PIL In Supreme Court Challenges New Income Tax Law Allowing Search Of Digital Devices

A public interest litigation has been filed before the Supreme Court challenging the constitutionality of powers conferred on Income Tax authorities under the Income Tax Act, 2025, which permit searches of “computer systems” and “virtual digital space”, including personal digital devices, cloud servers and electronic communications.

The petition, filed under Article 32 of the Constitution by entrepreneur Vishwaprasad Alva, assails Section 247 of the Income Tax Act, 2025, which is scheduled to come into force from April 1, 2026, along with corresponding provisions under Section 132 of the Income Tax Act, 1961

The petitioner also challenges the clauses in Section 132 of the 1961 Act (Section 247 of the new Act) that permit search and seizure on the belief that a person “will not” or “would not” produce documents if summoned, or that assets “would not be disclosed” for tax purposes. According to the petitioner, these provisions create an “anticipatory search framework” where highly intrusive powers can be exercised without any existing violation of law.

A bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice NV Anjaria briefly heard the arguments of Senior Advocate Sanjay Hegde, assisted by AoR Pranjal Kishore, before adjourning the matter for further consideration next week.

Although Hegde conceded that Section 132 of the IT Act was upheld by the Supreme Court in 1974 in Pooran Mal v. Director of Inspection case, in view of the recognition of right to privacy as a fundamental right in the KS Puttaswamy case in 2017, he argued that the Pooran Mal decision required revisiting.

Hegde submitted that there are no safeguards in the Income Tax Act, as the "reasons to believe" need not be disclosed, and there is no judicial review on that aspect. As per the 2017 amendment, the reasons need not be disclosed to the Tribunals, Hegde flagged.

Justice Bagchi however said that a limited judicial review on the resons to exercise Section 132 powers was recognised by the Supreme Court in 2022 in Principal Director Of Income Tax (Investigation) vs Laljibhai KanjiBhai Mandalia.

Justice Bagchi posed :

"If a roving search under 132 is initiated, you come before us and call upon the department to produce the records, and if you find that there is no rational nexus between the material before the department and the reasonable belief recorded by them in their records, the entire procedure will be set aside. So that is all fact-specific. How can you say that the discretion is uncanalised? Two things operate there. A discretion which is not uncanalized, it is regulated by recording of reasons on the basis of information received by the concerned officers. That is the principal commissioner and others up to the joint commissioner. So they have two things to satisfy. One, they have material before them, and that material germinates in a rational nexus in the search vis-a-vis the object they seek to achieve, that is recovery of documents for the purpose of their enquiry or gold or other valuables.So where can we say that the mechanism is unguided?"

Hegde said that the provision allows the search and seizure merely on the belief that the assesse will not produce the documents which have been summoned. "Now the authority comes directly to the finding that look this is a fellow who does not deserve any notice because if I give him a notice, he may not answer or will not answer," Hegede submitted. Justice Bagchi said that the provision is intended to prevent the destruction of documents if an advance notice is given to produce.

"He can destroy the evidence.  Now if that potentiality is not covered, you see the extent to which the investigation gets made. We have to also, definitely when it comes to clause B or clause C, the degree of scrutiny of the court and judicial review will be higher than clause A because there the material before the principal commissioner not only should have a nexus with regard to the documents they seek to receive but the fact that they will not respond to the summons,  which should also be evident from the material available to them. That is all, the higher degree of satisfaction is to be recorded," Justice Bagchi said.  

CJI Surya Kant said that if there are incriminating electronic documents, people might destroy the device itself. Justice Bagchi added : "Data in respect of most of the social media platforms, after the rules are amended, they have to keep the data within a server within the territory of India, was always in the cloud and they were accessible from foreign shores. So the investigating agencies did not have the power to go to the social media platforms to extract that evidence. So whatever digital evidence will always be in the hard disk or in the device. So to snub out the investigation, one can destroy the evidence." Hegde said that there are methods of retrieving the data even in such cases.

Hegde submitted that, irrespective of the possibilities of evidence destruction, there must be some guidelines to circumscribe the power of the authorities to prevent abuse.

CJI Kant said that it was not an "uncontrolled power" as there are some "pre-conditions". "Today there is only an apprehension, let us see after the passage of time, how it is implemented," CJI said.

Justice Bagchi said that the directions issued in the 2022 Mandalia decision addressed most of the concerns raised by the petitioners. The bench asked Hegde to come back after examining the Mandalia judgment in detail. Accordingly, the matter was adjourned.

Arguments raised in the petition 

At the core of the challenge is Section 247 of the 2025 Act, which authorises tax officials to conduct searches not only of physical premises but also of “computer systems”, a term expansively defined to include computers, communication devices, electronic data storage systems, cloud servers and what the law terms “virtual digital space”.

The petition argues that the provision effectively allows Income Tax officials to access personal laptops, mobile phones, emails, private chats and cloud-stored data, and even to override access controls and passwords, without prior judicial authorisation.

According to the petitioner, this represents an unprecedented extension of traditional search powers into the digital sphere and constitutes a grave invasion of informational privacy protected under Article 21 of the Constitution.

“Anticipatory” trigger for searches

The plea further challenges provisions that allow such intrusive searches to be conducted based on a belief that a person may not disclose information or would not produce documents in the future if summoned. It is contended that these clauses create an “anticipatory search regime”, enabling searches without any proven non-compliance or existing violation of tax law.

The petition submits that less intrusive statutory mechanisms such as summons, surveys and assessments are already available to the revenue, and therefore authorising full scale digital searches on speculative grounds fails the constitutional test of proportionality.

A major plank of the challenge is that search authorisation under the Income Tax law is granted internally by senior tax officials, without any requirement of judicial approval. Compounding this, the law expressly bars disclosure of the “reasons to believe” that form the basis of a search, even to appellate tribunals.

The petitioner argues that the non-disclosure provision, now incorporated as Section 249 of the Income Tax Act, 2025, renders meaningful judicial review impossible and violates principles of natural justice. It is further contended that the expansion of search powers into the digital domain makes such secrecy constitutionally untenable.

The plea relies heavily on the Supreme Court's privacy jurisprudence, particularly K.S. Puttaswamy v Union of India, to argue that digital searches implicate a higher threshold of constitutional scrutiny due to the volume, sensitivity and personal nature of data stored on electronic devices.

It is argued that earlier judgments upholding Income Tax search powers were delivered before privacy was recognised as a fundamental right, and therefore the new digital search regime requires fresh constitutional evaluation.

The petitioner has sought a declaration that the provisions of the Income Tax Act, 2025 permitting searches of computer systems and virtual digital space are unconstitutional. In the alternative, the plea seeks that the provisions be read down and that safeguards, including independent oversight and disclosure of reasons, be mandated.

Directions have also been sought for framing guidelines to prevent misuse of digital search powers and to ensure accountability of tax officials.

Case : VISHWAPRASAD ALVA Vs UNION OF INDIA | W.P.(C) No. 114/2026