Section 524 · Miscellaneous
Section 524 of the Income-tax Act, 2025 — Presumption as to Assets, Books of Account and Documents Found in Search or Survey
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XXIII
📜 What the law says — Section 524, Income-tax Act 2025
524. (1) Where any books of account, other documents, money, bullion, jewellery,
virtual digital asset or other valuable article or thing or any information in
electronic form as defined in section 261(g) or on a computer system as defined in
section 261(e) or any computer system containing the said information, is found in
the possession or control of any person in the course of a search under section 247
or survey under section 253, it may, in any proceeding under this Act, be presumed—
(a) that such books of account, other documents, money, bullion, jewellery,
virtual digital asset or other valuable article or thing such information
or computer system belong or belongs to such person;
(b) that the contents of such books of account and other documents or such
information or computer system are true;
(c) that the signature and every other part of such books of account and
other documents, which purports to be in the handwriting of any
particular person, or which may reasonably be assumed to have been
signed by, or to be in the handwriting of, any particular person, are in
the handwriting of that person;
(d) in the case of a document stamped, executed or attested, that it was duly
stamped and executed or attested by the person by whom it purports to
have been so executed or attested; and
(e) that exchange of such information in electronic form, or on such comput-
er system purported to be exchanged between any parties, is exchanged
between the parties thereto.
(2) Where any books of account, other documents or assets have been delivered to
the requisitioning officer as per section 248, then, the provisions of sub-section (1)
shall apply as if such books of account, other documents or assets, which had been
taken into custody from the person referred to in sub-section (1)(a) or (b) or (c) of
the said section, had been found in the possession or control of that person in the
course of a search under section 247.
Authorisation and assessment in case of search or requisition.
In plain language
What Section 524 actually says
Section 524 of the Income-tax Act, 2025 deals with the presumption as to assets, books of account and other documents found during tax search, survey or requisition. It is the re-drafted successor to Section 292C of the Income-tax Act, 1961. (Note: the working title "presumption as to service / validity of proceedings" was a placeholder — the verified scope of Section 524 is presumptions about seized/found material, not service of notices.)
In plain words: when the Income-tax Department finds cash, gold, jewellery, virtual digital assets (crypto/NFTs), books, diaries, loose papers or electronic records in your possession or control during an authorised action, the law lets the officer assume certain things are true unless you prove otherwise. It shifts the evidentiary burden onto you.
The presumptions the officer can make
- Ownership: the items found belong to the person in whose possession or control they were found.
- Truth of contents: the contents of the books of account and other documents are true.
- Handwriting & signatures: the handwriting and signatures on the documents are genuine and are those of the person they appear to be.
- Due execution: stamped, executed or attested documents were duly stamped and properly executed/attested.
- Electronic records: electronic communications/records were sent or exchanged between the parties they appear to be between.
When and to whom it applies
- Search under Section 247 (the 2025 Act's search-and-seizure power).
- Survey under Section 253.
- Requisition under Section 248 — where assets/books seized by another authority (e.g. police, customs) are handed over to the income-tax officer, sub-section (2) treats them as if found in the person's possession during a search, so the same presumptions apply.
It applies to any person — individuals, HUFs, firms, companies, LLPs — from whom material is found or in respect of whom material is requisitioned. It operates "in any proceeding under this Act": assessment, reassessment, block assessment, penalty and prosecution proceedings.
The key word: "may be presumed" — it is rebuttable
The presumption is rebuttable, not conclusive. The statute uses "may... be presumed", not "shall be conclusively presumed". This means:
- The presumption gives the Department a prima facie case — it does not have to first independently prove ownership or authenticity.
- The taxpayer can rebut it with credible contrary evidence — e.g. the cash belongs to a family member, the diary entries are rough/dumb notings, the jewellery is disclosed/streedhan, the crypto wallet is someone else's.
- Courts have consistently held (under the analogous s.292C/s.132(4A) jurisprudence) that the presumption is a starting point and the assessee's explanation, if bona fide and supported by material, must be considered.
How it interacts with related sections
- Sections 247/248/253 supply the search, requisition and survey powers that trigger Section 524.
- The presumed "truth of contents" feeds into additions to income and can support treatment as unexplained money/investment/expenditure (the 2025 Act successors to ss.68–69D of the 1961 Act, taxed at the higher special rate).
- It supports penalty and prosecution provisions, because presumed authenticity of incriminating documents helps establish concealment.
Practical implications
- Maintain a clear paper trail for cash, gold and jewellery holdings — purchase bills, wedding/gift records, wealth already disclosed in returns.
- Loose papers and diaries are risky — even rough notings can be presumed true; keep business books reconciled and avoid unexplained scribbles.
- Virtual digital assets are now expressly covered — crypto and NFTs found in a wallet you control can be presumed yours; keep KYC and acquisition records.
- Rebut promptly — record objections during the search itself and in your statement, and file documentary proof at the assessment stage.
💡 Example
Worked example 1 — Cash found in a search. During a Section 247 search at Mr. Arora's premises, officers find ₹18,00,000 in cash and a diary noting receipts of ₹25,00,000. Under Section 524 the officer presumes the cash belongs to Mr. Arora and the diary entries are true. Mr. Arora produces cash-withdrawal bank statements and sale bills explaining ₹12,00,000; the remaining ₹6,00,000 stays unexplained. Result: ₹6,00,000 is treated as unexplained money and taxed at the special rate (60% plus surcharge and cess, roughly ₹4,68,000 total), while the explained ₹12,00,000 is accepted because he successfully rebutted the presumption for that part.
Worked example 2 — Requisitioned crypto. Police seize a laptop from Ms. Nair holding a crypto wallet worth ₹40,00,000 and hand it to the income-tax officer under Section 248. By virtue of Section 524(2), the wallet is treated as if found in her possession during a search, so it is presumed to be her virtual digital asset. She rebuts by showing the wallet is a company-custody wallet with board resolutions and exchange KYC in the company's name — the presumption is displaced and the value is not added to her personal income.
Relatable story. Ramesh runs a small textile shop. In a survey under Section 253, the team photographs a pocket notebook with figures. Ramesh panics — he had used it to jot down informal stock estimates. Because of Section 524, the officer can presume those figures are true sales. His CA explains that "may be presumed" is only a rebuttable presumption, and they file a reconciliation showing the notes were provisional and already reflected in GST returns. The addition is dropped. The lesson: the presumption is beatable, but only with clean, contemporaneous records.
| Aspect | Section 524, Income-tax Act 2025 | Section 292C, Income-tax Act 1961 (old) |
|---|
| Subject | Presumption as to assets, books of account & documents | Presumption as to assets, books of account & documents |
| Triggered by | Search (s.247), Survey (s.253), Requisition (s.248) | Search (s.132), Survey (s.133A), Requisition (s.132A) |
| Nature of presumption | Rebuttable ("may be presumed") | Rebuttable ("may be presumed") |
| Virtual digital assets (crypto/NFT) | Expressly covered | Not expressly mentioned |
| Electronic records | Presumption on electronic communications included | Limited; read with s.132(4A) |
| Presumptions | Ownership, truth of contents, handwriting/signature, due execution, electronic exchange | Ownership, truth of contents, handwriting/signature, due execution |
| Burden after discovery | Shifts to taxpayer to rebut | Shifts to taxpayer to rebut |
Related sections
Section 247 — Search and seizure Section 248 — Requisition of books of account, assets Section 253 — Power of survey Section 292C (1961 Act) — Old presumption provision Section 132 (1961 Act) — Search jurisprudence (incl. 132(4A)) Section 158B — Block assessment of search cases (new scheme)
Frequently asked questions
Is the presumption under Section 524 final and binding?
No. It is a rebuttable presumption — the statute says items "may be presumed", not that they are conclusively so. The taxpayer can displace it with credible contrary evidence.
Does Section 524 apply to cryptocurrency and NFTs?
Yes. Unlike the old Section 292C, Section 524 expressly covers virtual digital assets, so crypto or NFTs found in a wallet under your control can be presumed to belong to you unless you prove otherwise.
What if the cash or jewellery found actually belongs to a family member?
You can rebut the ownership presumption by producing evidence — bank records, gift deeds, wedding jewellery/streedhan documentation, or the family member's own disclosed wealth. The burden to prove this is on you.
Can rough notings in a diary be used against me?
Yes, because Section 524 lets the officer presume the contents are true. But you can argue and prove that entries were provisional or dumb notings not representing real transactions, ideally backed by reconciled books and filed returns.
Does this section apply to a survey, or only to a search?
It applies to both — a search under Section 247 and a survey under Section 253 — and also to assets requisitioned and handed over under Section 248 by virtue of sub-section (2).
What is the 1961 Act equivalent of Section 524?
Section 524 of the 2025 Act corresponds to Section 292C of the Income-tax Act, 1961, updated to expressly include virtual digital assets and electronic records.
When does Section 524 take effect?
The Income-tax Act, 2025 (as amended by the Finance Act, 2026) is effective from 1 April 2026, so Section 524 applies to search, survey and requisition actions from that date.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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