SC to examine PIL against I-T's digital search powers

The Supreme Court on Tuesday said it will examine a PIL challenging the powers granted to the income tax authorities under the Income Tax Act, 2025 permitting searches of "computer systems" and "virtual digital space," including seizing of personal digital devices, cloud servers and electronic communications.

The 2025 Act, effective April 1, 2026, has expanded search powers under Section 247, authorising tax officials to search these if there is "reason to believe" income is hidden. This includes bypassing passwords, accessing emails/social media, and seizing devices.

A bench led by Chief Justice of India Surya Kant said while a limited judicial review of search actions of the income tax department was already recognised in its 2022 judgment, where tax authorities under the law can conduct searches when there is a "reason to believe" that income is hidden.


According to the top court, courts can examine whether there is a rational nexus between the material available with the income tax authorities and the belief recorded for initiating a search. The provisions allowing searches based on apprehension of non-compliance exist to prevent destruction of evidence, the bench said.

The court also observed that much of the digital evidence was stored on devices or in the cloud, and without search powers, investigations could be frustrated. "If notice is given for this search and seizure, there is a potential for destroying the evidence. The best way to snub out such an investigation against the digital record is to destroy the device itself," it said.

Senior counsel Sanjay Hegde, appearing for petitioner Vishwaprasad Alva, argued that the impugned provision provides excessive power in the hands of tax authorities and exposes not only the alleged tax evader but also third parties to coercive action.