Section 255 of the Income-tax Act, 2025 — Power to Inspect Registers of Companies

In plain language

What Section 255 actually says

Section 255 of the Income-tax Act, 2025 gives specified income-tax authorities the power to inspect the statutory registers that every company maintains — the register of members (shareholders), the register of debenture holders, and the register of mortgagees — and to take, or cause to be taken, copies of any such register or of any single entry in it. The plain purpose is verification: it lets the department cross-check who really owns shares or debentures in a company, and against whom, before it makes an assessment, opens a re-assessment, or recovers a tax demand.

This provision is the direct successor to Section 134 of the old Income-tax Act, 1961. The substance is almost identical; the 2025 Act simply modernises the list of officers who may act, adding the "assessment unit" and "verification unit" to reflect the faceless, technology-driven assessment system.

Who can exercise this power

• Assessing Officer (AO)
• Assessment unit and Verification unit (the faceless-regime bodies)
• Joint Commissioner or Joint Commissioner (Appeals)
• Commissioner (Appeals)
• Any person subordinate to the above who is authorised in writing for this purpose

The written authorisation is an important safeguard — a clerk or inspector cannot walk into a company and demand its registers unless a listed authority has authorised him in writing.

What can be inspected

• Register of members — shareholder names, holdings and changes in shareholding.
• Register of debenture holders — who holds the company's debentures and how much.
• Register of mortgagees — parties to whom the company's assets are mortgaged.
• Any individual entry in these registers, and copies of the same.

Who it applies to

The obligation falls on companies (which under the Companies Act, 2013 must maintain these registers). It is not a power to inspect the private books of an individual — it is aimed at company records that reveal beneficial ownership. In practice it affects:

• Companies, whose registers must be produced on demand from an authorised officer.
• Shareholders, debenture holders and mortgagees, whose details in those registers can be examined and copied.

How it interacts with related sections

Section 255 is one tool in the department's information-gathering toolkit and works alongside:

• Section 254 — Power to collect certain information and the power to call for information generally.
• Section 246 — Search and seizure and Section 247 — Survey, which are far more intrusive; Section 255 by contrast is a limited, register-only inspection.
• Section 256 — Powers of certain income-tax authorities (summons, discovery, production of documents).

Practical implications

• It is used to trace undisclosed investments — e.g. matching a shareholder in a company register against income declared in that person's return.
• It supports benami and shell-company detection by revealing who actually holds the shares.
• It aids recovery proceedings — identifying assets and holdings of a defaulter.
• There is no monetary threshold or fee; the only condition is that the officer must be one of the listed authorities or hold written authorisation.
• A company that refuses or obstructs inspection can face consequences under the Act's penalty and prosecution provisions, since the officer is exercising a statutory power.

For an ordinary salaried taxpayer this section is rarely felt directly. It matters most to company promoters, investors and closely-held companies, where ownership structures are the very thing the department wants to verify.