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Case law › Income-tax Act 2025 › Chapter XIV › Section 261
Chapter XIVwas s.131, s.132, s.132A, s.132B, s.133, s.133A, s.135

Section 261 of the Income-tax Act, 2025

Section 261 — Interpretation. Successor to s.131, s.132, s.132A, s.132B, s.133, s.133A, s.135 of the 1961 Act.

Where this section sits

Section 261 is in Chapter XIV — Tax Administration, which runs from section 236 to section 261.

← Section 260  ·  Section 262 →

What this section does

The definitions for the search and requisition Part, and what give that Part its reach.

Clause (a) lists four ranks as "approving authority": Principal Director General or Director General; Principal Chief Commissioner or Chief Commissioner; Principal Director or Director; Principal Commissioner or Commissioner. Clause (c) lists the "authorised officer" ranks, running from Joint or Additional Director and Joint or Additional Commissioner down through Assistant or Deputy Director and Assistant or Deputy Commissioner to the Income-tax Officer and the Tax Recovery Officer. Clause (d) adds the Joint and Additional Director and the Joint and Additional Commissioner to the clause (a) four, making six ranks of "competent authority".

Clause (b) makes "asset" include money, bullion, jewellery, a virtual digital asset or other valuable article or thing, held in physical or virtual form. Clause (e) defines "computer system" to cover computers, networks, resources, communication devices and digital or electronic storage devices, stand-alone, networked or used through intermediaries, and expressly includes the remote server, the cloud server and virtual digital space. Clauses (g) and (h) borrow "electronic form" and "electronic record" from sections 2(1)(r) and 2(1)(t) of the Information Technology Act, 2000.

Clause (f) fixes the "date on which the last of the authorisations for search was executed": for a search, the date of conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant was issued; for a requisition under section 248, the date the requisitioning officer actually receives the books, documents, computer system or assets.

Clause (i) defines "material seized or requisitioned" as books of account, other documents or computer systems and extracts seized in a search under section 247 or requisitioned under section 248, expressly including backups from specialised programs such as accounting software, spreadsheets and word files and all electronic records — and directs that this material be construed to mean books of account maintained by that person. Clause (j) defines "virtual digital space" and lists email servers, social media accounts, online investment, trading and banking accounts, websites storing details of ownership of assets, remote or cloud servers, digital application platforms and any other space of similar nature.

Why it is there

Search powers written for ledgers and safes would not reach records that exist only on a server somewhere else, so the definitions are drafted to cover them: the computer system includes the cloud, the asset includes a virtual digital asset, and the virtual digital space includes email and online accounts. The deeming in clause (i) is the sharpest edge — once seized, a spreadsheet or software backup is treated as the person's own books of account, which is what makes it usable as evidence of income. Clause (f) supplies the single date the rest of the Part reckons from.

Who it applies to

What this means in practice

These definitions decide, in practice, what can be seized and when the clock starts. Clause (i) is the one that changes outcomes: material seized — software backups, spreadsheets and word files included — is construed to be books of account maintained by the person, so it carries the weight of his own records rather than of loose papers. Clauses (e) and (j) together mean presence at premises is not the limit of a search, and clause (b) puts a virtual digital asset on the same footing as bullion. Clause (f) supplies the single date the rest of the Part reckons from, and it is fixed differently for a search and for a requisition.

An example

Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.

During a search the authorised officer takes a backup of the accounting software, copies spreadsheets, and accesses an email account and a cloud drive. Clause (e) puts the remote and cloud servers inside the "computer system", clause (j) puts the email server and any online trading or banking account inside "virtual digital space", and clause (i) makes the seized backups and spreadsheets material construed to be books of account maintained by the person searched. The date the search concludes, as recorded in the last panchnama, is the clause (f) date the rest of the Part reckons from.

Where you meet this section

You meet these definitions inside a search or requisition under section 247 or 248 and in everything that follows — the warrant, the panchnama, the seizure list and the assessment built on the seized material. The section is never itself the subject of a notice; it is the vocabulary the notices are written in.

The words themselves

"asset" includes any money, bullion, jewellery, virtual digital asset or other valuable article or thing, held in physical or virtual form
Section 261(b), Income-tax Act, 2025.
and includes the remote server or cloud server or virtual digital space
Section 261(e), Income-tax Act, 2025.
in the case of search, the date of conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued
Section 261(f)(i), Income-tax Act, 2025.
and shall be construed to mean as books of account maintained by the said person
Section 261(i), Income-tax Act, 2025.

What people get wrong

What this replaced

The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.

See the full 1961 to 2025 concordance.

Circulars of the Board on this section

A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.

See every circular and notification on this section, or the circulars index.

Notifications that reach this section

A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.

See every circular and notification on this section, or the notifications index.

Case law carried across

Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 261. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.

Explainers

Read with

What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.