Section 247 of the Income-tax Act, 2025 authorises search and seizure where there is reason to believe that records have been withheld or undisclosed assets exist, and expressly empowers the officer to require and override access codes to computer systems.
What section 247 does
Section 247 is the search and seizure power — the successor to section 132 of the Income-tax Act, 1961. Its structure is familiar, but the new Act rewrites it for a world where the records that matter are electronic.
The power arises where the competent authority, in consequence of information in his possession, has reason to believe either (a) that a person has failed, or would fail, to produce books, documents or information in electronic form or on a computer system in response to a summons or notice; or (b) that a person is in possession of an asset or information relating to an asset representing undisclosed income or property for the purposes of the 1961 Act, the Black Money Act, 2015, or this Act.
The digital provisions are the significant change. Clause (1)(ii) allows the officer to require reasonable technical assistance including the access code; clause (1)(iii) allows him to override the access code to a computer system where it is not made available; and clause (1)(vii) allows seizure of computer systems themselves.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 132(1)(a) and (b) | Failure to produce books or documents | 247(1)(a) |
| 132(1)(c) | Possession of undisclosed assets | 247(1)(b) |
| 132(1)(i) | Entry and search of premises and vehicles | 247(1)(i) |
| 132(1)(iib) | Technical assistance and access code | 247(1)(ii) |
| 132(1)(iia) | Breaking open locks and overriding access codes | 247(1)(iii) |
| 132(1)(iii) to (v) | Personal search, identification marks, inventory | 247(1)(iv) to (vi) |
| 132(1)(iii) | Seizure, excluding stock-in-trade | 247(1)(vii) |
| 132A | Requisition | 248 |
| 132B | Application of seized assets | 250 |
Section 247 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1)(a) — the non-production limb
Where a person to whom a summons under section 131(1) or notice under section 142(1) of the 1961 Act, or a summons under section 246(1) or notice under section 268(1) of this Act, was issued has omitted or failed to produce the books, documents or electronic information required; or where such a summons or notice has been or might be issued and the person will not produce material useful or relevant to proceedings.
Sub-section (1)(b) — the undisclosed asset limb
Where a person is in possession of any asset or information in relation to an asset which represents, wholly or partly, income or property not disclosed for the purposes of the Income-tax Act, 1961, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, or this Act. The express reference to the Black Money Act links the two regimes at the search stage.
Who authorises and who executes
The approving authority may authorise a Joint Director, Joint Commissioner, Assistant Director, Assistant Commissioner or Income-tax Officer; and a Joint Director or Joint Commissioner so authorised may in turn authorise an Assistant Director, Assistant Commissioner or Income-tax Officer. The officer so authorised is the authorised officer.
Clauses (i) to (iv) — entry, access codes and personal search
The authorised officer may enter and search any building, place, vessel, vehicle or aircraft; require technical and other assistance including the access code from any person in possession or control of electronic records; break open locks or override the access code to any computer system where keys or codes are not available; and search any person entering, leaving or present at the place if suspected of secreting material about their person.
Clauses (v) to (vii) — marks, inventory and seizure
The officer may place identification marks on books and documents and make extracts or copies, including from a computer system; make a note or inventory of assets and stock-in-trade found; and seize books, documents, computer systems or assets found as a result of the search — expressly other than stock-in-trade of the business, of which only an inventory may be made.
What follows a search
Seized assets are dealt with under section 250, and the copying, retention and release of seized material under section 251. Reasons need not be disclosed, by virtue of section 249. The assessment route is the block assessment code in sections 292 to 301, and losses cannot be set off against undisclosed income found in a search by virtue of section 120. Contravention of an order under section 247 is prosecuted under section 473.
Worked example
A search is authorised at a business premises in tax year 2026-27.
| Situation | Power under section 247 | Clause |
|---|---|---|
| Accounting records are on a cloud accounting system | Officer may require the access code and technical assistance to inspect them | 247(1)(ii) |
| The proprietor refuses to share the password | Officer may override the access code to the computer system | 247(1)(iii) |
| A server and two laptops hold the primary records | The computer systems themselves may be seized | 247(1)(vii) |
| ₹80,00,000 of finished goods held for sale | Inventory only — stock-in-trade cannot be seized | 247(1)(vi) and (vii) |
| ₹22,00,000 of unexplained cash | May be seized | 247(1)(vii) |
| An employee is about to leave the premises with a bag | May be searched if there is reason to suspect | 247(1)(iv) |
The distinction in the fourth and fifth rows is long-standing and still holds: stock-in-trade may not be seized, only inventoried, while cash and other assets may be. The genuinely new ground is digital — refusing a password no longer obstructs the search, because clause (1)(iii) permits the access code to be overridden.
Compliance checklist and due dates
- Verify the authorisation and the identity of the authorised officer at the outset.
- Provide technical assistance and access codes when required; refusal does not prevent access and can lead to prosecution under section 473 or 474.
- Ensure stock-in-trade is inventoried, not seized, and that the inventory is signed and a copy retained.
- Obtain a copy of the panchnama and the list of seized items, including computer systems.
- Apply under section 251 for copies of, or release of, seized books and documents.
- Track the treatment of seized assets under section 250.
- Expect the assessment to follow the block assessment route in sections 292 to 301, and note that section 120 bars set off of losses against undisclosed income found.
Common mistakes
- Assuming records held on a cloud platform outside the premises are beyond reach; clause (1)(ii) covers information on a computer system.
- Withholding an access code in the belief that it protects the data — clause (1)(iii) permits overriding it.
- Allowing stock-in-trade to be seized when the section permits only an inventory.
- Not securing copies of seized records, which section 251 provides for.
- Overlooking that section 247 also supports action relating to the Black Money Act, 2015.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.