Section 489 of the Income-tax Act, 2025 — Presumption as to Assets, Books of Account, etc., in Prosecution Cases

In plain language

What Section 489 actually says

Section 489 of the Income-tax Act, 2025 creates a legal presumption that helps the prosecution (the Income-tax Department) when it takes a taxpayer to criminal court for a tax offence. In plain words: if money, bullion, jewellery, a virtual digital asset (VDA / crypto), or any books of account, documents, or information stored in electronic form or on a computer system were found with a person during a search, and the prosecution puts those items before the court as evidence, the court is allowed to presume certain things without the Department having to separately prove them.

It does this by borrowing the presumption already built into the search law. Section 489 says that the presumption rules in Section 247(7) (the general search-and-seizure provision) "shall, so far as may be, apply" in a prosecution. This is the 2025 Act's replacement for the old Section 278D of the Income-tax Act, 1961, which similarly imported the presumption from the old Section 132(4A).

The three things the court may presume

Under Section 247(7) (carried into prosecution by Section 489), where such assets or documents are found in a person's possession or control, the court may presume that:

• Ownership / belonging — that the money, bullion, jewellery, VDA, books or documents belong to that person.
• Truth of contents — that the contents of the books of account and documents are true.
• Genuineness of signature and handwriting — that the signature and every part of the handwriting which purports to be in a person's hand is genuinely his, and that documents were duly stamped and executed by the person they appear to be executed by.

Two situations it covers

• Sub-section (1) — Items found in a search: Applies when the assets, books, documents or electronic information were found in possession or control during a search under Section 247 and are tendered in evidence.
• Sub-section (2) — Items taken into custody and requisitioned: Applies when items were taken into custody by an officer or authority under Section 248(1)(a), (b) or (c) and delivered to the requisitioning officer, and are then tendered in evidence.

Who it applies to

It applies to any person being prosecuted for an offence under the Act — and, importantly, also against a person tried together with an abettor or accomplice referred to in Section 484 (abetment of false return / false accounts). So a partner, director, accountant or agent who helped can be swept in.

Key conditions and limits

• It is a "may presume", not a "shall presume" — the court has discretion, and the presumption is rebuttable. The accused can lead evidence to show the items are not his, or the contents are false/planted.
• The presumption only bites where the items were found in possession or control during a Section 247 search or a Section 248 requisition — not for material gathered by other routes.
• The 2025 Act explicitly modernises the old wording by naming virtual digital assets, information in electronic form and computer systems (defined by reference to Section 261), reflecting today's digital records and crypto.
• It is procedural/evidentiary — it does not itself create an offence or a penalty; it eases the burden of proof in a prosecution launched under other sections.

How it interacts with related sections

• Section 247 is the source of the presumption (search and seizure); Section 247(7) is the exact sub-section imported.
• Section 248 deals with requisition of books/assets already in another authority's custody.
• Section 484 covers abetment, so the presumption can operate against accomplices too.
• The presumption practically supports prosecutions for offences such as wilful attempt to evade tax and false statements in verification (the 2025 Act's successors to Sections 276C / 277 of the 1961 Act).

Practical implications for taxpayers

If you undergo a search and undisclosed cash, gold, crypto or incriminating ledgers are found with you, do not assume the Department must prove everything from scratch in the criminal case. The starting point tilts against you — the court can presume the assets are yours and the books are true. Your defence must actively rebut that presumption with credible evidence (bills, ownership proof, explanations for who really controlled the material). Keeping clean, well-documented records and not holding others' unexplained assets is the best protection.