Section 254 — Power to collect certain information. Successor to s.133B of the 1961 Act.
Section 254 is in Chapter XIV — Tax Administration, which runs from section 236 to section 261.
Sub-section (1) lets an income-tax authority, irrespective of anything else in the Act, enter any building or place within the limits of the area assigned to it, or any building or place occupied by a person over whom it exercises jurisdiction, at which a business or profession is carried on — whether or not that is the principal place of the business — for the purpose of collecting information useful for or relevant to the purposes of the Act. Having entered, it may require any proprietor, employee or other person then and there attending to, helping in, or carrying on the business or profession to furnish such information as may be prescribed.
Sub-section (2) confines entry to the hours at which the place is open for the conduct of the business or profession. Sub-section (3) is an absolute prohibition: the authority acting under this section shall on no account remove or cause to be removed from the building or place any books of account or other documents, or any cash, stock or other valuable article or thing. Sub-section (4) defines "income-tax authority" for this section as a Joint Commissioner, Joint Director, Assistant Director or Assessing Officer, and an Inspector of Income-tax authorised by the Assessing Officer to exercise these powers in relation to the area over which that Assessing Officer has jurisdiction or a part of it.
The Department needs a light-touch way of gathering prescribed information at business premises without mounting a search or a survey. The section therefore gives entry and a power to ask questions, and immediately fences it: only at open hours, only at business premises, only by four named ranks plus an authorised Inspector, and with nothing whatever allowed to be taken away.
What can be asked for is limited to information that is prescribed — the section does not authorise a general demand for records, and it does not authorise taking anything away. Sub-section (3) is unqualified: no books, documents, cash, stock or valuable article may be removed, so a removal purportedly under this section is outside it. The person who can be required to answer is anyone attending to or helping in the business at that time and place, not only the proprietor, which is what makes the power useful at a branch or an outlet. Two limits are jurisdictional: the premises must be within the area assigned to the authority or occupied by a person over whom it has jurisdiction, and entry must be during business hours.
An Assessing Officer's Inspector, authorised for that area, walks into a firm's branch outlet during trading hours and asks the person at the counter for the prescribed information about the business carried on there. That is within sub-section (1), even though the branch is not the principal place of business. If the Inspector then takes the sales register or the day's cash away with him, that step is barred outright by sub-section (3).
A business meets this section when an officer arrives at its premises during working hours and asks for prescribed information on the spot; it is not a notice-based proceeding, so there is usually no document beforehand, and the officer's rank must be one of those named in sub-section (4).
The income-tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession.
shall, on no account, remove or cause to be removed from the building or place wherein it has entered, any books of account or other documents or any cash or stock or other valuable article or thing
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.