Section 276 — Removal, concealment, transfer or delivery of property to thwart tax recovery
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live penal provision. Criminalises fraudulent dealing with property to defeat recovery under the Second Schedule.
Finance Act, 2026: AMENDED w.e.f. 1 March 2026 — punishment converted from rigorous to simple imprisonment up to two years and with fine (see amendment note).
Mechanism: Punishes a person who fraudulently removes, conceals, transfers or delivers property intending to prevent it being taken in execution of a recovery certificate under the Second Schedule.
Litigation profile: Sparse — no direct reported merits authority; complements the civil recovery code (TRO) and section 281 (void transfers).
A. COMMENTARY
Object — protecting tax recovery
Section 276 is the criminal arm of the recovery machinery. Where a certificate has been drawn up for recovery of arrears and the property of the defaulter is liable to be attached and sold under the Second Schedule, a defaulter who fraudulently spirits the property away — by removing, concealing, transferring or delivering it to another, intending to keep it out of execution — commits an offence. It is the income-tax analogue of section 206 of the Indian Penal Code (fraudulent removal of property to prevent its seizure in execution of a decree).
Ingredients — fraud and intent are central
The actus reus is the removal, concealment, transfer or delivery of 'any property or any interest therein'; the mens rea is twofold — the act must be 'fraudulent', and it must be done 'intending thereby to prevent that property... from being taken in execution of a certificate under the provisions of the Second Schedule'. Both elements must be proved; a bona fide commercial transfer, or a transfer made before any certificate was drawn, will not attract the section. The section works in tandem with the civil power to declare transfers void against the revenue (section 281) and with Rule 16 of the Second Schedule (private alienation void after notice).
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 25 of the Finance Act, 2026, with effect from 1 March 2026, in section 276 the words 'rigorous imprisonment for a term which may extend to two years and shall also be liable to fine' are substituted by 'simple imprisonment for a term up to two years and with fine'. The maximum term is unchanged at two years; the imprisonment is softened from rigorous to simple. The marginal heading is not changed. The verbatim text in Part B is the pre-amendment text.
Practice note
Prosecution requires sanction under section 279(1). In practice the revenue's first recourse is the civil route — attachment, and a section 281 declaration that the transfer is void — and the criminal complaint under section 276 is reserved for clear cases of fraudulent dissipation. The timing of the transfer relative to the recovery certificate, and proof of fraudulent intent, are decisive.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text; from 1 March 2026 read 'simple imprisonment' for 'rigorous imprisonment' (see amendment note).
Removal, concealment, transfer or delivery of property to thwart tax recovery.
276. Whoever fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, intending thereby to prevent that property or interest therein from being taken in execution of a certificate under the provisions of the Second Schedule shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine.
C. AUTHORITIES
Section 276 has not been the subject of a reported merits prosecution decision (candour rule). It is illuminated by the civil recovery jurisprudence — the validity of attachment under the Second Schedule and the avoidance of transfers under section 281 — which establishes when a dealing with property is 'to thwart recovery'.
Cognate authority — recovery, void transfers and fraudulent alienation
These civil decisions define when a transfer defeats recovery; they frame the fraudulent intent that section 276 criminalises.
Holding Under section 281 the TRO cannot himself declare a transfer void; the revenue must seek a declaration from the civil court. Defines the lawful route for impeaching transfers that thwart recovery, of which section 276 is the penal counterpart.
Builders Supply Corporation v. Union of India (1965) 56 ITR 91 (SC)
Court/Year Supreme Court, 1965.
Holding Affirms the Crown's/State's priority in recovery of tax dues; underpins the policy that property must remain available for execution — the interest section 276 protects.
Gangadhar Vishwanath Ranade (No.1) / Second Schedule line
Court/Year Cognate.
Holding The Second Schedule and Rule 16 render private alienations after notice void against the revenue; fraudulent removal of such property to defeat execution is the conduct section 276 makes criminal.
CHAPTER XXII — OFFENCES AND PROSECUTIONS
Section 276 — Removal, concealment, transfer or delivery of property to thwart tax recovery
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live penal provision. Criminalises fraudulent dealing with property to defeat recovery under the Second Schedule.
Finance Act, 2026: AMENDED w.e.f. 1 March 2026 — punishment converted from rigorous to simple imprisonment up to two years and with fine (see amendment note).
Mechanism: Punishes a person who fraudulently removes, conceals, transfers or delivers property intending to prevent it being taken in execution of a recovery certificate under the Second Schedule.
Litigation profile: Sparse — no direct reported merits authority; complements the civil recovery code (TRO) and section 281 (void transfers).
A. COMMENTARY
Object — protecting tax recovery
Section 276 is the criminal arm of the recovery machinery. Where a certificate has been drawn up for recovery of arrears and the property of the defaulter is liable to be attached and sold under the Second Schedule, a defaulter who fraudulently spirits the property away — by removing, concealing, transferring or delivering it to another, intending to keep it out of execution — commits an offence. It is the income-tax analogue of section 206 of the Indian Penal Code (fraudulent removal of property to prevent its seizure in execution of a decree).
Ingredients — fraud and intent are central
The actus reus is the removal, concealment, transfer or delivery of 'any property or any interest therein'; the mens rea is twofold — the act must be 'fraudulent', and it must be done 'intending thereby to prevent that property... from being taken in execution of a certificate under the provisions of the Second Schedule'. Both elements must be proved; a bona fide commercial transfer, or a transfer made before any certificate was drawn, will not attract the section. The section works in tandem with the civil power to declare transfers void against the revenue (section 281) and with Rule 16 of the Second Schedule (private alienation void after notice).
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 25 of the Finance Act, 2026, with effect from 1 March 2026, in section 276 the words 'rigorous imprisonment for a term which may extend to two years and shall also be liable to fine' are substituted by 'simple imprisonment for a term up to two years and with fine'. The maximum term is unchanged at two years; the imprisonment is softened from rigorous to simple. The marginal heading is not changed. The verbatim text in Part B is the pre-amendment text.
Practice note
Prosecution requires sanction under section 279(1). In practice the revenue's first recourse is the civil route — attachment, and a section 281 declaration that the transfer is void — and the criminal complaint under section 276 is reserved for clear cases of fraudulent dissipation. The timing of the transfer relative to the recovery certificate, and proof of fraudulent intent, are decisive.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text; from 1 March 2026 read 'simple imprisonment' for 'rigorous imprisonment' (see amendment note).
Removal, concealment, transfer or delivery of property to thwart tax recovery.
276. Whoever fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, intending thereby to prevent that property or interest therein from being taken in execution of a certificate under the provisions of the Second Schedule shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine.
C. AUTHORITIES
Section 276 has not been the subject of a reported merits prosecution decision (candour rule). It is illuminated by the civil recovery jurisprudence — the validity of attachment under the Second Schedule and the avoidance of transfers under section 281 — which establishes when a dealing with property is 'to thwart recovery'.
Cognate authority — recovery, void transfers and fraudulent alienation
These civil decisions define when a transfer defeats recovery; they frame the fraudulent intent that section 276 criminalises.
Tax Recovery Officer v. Gangadhar Vishwanath Ranade (1998) 234 ITR 188 (SC)
Court/Year Supreme Court, 1998.
Holding Under section 281 the TRO cannot himself declare a transfer void; the revenue must seek a declaration from the civil court. Defines the lawful route for impeaching transfers that thwart recovery, of which section 276 is the penal counterpart.
Builders Supply Corporation v. Union of India (1965) 56 ITR 91 (SC)
Court/Year Supreme Court, 1965.
Holding Affirms the Crown's/State's priority in recovery of tax dues; underpins the policy that property must remain available for execution — the interest section 276 protects.
Gangadhar Vishwanath Ranade (No.1) / Second Schedule line
Court/Year Cognate.
Holding The Second Schedule and Rule 16 render private alienations after notice void against the revenue; fraudulent removal of such property to defeat execution is the conduct section 276 makes criminal.