Section 175 — Assessment of Persons Likely to Transfer Property to Avoid Tax
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part L of Chapter XV (Persons trying to alienate their assets). Anti-avoidance accelerated machinery.
Subject: Where during any current assessment year it appears to the Assessing Officer that a person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding payment of any liability under the Act, the total income up to the date the proceeding is commenced may be charged to tax in that assessment year at once, the section 174(2)–(6) machinery applying.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. Accelerated charge against asset-stripping
Section 175 is anti-avoidance accelerated machinery aimed at the taxpayer who seeks to defeat a tax liability by stripping himself of assets. Where, during a current assessment year, it appears to the Assessing Officer that a person is likely to sell, transfer, dispose of or otherwise part with his assets with a view to avoiding payment of any liability under the Act, the officer may charge to tax at once the person's income up to the date on which the proceeding under the section is commenced, borrowing the section 174(2)–(6) machinery. Like sections 174 and 174A, it advances the point of assessment to forestall a loss of revenue.
2. Untested; the live machinery sits elsewhere
Section 175 is rarely invoked and, in candour, has no reported decision construing its trigger ('likely to ... transfer ... with a view to avoiding payment of any liability') on the merits. In practice the Revenue reaches asset-stripping through other, more frequently litigated provisions — section 281 (which renders certain transfers void as against the Revenue) and provisional attachment / the recovery machinery in the Second Schedule. Those provisions are distinct from section 175 and embody the same policy; they should be cited, if at all, as cognate and not as section 175 holdings. No section 175 authority is asserted.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
175. Notwithstanding anything contained in section 4, if it appears to the Assessing Officer during any current assessment year that any person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding payment of any liability under the provisions of this Act, the total income of such person for the period from the expiry of the previous year for that assessment year to the date when the Assessing Officer commences proceedings under this section shall be chargeable to tax in that assessment year, and the provisions of sub-sections (2), (3), (4), (5) and (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person as they apply in the case of persons leaving India.
C. AUTHORITIES
Candour rule. Section 175 is protective/anti-avoidance machinery with no reported decision construing its trigger. The live equivalent jurisprudence is under section 281 (transfers void against the Revenue) and provisional attachment, cited as cognate only.
Cluster A — Nature and nearest cognate (no direct authority)
Section 175 is rarely-invoked protective machinery. The nearest cognate provisions — section 281 (transfers void against the Revenue) and provisional attachment under the recovery machinery — are distinct and are not section 175 authorities. No section 175 case is invented.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XV — LIABILITY IN SPECIAL CASES
Section 175 — Assessment of Persons Likely to Transfer Property to Avoid Tax
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part L of Chapter XV (Persons trying to alienate their assets). Anti-avoidance accelerated machinery.
Subject: Where during any current assessment year it appears to the Assessing Officer that a person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding payment of any liability under the Act, the total income up to the date the proceeding is commenced may be charged to tax in that assessment year at once, the section 174(2)–(6) machinery applying.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. Accelerated charge against asset-stripping
Section 175 is anti-avoidance accelerated machinery aimed at the taxpayer who seeks to defeat a tax liability by stripping himself of assets. Where, during a current assessment year, it appears to the Assessing Officer that a person is likely to sell, transfer, dispose of or otherwise part with his assets with a view to avoiding payment of any liability under the Act, the officer may charge to tax at once the person's income up to the date on which the proceeding under the section is commenced, borrowing the section 174(2)–(6) machinery. Like sections 174 and 174A, it advances the point of assessment to forestall a loss of revenue.
2. Untested; the live machinery sits elsewhere
Section 175 is rarely invoked and, in candour, has no reported decision construing its trigger ('likely to ... transfer ... with a view to avoiding payment of any liability') on the merits. In practice the Revenue reaches asset-stripping through other, more frequently litigated provisions — section 281 (which renders certain transfers void as against the Revenue) and provisional attachment / the recovery machinery in the Second Schedule. Those provisions are distinct from section 175 and embody the same policy; they should be cited, if at all, as cognate and not as section 175 holdings. No section 175 authority is asserted.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
175. Notwithstanding anything contained in section 4, if it appears to the Assessing Officer during any current assessment year that any person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding payment of any liability under the provisions of this Act, the total income of such person for the period from the expiry of the previous year for that assessment year to the date when the Assessing Officer commences proceedings under this section shall be chargeable to tax in that assessment year, and the provisions of sub-sections (2), (3), (4), (5) and (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person as they apply in the case of persons leaving India.
C. AUTHORITIES
Candour rule. Section 175 is protective/anti-avoidance machinery with no reported decision construing its trigger. The live equivalent jurisprudence is under section 281 (transfers void against the Revenue) and provisional attachment, cited as cognate only.
Cluster A — Nature and nearest cognate (no direct authority)
Section 175 is rarely-invoked protective machinery. The nearest cognate provisions — section 281 (transfers void against the Revenue) and provisional attachment under the recovery machinery — are distinct and are not section 175 authorities. No section 175 case is invented.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.