Section 499
Section 499: certain asset transfers during tax proceedings are void
Section 499 stops an assessee from defeating tax recovery by quietly transferring or mortgaging assets while a tax proceeding is pending or after it concludes but before the Tax Recovery Officer's notice is served. Such a transfer is treated as void against the tax department's claim, subject to two exceptions.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
When a charge or transfer is void
"Where, during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice by the Tax Recovery Officer as per the procedure specified under section 413, any assessee creates a charge on, or parts with the possession of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise."
Exceptions - when the charge or transfer is NOT void
The charge or transfer under sub-section (1) is not void if it is made:
- for adequate consideration and without notice of the pendency of the proceeding or, as the case may be, without notice of the tax or other sum payable by the assessee; or
- with the previous permission of the Assessing Officer.
Monetary thresholds
Section 499 applies only where the amount of tax or other sum payable, or likely to be payable, exceeds ₹5,000, and the assets charged or transferred exceed ₹10,000 in value.
What counts as an "asset", and what counts as a "transfer"
"Assets" means land, building, machinery, plant, shares, securities, fixed deposits in banks, and virtual digital asset, to the extent these do not form part of the assessee's business stock-in-trade.
The modes of creating a charge on, or parting with possession of, such assets include sale, mortgage, gift, exchange or any other mode of transfer.
Frequently asked questions
Can I sell or mortgage my property while a tax proceeding against me is pending?
You can, but under Section 499(1) such a transfer or charge is void against any tax claim arising from that proceeding, unless it falls within one of the exceptions in Section 499(2).
Is every transfer during a pending tax proceeding void?
No. A transfer for adequate consideration made without notice of the pending proceeding or the tax payable, or a transfer made with the Assessing Officer's previous permission, is not void under this section.
Is there a minimum amount for Section 499 to apply?
Yes - the tax or other sum payable or likely to be payable must exceed ₹5,000, and the assets charged or transferred must exceed ₹10,000 in value.
Does "assets" under Section 499 include virtual digital assets?
Yes - the definition of "assets" in Section 499(4)(a) expressly includes virtual digital asset.
Related sections
Want this applied to your actual filing, not just explained?
Talk to our tax team about this sectionLast updated 9 September 2026