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Direct Tax Laws and International Taxation · Assessment of Companies

Power to Inspect Registers of Companies under Section 255

Updated 11 October 2026 · Fact-checked

Section 255 of the Income-tax Act, 2025 lets specified tax authorities, or persons they authorise in writing, inspect any register of members, debenture holders or mortgagees of a company, or any entry in it, and take copies if necessary. Refusing inspection attracts a penalty under section 465(2)(d).

Understand Power to Inspect Registers of Companies

A company keeps statutory registers. Three matter here: the register of members (shareholders), the register of debenture holders and the register of mortgagees. They show who holds the company's shares and debt. Tax officers often need this to trace ownership, verify who received dividends or interest, or check share transactions.

Section 255 gives the power to look at these registers. The following may inspect: the Assessing Officer, the assessment unit, the verification unit, the Joint Commissioner, the Joint Commissioner (Appeals) and the Commissioner (Appeals). Any person subordinate to them can also do so, but only if that officer or authority has authorised him in writing.

The power has two parts. First, the authority may inspect the register, or any single entry in it. Second, if necessary, it may take copies, or cause copies to be taken, of the register or of an entry. The Act does not need a notice or a search for this. It is an enquiry power, not a search power.

There is a consequence for the company. Under section 465(2)(d), a person who fails to allow inspection of any register referred to in section 255, or an entry in it, or fails to allow copies to be taken, is liable to a penalty of ₹500 for every day the failure continues. Under section 465(4)(d), this penalty is imposed by the Joint Director or the Joint Commissioner, unless the failure occurs in a proceeding before an authority of that rank or higher, in which case that authority imposes it.

Section 260 adds that the Central Government may notify a faceless scheme for exercising the power to inspect registers under section 255. The scheme can remove the physical interface between authority and assessee as far as technology allows, use team-based working with dynamic jurisdiction, and the notification must be laid before Parliament.

Key rules to remember

Who may inspect (section 255)
AO, assessment unit, verification unit, JC, JC(Appeals), CIT(Appeals) + subordinates authorised in writing
A subordinate without written authorisation has no power to inspect.
What may be inspected
Register of members, debenture holders or mortgagees of any company, or any entry in it
Applies to any company, not only the company being assessed.
Extent of power
Inspect + (if necessary) take copies or cause copies to be taken
Copying is allowed only if necessary.
Penalty for refusal (section 465(2)(d))
₹500 per day while the failure continues
Covers failure to allow inspection or copying of the register or an entry.
Penalty-imposing authority (section 465(4))
Joint Director or Joint Commissioner (general case)
If the default occurs in a proceeding before an authority not below Joint Director or Joint Commissioner, that authority imposes it.
Faceless scheme (section 260)
Central Government notification; laid before each House of Parliament
Can notify that provisions apply with modifications for the scheme.

How to solve Power to Inspect Registers of Companies questions

Use this method for any question on inspection of company registers, whether theory or a short case.

  1. 1Identify the document: is it a register of members, debenture holders or mortgagees? If it is another record, section 255 does not directly apply.
  2. 2Identify who wants to inspect. Check that the person is one of the listed authorities or a subordinate holding written authorisation.
  3. 3State what the authority may do: inspect the register or any entry, and take copies if necessary.
  4. 4Check whether the company or its officer allowed access. If refused, apply section 465(2)(d).
  5. 5Compute the penalty: ₹500 × number of days the failure continued.
  6. 6Name the authority who imposes the penalty under section 465(4).
  7. 7If the question mentions a faceless or notified scheme, add the section 260 points.
  8. 8Close with a clear conclusion in one or two lines.

Quickest way: Three-check approach

When to use it: When you have a short case and a few minutes.

  1. Check 1: Who? Listed authority, or subordinate with written authorisation.
  2. Check 2: What? Register of members, debenture holders or mortgagees, or an entry in it.
  3. Check 3: Default? If access or copying was refused, penalty is ₹500 per day of continuing failure.
  4. Write the answer with the section numbers 255 and 465(2)(d).

Common mistakes in Power to Inspect Registers of Companies

  • Saying any tax official can inspect the registers.

    Students remember only that tax officers have wide powers.

    Fix: Remember that subordinates need written authorisation from the officer or authority listed in the section.

  • Applying section 255 to all company records such as books of account.

    The word register is read loosely.

    Fix: Limit it to registers of members, debenture holders and mortgagees, or entries in them.

  • Stating the refusal penalty as ₹10,000.

    Confusion with section 465(1), which has a ₹10,000 penalty for other defaults.

    Fix: Refusal of inspection falls in section 465(2)(d): ₹500 per day while the failure continues.

  • Saying copies can always be taken.

    Students skip the words if necessary.

    Fix: Write that copies may be taken if necessary, or caused to be taken.

  • Treating the power as a search under warrant.

    Inspection and search sound alike.

    Fix: Section 255 is an enquiry power and needs no warrant. Search is a separate topic.

  • Ignoring section 260 on faceless working.

    It sits in a different part of the Act.

    Fix: Mention that a notified scheme can remove the interface and use team-based exercise of this power.

Worked examples

Example 1

An Inspector in the department, with no written authorisation from any officer, asks Sunrise Textiles Ltd, Surat, to show its register of members. The company refuses. Advise whether the refusal attracts a penalty under section 255 read with section 465.

Show the solution
  1. Section 255 allows inspection by listed authorities or a subordinate authorised in writing by such officer or authority.
  2. The Inspector holds no written authorisation, so he is not empowered under section 255.
  3. Section 465(2)(d) penalises failure to allow inspection of a register referred to in section 255. That failure requires a valid demand by an empowered person.
  4. Since the demand is not valid, the failure is not one the section penalises.

Answer: No penalty arises. The Inspector is not an authorised person under section 255. The company should still cooperate once a properly authorised person asks.

Example 2

The Assessing Officer authorises in writing a subordinate to inspect the register of debenture holders of Kaveri Industries Ltd and take copies. The company refuses access from 5 March to 14 March (both days included) and then allows it. Compute the penalty and say who imposes it, assuming the default does not occur in a proceeding before an authority of the rank of Joint Director or Joint Commissioner.

Show the solution
  1. The register of debenture holders is covered by section 255, and the subordinate holds written authorisation, so the demand is valid.
  2. Days of failure: 5 March to 14 March inclusive = 10 days.
  3. Penalty under section 465(2)(d) = ₹500 × 10 = ₹5,000.
  4. Under section 465(4)(d), in any other case the penalty is imposed by the Joint Director or the Joint Commissioner.

Answer: Penalty is ₹5,000, imposed by the Joint Director or the Joint Commissioner.

Exam tips

  • Learn the list of authorities in section 255 as a short chain: AO, assessment unit, verification unit, JC, JC(Appeals), CIT(Appeals), plus authorised subordinates.
  • Always quote the penalty as ₹500 per day and tie it to section 465(2)(d).
  • In case questions, check first whether written authorisation exists.
  • Link the topic to section 260 if the question mentions a faceless scheme.
  • Keep answers short: this topic usually fetches a small theory answer or part of an MCQ.

Practice questions from Assessment of Companies

Power to Inspect Registers of Companies: frequently asked questions

Who can inspect registers of companies under section 255 of the Income-tax Act, 2025?

The Assessing Officer, assessment unit, verification unit, Joint Commissioner, Joint Commissioner (Appeals) and Commissioner (Appeals) can. A subordinate can also do so if authorised in writing by such officer or authority.

Which registers can be inspected?

The register of members, debenture holders or mortgagees of any company, and any entry in such a register. Other records are not covered by this section.

Can the authority take copies of the register?

Yes. If necessary, it may take copies, or cause copies to be taken, of the register or of any entry in it.

What is the penalty for not allowing inspection?

Section 465(2)(d) imposes a penalty of ₹500 for every day the failure continues. It covers failure to allow inspection or the taking of copies.

Does section 255 apply under a faceless scheme?

Section 260 lets the Central Government notify a scheme covering the exercise of the power under section 255. The scheme can remove the interface between the authority and the assessee to the extent technologically feasible.