Supreme Court Refuses To Entertain Plea Challenging Search Powers Under S.132 Income Tax Act (S.247 New Act)

The Supreme Court on Monday refused to entertain a petition challenging the search provisions under Section 132 of the Income Tax Act, 1961, and its corresponding provision (Section 247) in the new Income Tax Act, 2025 (set to take effect from April 1, 2026).

A bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi however allowed the petitioner to approach the Government of India with a representation seeking modifications or clarifications with respect to the provision. The writ petition was dismissed as withdrawn.

The bench disagreed with the submission of Senior Advocate Sanjay Hegde,  assisted by Advocate on Record Pranjal Kishore, that the provision was unconstitutional.

The main concern raised by Hegde was regarding the provision exempting the tax officers from disclosing the reasons for the search to the assessee or to the Income Tax Appellate Tribunal.  The petitioner also questioned 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.

The petitioner further flagged that Section 247 permitted searches of “computer systems” and “virtual digital space”, including personal digital devices, cloud servers and electronic communications.

Judicial review of High Courts preserved, the bench points out

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. "Why should every person come before the High Court to know the reasons? They should at least be shown to the Tribunal," Hegde urged. He submitted that the exact reasons need not be shown, if the Department has concerns about the destruction of evidence, but at least the gist should be disclosed.

However, the bench, while saying that it appreciated the petitioner's concerns, refused to accept the argument of unconstitutionality, pointing out that judicial review by the High Court is not barred.

"We fully understand your concern that it would have been better if S 249 was not there and it was available to superior officers or at any stage in 143 proceedings. Nonetheless, when there is a scope of judicial review, we cannot say that the provision is unconstitutional. We cannot second-guess the wisdom of the Parliament," Justice Bagchi said.

Hegde said that judicial review is not confined to the Constitutional Courts and can be available to Tribunals. Justice Bagchi said that the extent of inquiry on unconstitutionality is only regarding the existence of judicial review, and not with respect to the forum available for judicial review. "Here judicial review is vested with a Constitutional Court," Justice Bagch pointed out.

On the previous hearing, the bench had pointed out that the 2022 judgment in  Principal Director Of Income Tax (Investigation) vs Laljibhai KanjiBhai Mandalia had recognised a limited scope of judicial review over searches under Section 132. Hegde had then sought an adjournment to examine this judgment in detail.

Today, Hegde submitted that the remedy recognised by the Mandalia judgment was only in the nature of a "post-decisional hearing in a writ proceeding."

CJI Surya Kant pointed out that the provision mandates the recoding of the "reasons to believe" in writing, and the question was only at what stage they can be disclosed. Hegde said that if there is no mechanism for advance disclosure of reasons, there are chances of supplementation. He submitted that the CAG had also raised concerns over the provision. Hegde underscored that the CAG had recommended that the department should initiate search only on the basis of proper information to avoid undue harassment of assessees. 

"My only request is that a system can be made better in a way that assesses are not unnecessarily harassed. Those reasons must not only exist but also within the system, there must be safeguards," Hegde urged. There is no other way to know the reasons except by filing a writ petition, he added.  A mandate for advance disclosure of reasons would ensure that searches take place only for proper reasons, he argued.

The bench however said that was an "abstract" apprehension.

"This is an initial apprehension. There are provisions which are sometimes innocuously made but which looks like they can be misused.. so Courts may have to examine it later. There are provisions which are capable of misuse but are streamlined over time.  These provisions are often for the big tax evaders etc," CJI Surya Kant said.

Arguments raised in the petition

The petition challenged 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