Sections 259 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 259 to 261 close Part B of Chapter XIV. Section 259 lets the prescribed income-tax authority issue a notice to verify information. Section 260 lets the Central Government make a faceless scheme for calling for and collecting information. Section 261 defines the terms used across the search, survey and information provisions, including "approving authority", "authorised officer", "asset" and "computer system". This article explains them as per the Income-tax Act, 2025 as amended by the Finance Act, 2026.
The prescribed income-tax authority may issue a notice requiring any person to furnish information, in the form, manner and time specified in the notice. Such information is processed under a scheme notified under section 260, which aims at eliminating the interface between authority and assessee to the extent technologically feasible. Section 261 gives the definitions for Part B, including a wide definition of asset (it includes virtual digital assets) and computer system (it includes cloud servers).
By section 1(3), the Act is in force from 1 April 2026, save as otherwise provided. No Finance Act, 2026 amendment is named for these sections. Later amendments, rules and notifications should be checked. For advice on a notice or the faceless process, see our legal consultation service.
Section 259: information called by the prescribed authority
The notice: sub-section (1)
For the purposes of verification of information in the possession of the prescribed income-tax authority, the authority may issue a notice requiring any person to furnish any information as may be useful for, or relevant to, any inquiry or proceeding under the Act, in such form and manner and within such time as specified in the notice.
Processing: sub-section (2)
The prescribed income-tax authority may process and utilise the information and documents received as per the scheme notified under section 260.
Meaning of "proceeding": sub-section (3)
The term "proceeding" has the meaning assigned to it in section 253. Section 253 is the power of survey; see our post on section 253, powers of survey.
Who the "prescribed income-tax authority" is, is left to the Income-tax Rules, 2026; see our rule-wise guides. The text of section 259 does not itself name an officer.
Section 260: faceless collection of information
The scheme: sub-section (1)
The Central Government may make a scheme, by notification, for the purposes of:
- calling for information under section 252;
- collecting certain information under section 254;
- calling for information by the prescribed income-tax authority under section 259;
- exercise of the power to inspect the register of companies under section 255; or
- exercise of the power of the Assessing Officer under section 256,
so as to impart greater efficiency, transparency and accountability by:
- (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;
- (b) optimising utilisation of resources through economies of scale and functional specialisation; and
- (c) introducing a team-based exercise of powers, including to call for, collect, process or utilise the information, with dynamic jurisdiction.
Whether a scheme has been notified and what it provides is not in the text consulted; no scheme is named here.
Adapting the Act: sub-section (2)
To give effect to the scheme, the Central Government may, by notification, direct that any provision of the Act shall not apply or shall apply with the exceptions, modifications and adaptations specified in the notification.
Parliament: sub-section (3)
Every notification under sub-sections (1) and (2) shall, as soon as may be after it is issued, be laid before each House of Parliament.
Section 261: the definitions for this Part
"For the purposes of this Part":
| Clause | Term | Meaning |
|---|---|---|
| (a) | Approving authority | The Principal Director General or Director General; the Principal Chief Commissioner or Chief Commissioner; the Principal Director or Director; or the Principal Commissioner or Commissioner |
| (b) | Asset | Includes any money, bullion, jewellery, virtual digital asset or other valuable article or thing, held in physical or virtual form |
| (c) | Authorised officer | The Joint Director or Additional Director; the Joint Commissioner or Additional Commissioner; the Assistant Director or Deputy Director; the Assistant Commissioner or Deputy Commissioner; the Income-tax Officer or Tax Recovery Officer |
| (d) | Competent authority | The Principal Director General or Director General; the Principal Chief Commissioner or Chief Commissioner; the Principal Director or Director; the Principal Commissioner or Commissioner; the Joint Director or Additional Director; the Joint Commissioner or Additional Commissioner |
| (e) | Computer system | Computers, computer networks, computer resources, communication devices, digital or electronic data storage devices, used on stand-alone mode or as part of a computer system linked through a network, or utilised through intermediaries for information creation, processing, storage or exchange, and includes the remote server or cloud server or virtual digital space |
| (f) | Date on which the last of the authorisations for search was executed | (i) For a search, the date of conclusion of search as recorded in the last panchnama drawn for any person in whose case the warrant of authorisation has been issued; (ii) for a requisition under section 248, the date of actual receipt of the books of account, documents, computer system or assets by the requisitioning officer |
| (g) | Electronic form | The meaning in section 2(1)(r) of the Information Technology Act, 2000 (21 of 2000) |
| (h) | Electronic record | The meaning in section 2(1)(t) of the Information Technology Act, 2000 |
| (i) | Material seized or requisitioned | Books of account, other documents, computer systems and extracts seized during a search under section 247 or requisitioned under section 248; includes backup taken from specialised programs such as accounting software, spreadsheets, word files and all electronic records, containing figures and other relevant noting, and is to be construed as books of account maintained by the person |
| (j) | Virtual digital space | An environment, area or realm constructed and experienced through computer technology and not the physical, tangible world, encompassing any digital realm that lets users interact, communicate and perform activities using computer systems, networks, resources, communication devices, cyberspace, internet, worldwide web and emerging technologies, using data and information in electronic form; includes (i) email servers, (ii) social media accounts, (iii) online investment, trading and banking accounts, etc., (iv) any website used for storing details of ownership of any asset, (v) remote or cloud servers, (vi) digital application platforms and (vii) any other space of similar nature |
The Information Technology Act, 2000 is another law; the reader should check it for the terms in clauses (g) and (h).
Why these definitions matter
The definitions of "approving authority", "authorised officer" and "competent authority" fix who may act under sections 247 and 248: see our post on section 247, search and seizure. The date in clause (f) is the date from which periods run in section 250; see our article on sections 250 and 251.
A worked example
Names are assumed.
A prescribed income-tax authority wants to verify information it already holds about Sundar Fabrics Ltd.
- Under section 259(1), it issues a notice requiring the company to furnish information in the form and manner and within the time specified in the notice.
- Under section 259(2), it processes and uses the information as per the scheme notified under section 260 (if any scheme is in force; the text consulted does not show one).
- If, later, a search takes place under section 247 and the company's cloud-hosted accounts are accessed, clause (e) of section 261 treats a cloud server and virtual digital space as part of a "computer system", and clause (j)(iii) lists online banking and trading accounts as part of virtual digital space.
- If the search concludes on 12 March (assumed), the date recorded in the last panchnama is the date in section 261(f)(i), from which periods such as the one hundred and twenty days in section 250 are counted.
Need help with a notice from the tax department?
A notice under section 259 sets its own form, manner and time. Our team can help you read the notice, collect the information and respond through our legal consultation service.
Key takeaways
- Section 259 lets the prescribed income-tax authority issue a notice for information, in the form, manner and time stated in it.
- Section 260 lets the Central Government make a faceless scheme by notification, to be laid before Parliament.
- The scheme covers the powers in sections 252, 254, 255, 256 and 259.
- Section 261 defines the key terms for Part B, with a broad meaning for asset, computer system and virtual digital space.
Read next
- Sections 255 to 258: inspection of company registers, judicial proceedings and disclosure of information
- Section 262: permanent account number
- Section 253: powers of survey
- Chapter XIV: tax administration
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.