Chapter XIV - Tax Administration
Section 254
Section 254: power to collect certain information
Section 254 is a narrower, information-gathering power than the survey power in Section 253 or the search power in Section 247. It lets designated officers enter a business or professional place during business hours purely to collect prescribed information - nothing may be removed from the premises.
On this page
Need advice on Section 254?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Irrespective of anything contained in any other provision of this Act, an income-tax authority may, for the purposes of collecting any information which may be useful for, or relevant to, the purposes of this Act, enter––
(a) any building or place within the limits of the area assigned to such authority; or
(b) any building or place occupied by any person in respect of whom such authority exercises jurisdiction, at which a business or profession is carried on, regardless of the fact that such place be the principal place or not of such business or profession and require any proprietor or employee or any other person, who may at that time and place, be attending in any manner to, or helping in, or carrying on of such business or profession, to furnish such information as may be prescribed.
(2) 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.
(3) The income-tax authority acting under this section 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.
(4) For the purposes of this section, “income-tax authority” means––
(a) a Joint Commissioner, or a Joint Director or an Assistant Director or an Assessing Officer; and
(b) an Inspector of Income-tax, authorised by the Assessing Officer to exercise the powers conferred under this section in relation to the area in respect of which the Assessing Officer exercises jurisdiction or part thereof.
Introduction
This power concerns information collection at a place where a business or profession is carried on. The authority's location or taxpayer jurisdiction must fit Section 254(1), and entry is limited to business hours.
Key takeaways
Business-hours entry only
The officer may enter a covered business or professional place only while it is open for that activity.
Information may be required
A proprietor, employee or other person attending to the business may be asked for prescribed information useful or relevant to the Act.
Items cannot be removed
Section 254 expressly bars taking away books, documents, cash, stock or other valuables under this power.
Inspector needs authorisation
An Inspector may use this power only if the Assessing Officer authorises it for the relevant area or part of it.
Who can enter, and where
An income-tax authority may enter any building or place within its assigned area, or occupied by a person over whom it has jurisdiction, at which a business or profession is carried on (whether or not the principal place), and require any proprietor, employee, or person attending to or helping with the business/profession to furnish such information as may be prescribed.
Timing
Entry is allowed only during the hours the place is open for the conduct of business or profession.
No removal of anything
The income-tax authority must not, on any account, remove or cause to be removed from the place entered, any books of account, other documents, cash, stock, or other valuable article or thing.
Who counts as an 'income-tax authority' here
For this section, "income-tax authority" means a Joint Commissioner, Joint Director, Assistant Director, or an Assessing Officer, and also includes an Inspector of Income-tax who has been authorised by the Assessing Officer to exercise these powers in the relevant jurisdiction (or part of it).
Step-by-step flow for applying Section 254
- 1
Is the officer an income-tax authority for Section 254?
Section 254(4): a Joint Commissioner, Joint Director, Assistant Director or Assessing Officer, or an Inspector of Income-tax authorised by the Assessing Officer for the Assessing Officer's area or part of it.
- No: Section 254 gives that officer no power of entry.
- Yes: Go to the next step.
- 2
Is the building or place covered?
Any building or place within the authority's area, or any building or place occupied by a person under its jurisdiction at which a business or profession is carried on, whether or not it is the principal place (Section 254(1)).
- 3
If it is a place of business or profession, is it open for business?
Entry is allowed only during the hours the place is open for the conduct of business or profession (Section 254(2)).
- 4
What can be asked?
The proprietor, employee or other person attending to the business can be required to furnish such information as may be prescribed. Section 254 itself does not list that information; it is left to the rules.
- 5
Can anything be taken away?
No. Books of account, documents, cash, stock or other valuable articles must not be removed (Section 254(3)).
Practical checklist
Do
- Confirm the income-tax authority’s identity and the stated purpose for collecting information.
- Record the place visited, information requested and any statement or record furnished.
Avoid
- Treat the power to collect information as a power to remove stock, cash or books from the premises.
Illustrative example
Worked example: an information visit to a pharmacy
Hypothetical facts (illustration only, not a real taxpayer): An Inspector of Income-tax, authorised by the Assessing Officer for the area, visits a pharmacy during its opening hours to collect information. He asks the employee at the counter for details and also asks to take the day's sales register back to the office. Facts are assumed.
Authority
An authorised Inspector is an income-tax authority under Section 254(4)(b), for the area of the authorising Assessing Officer.
Timing
The visit is during business hours, as Section 254(2) requires.
Information
The employee can be required to furnish the information that has been prescribed (Section 254(1)); requests beyond that are not covered by this section.
Register
The sales register cannot be removed from the pharmacy (Section 254(3)).
Outcome
- The visit and the request for prescribed information are within Section 254; taking the register away is not.
- Wider powers such as recording statements on oath or impounding books belong to a survey under Section 253, which has its own approval requirement.
Frequently asked questions
How is Section 254 different from the survey power in Section 253?
Section 254 is a narrower power purely for collecting prescribed information from a business or professional place during business hours. It doesn't carry the broader inspection, impounding, or statement-recording powers that a survey under Section 253 has.
Can an Inspector of Income-tax exercise this power?
Yes, but only if authorised by the Assessing Officer to exercise the power under Section 254 in relation to the relevant jurisdiction or part of it.
Can anything be taken away during this kind of visit?
No - Section 254(3) specifically prohibits removing or causing to be removed any books, documents, cash, stock, or other valuable article or thing from the premises.
Need help applying this provision to your situation?
Get help responding to an income-tax noticeLast updated 9 October 2026