Failure to Produce Books During Search? Know new Consequences as Finance Bill, 2026

The Finance Bill, 2026 has brought about a major amendment to Section 275B of the Income-tax Act, 1961, which has eased the penal implications for not producing books of accounts during income-tax search proceedings. The amendment will come into effect from 1st March, 2026, as part of an effort to simplify criminal provisions in tax laws.

Before the amendment, Section 275B laid down rigorous imprisonment for a term which may extend to two years and fine for failing to afford facility for inspection of books of account or documents during a search. This section was often criticized for being too harsh, especially in instances of procedural or logistical defaults during search operations.

The Finance Bill makes a substitution in the punishment clause to introduce a less severe punishment. With the amendment, Section 275B will now read:

“shall be punishable with simple imprisonment for a term which may extend to six months, or with fine, or with both.”

This is a double dilution of punishment, as the punishment is reduced from two years to six months, and the type of imprisonment is altered from rigorous to simple. Moreover, the marginal heading of Section 275B is also substituted by the Finance Bill, and it will now read:

“Failure to afford facility for inspection of books of account during search.”

The amendment states that the marginal heading “shall be deemed to have been substituted”, bringing clarity to the scope of the offence and aligning it closely with the operative provision.

The relaxation of Section 275B is in line with the government’s overall strategy of rationalization of criminal provisions in tax laws and minimizing prosecution risk for compliance defaults that are not directly related to tax evasion or income concealment. It is to be noted that the earlier provision often triggered prosecution risks even in cases where records were unavailable due to practical constraints rather than deliberate obstruction.

Although default in producing books during search continues to be a criminal offense, the reduced penalty is likely to introduce greater proportionality, minimize litigation, and alleviate the prosecution burden on taxpayers and responsible officers.

The amendment marks a shift towards a compliance-friendly enforcement regime under the Income-tax Act.

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