Income Tax Notice to Furnish Information: Powers to Call for and Collect Information (Income Tax Act 2025)

The Income Tax Act 2025 gives tax officers four separate routes to ask for information without a search or a survey. Section 252 lets an assessing or appellate authority call for information and statements. Section 254 lets an officer walk into a business place during opening hours and ask for prescribed information, but never take anything away. Section 259 lets a prescribed authority issue a notice to verify information it already holds. Section 260 allows all of these to run through a faceless scheme.

This guide explains each power, who can use it, what you can be asked for, and the limits written into the law. The text is as amended by the Finance Act, 2026 and the Income-tax Rules, 2026, with section and rule numbers beside each point so you can check them. Last reviewed on 10 November 2026.

What are the four information powers at a glance?

Section	Who exercises it	How	Key limit
252: call for information	Assessing Officer, Joint Commissioner, Joint Commissioner (Appeals), Commissioner (Appeals); also the competent authority or Assistant Director for 252(1)(a)	Written requirement to furnish information, returns or statements within a stated time	Prior approval needed if no proceeding is pending and the officer is below the rank stated in 252(3)(a)
254: collect certain information	Joint Commissioner, Joint Director, Assistant Director, Assessing Officer, or an Inspector authorised by the Assessing Officer	Enter a business place and require information in Form No. 87	Only during business hours; nothing may be removed (254(2), (3))
259: call by prescribed authority	Authority not below Assistant Commissioner of Income-tax, authorised by the CBDT (rule 156)	Notice with form, manner and time specified in the notice	Only to verify information in the authority's possession (259(1))
260: faceless scheme	Central Government	Notified scheme covering sections 252, 254, 255, 256 and 259	Notification must be laid before each House of Parliament (260(3))

What can an officer require under section 252?

Section 252(1) lists six things an authority can require "for the purposes of this Act":

• Any person, including a bank or its officer, to furnish information or verified statements of account and affairs that the authority thinks will be useful or relevant to an enquiry or proceeding (252(1)(a)). The authority sets the time and the manner of verification.
• A firm to give a return of its partners' names, addresses and shares (252(1)(b)).
• A Hindu undivided family to give a return of the names and addresses of the manager and members (252(1)(c)).
• A trustee, guardian or agent to give the names and addresses of the persons for whom they act (252(1)(d)). The authority must have reason to believe the person holds that role.
• An assessee to give a statement of everyone to whom, in a tax year, they paid rent, interest, commission, royalty, brokerage or an annuity (other than a salary annuity) above Rs 10,000, or a higher prescribed amount, with particulars of the payments (252(1)(e)).
• A dealer, broker, agent or person managing a stock or commodity exchange to give names, addresses and particulars of sums paid or received on transfers of assets (252(1)(f)).

The people who can use these powers are the Assessing Officer, Joint Commissioner, Joint Commissioner (Appeals) and Commissioner (Appeals). For the general power in 252(1)(a), the competent authority or an Assistant Director can also act (252(2)).

Does the officer need approval before calling for information?

Sometimes. Under section 252(3)(a), where no proceeding is pending, the powers cannot be used by an income-tax authority below the rank of Principal Director, Director, Principal Commissioner or Commissioner without the prior approval of that senior officer. A Joint Director or Assistant Director is carved out of that restriction by the same clause.

Section 252(3)(b) adds a separate permission. An authority notified under section 246(2)(a) can use these powers for the purposes of an agreement referred to in section 159, even when no proceeding is pending before it or any other authority.

What can an officer do under section 254, and what can they not do?

Section 254(1) lets an income-tax authority enter any building or place that is within the authority's assigned area, or occupied by a person the authority has jurisdiction over, where a business or profession is carried on. It applies even if the place is not the principal place of the business. The officer can require the proprietor, an employee or anyone attending to or helping in the business at that time to furnish "such information as may be prescribed".

Rule 154 prescribes the form: information under section 254(1) is furnished in Form No. 87.

Three limits are written into the section itself:

• Hours. Entry is allowed only during the hours the place is open for business (254(2)).
• Nothing leaves the premises. The officer shall, on no account, remove any books of account, documents, cash, stock or other valuable article (254(3)).
• Who counts as the authority. A Joint Commissioner, Joint Director, Assistant Director or Assessing Officer, or an Inspector of Income-tax authorised by the Assessing Officer for that area (254(4)).

This is different from a survey. A survey under section 253 lets the officer require technical assistance to inspect books and electronic records, check assets and stock, and ask for information on any matter useful to a proceeding. Section 254 is narrower: it collects prescribed information and does not allow inspection or verification of stock. For the survey rules, see our guide to income tax survey powers and limits.

What is section 259 and who can issue the notice?

Section 259 is a verification power. The prescribed income-tax authority can issue a notice to any person requiring information that is useful or relevant to an inquiry or proceeding, "for the purposes of verification of information in the possession" of that authority (259(1)). The notice itself states the form, manner and time.

Rule 156 says the prescribed authority is an income-tax authority not below the rank of Assistant Commissioner of Income-tax who has been authorised by the Central Board of Direct Taxes for this purpose. Information received can be processed and used as per the scheme notified under section 260 (259(2)). "Proceeding" has the meaning in section 253 (259(3)).

What is the faceless scheme under section 260?

Section 260(1) allows the Central Government to notify a scheme for calling for information under section 252, collecting information under section 254, calling for information under section 259, and exercising the powers in sections 255 (inspection of register of companies) and 256 (powers of the Assessing Officer). The stated aims are to:

• eliminate the interface between the authority and the person, as far as technology allows;
• use resources better through economies of scale and functional specialisation; and
• use a team-based approach to call for, collect, process and use information, with dynamic jurisdiction.

To give effect to the scheme, the Government can direct that any provision of the Act does not apply, or applies with stated exceptions, modifications or adaptations (260(2)). Every such notification must be laid before each House of Parliament as soon as may be after it is issued (260(3)). The sections here do not set out the scheme's procedure, so check the notified scheme itself for how notices are served and responded to.

Worked examples: the section 252(1)(e) payment statement

Section 252(1)(e) asks an assessee for a list of payees of rent, interest, commission, royalty, brokerage or annuity above Rs 10,000 in a tax year. Both examples assume tax year 2026-27 and the Rs 10,000 figure stated in the section (a higher amount may be prescribed, which these examples do not assume).

Example 1: Which payees are listed? Sharma Traders receives a notice under section 252(1)(e) for tax year 2026-27. Its payments for the year:

Payee	Nature	Paid in the year	Above Rs 10,000?	Listed?
Landlord A	Rent (12 x Rs 8,000)	Rs 96,000	Yes	Yes
Agent B	Commission	Rs 9,500	No	No
Lender C	Interest	Rs 10,000	No (not more than)	No
Broker D	Brokerage (Rs 6,000 + Rs 5,500)	Rs 11,500	Yes	Yes

The test is the total for the tax year, not each payment. Broker D crosses the limit only when the two payments are added. The statement lists Landlord A and Broker D, with particulars of each payment. Lender C is exactly Rs 10,000, and the section says "more than" Rs 10,000.

Example 2: Sum across months and payees. Neha Interiors paid a freelance designer a commission of Rs 4,200 in each of April, July and October 2026, and Rs 3,000 in January 2027. Total: Rs 4,200 x 3 = Rs 12,600, plus Rs 3,000 = Rs 15,600. This is above Rs 10,000, so the designer appears in the statement even though no single payment was close to the limit. Whether each payment also needed TDS is a separate question under section 393, which this article does not cover.

Real-life scenarios

Scenario 1: A shop visit under section 254. An Inspector authorised by the Assessing Officer visits Ravi's hardware shop at 11 am on a working day and asks his employee to fill Form No. 87. The visit is inside business hours and within the Inspector's area, so it fits section 254. If the Inspector asks to take the cash register or the day's cash away, section 254(3) says no. Ravi's employee should hand over the information requested in the form, and the books stay in the shop.

Scenario 2: A bank asked for statements. During an assessment, the Assessing Officer writes to Meena's bank asking for statements of account for a period, within a stated time. Section 252(1)(a) covers "a banking company or any officer thereof". The bank must respond within the time the authority sets, and the statements must be verified in the manner the authority specifies.

Scenario 3: A verification notice from an authorised ACIT. An Assistant Commissioner authorised by the CBDT sends Kabir a notice under section 259 asking for documents to verify information the department already holds about his transactions. Kabir should check three things: the sender is not below the rank of Assistant Commissioner, the notice states the form, manner and deadline, and the request relates to information the authority already has. Then he responds in the form, manner and time the notice states.

What are the common mistakes?

• Treating a section 254 visit as a search or survey. The power is limited to prescribed information, business hours, and no removal of books, cash or stock.
• Testing the Rs 10,000 limit per payment. Section 252(1)(e) looks at the total paid to a person in the tax year.
• Missing the notice deadline. The authority fixes the time under section 252(1)(a) and in a section 259 notice. Note the date on receipt and diarise the response.
• Ignoring who signed. Check the rank of the sender. Section 259 needs an authority not below Assistant Commissioner who is CBDT-authorised (rule 156).
• Using the wrong form. Information under section 254(1) goes in Form No. 87 (rule 154).
• Giving unverified statements. Section 252(1)(a) allows the authority to require statements verified in a specified manner.

What is the penalty if I ignore an information notice?

Two penalty sections apply, and they work differently:

• Section 252 returns and statements. Under section 465(2)(c), failing to furnish in due time any of the returns, statements or particulars mentioned in section 252 attracts a penalty of Rs 500 for every day the failure continues.
• Section 254 information. Under section 466, a person who fails to comply with section 254 can be penalised up to Rs 25,000, imposed by the Joint Commissioner, Deputy Director, Assistant Director or Assessing Officer. The limit was raised from Rs 1,000 by the Finance Act, 2026 with effect from 1 April 2026.

Example: a firm served with a section 252(1)(b) partners' return misses the stated date and files 20 days late. At Rs 500 a day for 20 days, the penalty is Rs 10,000. The section 465 text quoted here does not itself set a cap for this item, so confirm the final amount against the order actually passed.

Quick reference

Item	Provision	What it says
Payment-statement threshold	252(1)(e)	More than Rs 10,000 in a tax year, or a higher prescribed amount
Approval where no proceeding pending	252(3)(a)	Prior approval of the senior authority for officers below the stated rank
Form for section 254 information	Rule 154	Form No. 87
Entry hours	254(2)	Only when the place is open for business
Removal of books, cash, stock	254(3)	Not allowed on any account
Authority under section 259	Rule 156	Not below ACIT, authorised by the CBDT
Penalty, late section 252 returns/statements	465(2)(c)	Rs 500 per day of failure
Penalty, non-compliance with section 254	466	Up to Rs 25,000
Faceless scheme	260	Notified by the Central Government; laid before Parliament

Where is this in the Act?

• Section 252: power to call for information
• Section 254: power to collect certain information; rule 154 (Form No. 87)
• Section 259: power to call for information by prescribed income-tax authority; rule 156
• Section 260: faceless collection of information
• Sections 465(2)(c) and 466: penalties for failure to comply with sections 252 and 254
• Related: section 253 (survey), section 255 (inspection of register of companies), section 256 (powers of the Assessing Officer), section 159 and section 246(2)(a)

How can a CA firm keep track of these notices?

An information notice usually comes with a short deadline, and several clients may receive one in the same week. Finexo's practice management software lets a CA firm log each notice against the client, assign it, and track the response date so none is missed. It does not draft the reply or file it with the department.

This article explains the Income Tax Act 2025 (as amended by the Finance Act, 2026) and the Income-tax Rules, 2026. It is general information, not tax advice. Confirm the position for a specific notice with a qualified chartered accountant.