Section 499 — Certain Transfers to be Void | ITA 2025

Section 499 of the Income-tax Act, 2025 corresponds to s. 281 of the Income-tax Act, 1961. STATUTORY ARCHITECTURE Where during pendency / after completion of any proceeding but before service of TRO notice u/s 415 [ s. 222 ], assessee…

Section 499 — - CERTAIN TRANSFERS TO BE VOID

Section 499 of the Income-tax Act, 2025 corresponds to s. 281 of the Income-tax Act, 1961.

Statutory text — Income-tax Act, 2025

(1) Where, during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice by the Tax Recovery Officer as per the procedure specified under section 413, any assessee creates a charge on, or parts with the possession of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise.

(2) The charge or transfer as referred to in sub-section (1) shall not be void if it is made—

(a) for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee; or

(b) with the previous permission of the Assessing Officer.

(3) This section applies to cases where the amount of tax or other sum payable or likely to be payable exceeds ` 5000 and the assets charged or transferred exceed ` 10000 in value.

(4) For the purposes of this section,––

(a) “assets” means land, building, machinery, plant, shares, securities, fixed deposits in banks, and virtual digital asset, to the extent to which any of the said assets do not form part of the stock-in-trade of the business of the assessee;

(b) the modes of creating a charge on or parting with the possession of such assets shall include sale, mortgage, gift, exchange or any other mode of transfer. Provisional attachment to protect revenue in certain cases.

STATUTORY ARCHITECTURE

Where during pendency / after completion of any proceeding but before service of TRO notice u/s 415 [s. 222], assessee creates charge / parts with possession of any asset, such transfer is VOID against any tax claim. Carve-outs: (a) for adequate consideration without notice; (b) with prior AO permission. Threshold: tax INR 5,000+ and asset value INR 10,000+.

PRACTITIONER PLANNING NOTES

Powerful Revenue tool against asset-stripping by defaulters; courts examine timing and consideration.
Defence: bona fide third-party purchaser without notice of pending proceedings -- documented sale deed, bank trail, market-rate consideration.
AO advisory: obtain prior permission (s. 281A application) for legitimate sales during pendency of major assessment.
TPI v. Gangotri Enterprises (2015) 376 ITR 482 (SC) -- void transfers reckoned from filing of notice.

CROSS-REFERENCES

s. 533 [295] -- Rules.
s. 535 [298] -- Removal of difficulty.
s. 536 [Repeal] -- Saving clause.

← All sections (537)Act 2025 hub

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
2025 provision	1961 counterpart
s. 499 -- Certain Transfers to be Void	s. 281