment investigation possible. Sub-section (3) allows impounding for such period as the authority thinks fit, but sub-section (4) cuts that down sharply where the Assessing Officer or Assistant Director is the one holding the material: reasons must be recorded, and beyond fifteen days, counted exclusive of holidays, retention needs the prior sanction of the approving authority. A summons to attend and be examined on oath reaches an officer of a banking company as much as the assessee, since clause (1)(b) names him.
A Joint Director has reason to suspect that a firm within his jurisdiction is likely to conceal income, though no assessment or other proceeding is pending anywhere. Under clause (2)(b) he may still summon the firm's partners and its banker's officer, examine them on oath and compel production of the firm's books. If the books are produced before the Assessing Officer in a pending proceeding and he decides to impound them, sub-section (4) requires him to record his reasons and to hand them back within fifteen days, holidays excluded, unless the approving authority has given prior sanction for a longer period.
You meet this as a summons requiring attendance, or a notice requiring production of books of account and documents, issued in the course of an assessment, an appeal before the Joint Commissioner (Appeals) or Commissioner (Appeals), or a proceeding before the Dispute Resolution Panel. You also meet it before any proceeding exists, when an investigation officer or the authorised officer in a search issues the same summons under sub-section (2), and as the receipt for books impounded under sub-section (3).
shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit
enforcing the attendance of any person, including any officer of a banking company and examining him on oath
even when there are no proceedings pending with respect to such person or class of persons before them or any other income-tax authority
The Assessing Officer or the Assistant Director shall record the reasons for impounding any books of account or other documents under sub-section (3) and may retain such impounded books of account or other documents up to fifteen days (exclusive of holidays), or for such further period, with the prior sanction of the approving authority.
See the full 1961 to 2025 concordance.
See the circulars index.