Income Tax Act

Official PDF pages 391–395

SOURCE PDF PAGE 391
( a )   the total income determined or assessed, as the case may be, under
section 270(1) or (10) or section 271 or 279 or 294(1)( c ) of this Act or
section 143 or 144 or 147 or 153A or 153C or 158BC or 245D(4) of the
Income-tax Act, 1961 (43 of 1961) prior to the date of initiation of the
search or the date of requisition, in respect of any of the tax year falling
within the block period;
( b )   the total income declared in the return of income filed under section
263 of this Act or section 139 of Income-tax Act, 1961 (43 of 1961), or in
response to a notice under section 268(1) of this Act or section 142(1) of
Income-tax Act, 1961 (43 of 1961) prior to the date of initiation of the
search or the date of requisition, in respect of any of the tax year falling
within the block period, and not covered under clause ( a );
( c )   the income computed by the assessee, in respect of—
( i )   a tax year, where such tax year has ended and the due date for fur -
nishing the return for such year has not expired prior to the date
of initiation of the search or the date of requisition, on the basis of
entries relating to such income or transactions as recorded in the
books of account and other documents maintained in the normal
course before the date of initiation of search or the date of requi -
sition;
( ii )   the period commencing from the 1st April of the tax year in which
the search is initiated or requisition is made and ending on the day
immediately preceding the date of initiation of search or requisition,
on the basis of entries relating to such income or transactions as
recorded in the books of account and other documents maintained in
the normal course for such period on or before the day immediately
preceding the date of initiation of search or the date of requisition;
( iii )   the period commencing from the date of initiation of the search or
the date of requisition and ending on the date of the execution of
the last of the authorisations for search or requisition, on the basis
of entries relating to such income or transactions as recorded in the
books of account and other documents maintained in the normal
course for such period on or before the date of the execution of the
last of the authorisations;
( d )   the total income referred to in section 207(8) or section 216 or section
393(1) [Table: Sl. No. 8( iii )]   of this Act, or section 115A(5) or section
115G or 194P(1) of the Income-tax Act, 1961 (43 of 1961).
(3) For the purposes of sub-section (2)( c ), where the Assessing Officer is of the
opinion that any part of the income as computed by the assessee under the said
sub-section is undisclosed, he may recompute such income.
(4) The undisclosed income falling within the block period, shall be computed on
the basis of following:—
( a )   evidence found as a result of search or survey or requisition;
( b )   any other material or information as are either available with the
Assessing Officer or comes to his notice during the course of proceedings
under Part B.

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(5) Where any income required to be determined —
( a )   as a result of search or requisition of books of account or other
documents, or based on any other material or information as are either
available with the Assessing Officer or comes to his notice during the
course of proceedings under this Part; or
( b )   based on entries relating to income or transactions as recorded in
books of account and other documents maintained in the normal course
on or before the date of the execution of the last of the authorisations,
relates to any international transaction or specified domestic transaction referred
to in section 166, and pertains to the period beginning from the 1st April of the tax
year in which last of the authorisations was executed and ending with the date of
execution of the last of the authorisations, then irrespective of provisions of section
292(6)—
( i )   such income shall not be considered for the purposes of determining the
total undisclosed income of the block period; and
( ii )   such income shall be considered in the assessment made under other
provisions of this Act.
(6) For the purposes of determination of undisclosed income,—
( a )   of a firm, such income assessed for each of the tax years falling within the
block period shall be the income determined before allowing deduction
of salary, interest, commission, bonus or remuneration, by   whatever
name called, to any partner not being a working partner;
( b )   the provisions of sections 102, 103, 104 and 105 shall, so far as may be,
apply and reference to tax year in those sections shall be construed as
references to the relevant tax year falling in the block period;
( c )   the provisions of section 166 shall, so far as may be, apply and reference
to tax year in that section shall be construed as reference to the relevant
tax year falling in the block period excluding the period referred to in
sub-section (5).
(7) The tax referred to in section 292(7)
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shall be charged on the total undisclosed
income pertaining to the block period determined in the manner specified in
sub-sections (1), (2) and (3).
(8) For the purposes of assessment, losses brought forward from the tax year (prior
to the first tax year comprising the block period) under Chapter VII or unabsorbed
depreciation under section 33(11) shall not be set off against the undisclosed
income determined in the block assessment under this part.
(9) Losses or unabsorbed depreciation as referred to in sub-section (8) may be car -
ried forward for being set off in the tax year subsequent to the tax year in which the
block period ends, for the remaining period, taking into account the block period
and such tax year, and as per the provisions of this Act.
Procedure for block assessment.
294.   (1) Where any search has been
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initiated or requisition is made in the case of
any person, then,—
( a )   the Assessing Officer shall, in respect of such search or requisition,
issue a notice to such person, requiring him to furnish within a period

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SOURCE PDF PAGE 393
specified in the notice, not exceeding sixty days, a return in the form
and verified in the manner, as may be prescribed, setting forth his
undisclosed income, for the block period, and—
( i )   such return shall be considered as if it was a return furnished
under section 263 and thereafter notice under section 270(8) shall
be issued;
( ii )   any return furnished beyond the period allowed in the notice shall
not be deemed to be a return under section 263;
( iii )   no notice under section 280 is required to be issued for the purpose
of proceeding under this part;
( iv )   a person who has furnished a return under this clause shall not be
entitled to furnish a revised return;
( v )   the time allowed for furnishing a return under this clause may be
extended by a further period of thirty days, where—
( A )   in respect of a tax year immediately preceding the tax year in
which the search is initiated or requisition is made, the due
date for furnishing the return has not expired prior to the date
of initiation of such search or requisition;
( B )   the assessee was liable for audit under section 63 for such tax
year;
( C )   the accounts (maintained in normal course) of such tax year
have not been audited on the date of issuance of such notice;
and
( D )   the assessee requests in writing for extension of time for
furnishing such return to get such accounts audited;
( b )   the Assessing Officer shall proceed to determine the total undisclosed
income of the block period in the manner laid down in section 293 and
the provisions of sections 268, 270(8), 270(10), 271, 276, 277 and 278
shall, so far as may be, apply;
( c )   the Assessing Officer, on determination of the total undisclosed income
of the block period in accordance with this part, shall pass an order of
assessment or reassessment and determine the tax payable by him on the
basis of such assessment or reassessment, and the provisions of section
275 shall not apply in respect of such order;
( d )   the assets seized under section 247 or requisitioned under section 248
shall be dealt with as per section 250.
(2) The provisions of section 270(1) shall not apply to the return furnished under
this section.
(3) The Assessing Officer, before issuance of notice under sub-section (1)( a ), shall
take prior approval of the Additional Commissioner or the Additional Director or
the Joint Commissioner or the Joint Director.

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Undisclosed income of any other person.
295.   (1) Where the Assessing Officer is satisfied that any undisclosed income
belongs to or pertains to or relates to any person (herein referred to as the
other person), other than the person (herein referred to as the specified person) with
respect to whom search was initiated under section 247 or requisition was made
under section 248, then—
( a )   any money, bullion, jewellery, virtual digital asset or other valuable article
or thing or any books of account or other documents seized or requi -
sitioned or any other material or information relating to the aforesaid
undisclosed income shall be handed over to the Assessing Officer having
jurisdiction over such other person; and
( b )   Assessing Officer of the other person shall proceed under section 294
against such other person and the provisions of this part shall apply
accordingly.
(2) For the purposes of this section,—
( a )   where there is one specified person relevant to such other person, the
block period for such other person shall be the same as that for the
specified person;
( b )   where there is more than one specified persons relevant to such other
person, the block period for such other person shall be the same as that
for the specified person in whose case the block period ends on a later
date;
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[ ( c )   where the undisclosed income of the other person pertains only to the
period—
( i )   commencing from the tax year (herein referred to as the specified year)
immediately preceding the year of initiation of search or requisition;
and
( ii )   ending on the date of initiation of search or making of requisition,
then irrespective of the provisions of section 301( a ), the block period in
respect of such other person shall comprise of the specified year and the
period starting from the 1st April of the tax year in which search was ini -
tiated or requisition was made and ending on the date of the execution of
the last of the authorisations for such search or such requisition;
( d )   where the undisclosed income of the other person pertains to a single tax
year out of the five tax years preceding the specified year, then irrespective
of the provisions of section 301( a ), the block period in respect of such other
person shall comprise of only that single tax year. ]
(3) In case of such other person as referred to in sub-section (1), for the purposes
or abatement under section 292(2) and (3), the reference to the date of initiation of
the search under section 247 or making of requisition under section 248 shall be
62.   Clauses ( c ) and ( d ) inserted by the Finance Act, 2026, w.e.f.   1-4-2026 .

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SOURCE PDF PAGE 395
construed as reference to the date on which such money, bullion, jewellery, virtual
digital asset or other valuable article or thing or any books of account or other
documents seized or requisitioned or any other material or information relating
to the aforesaid undisclosed income were received by the Assessing Officer having
jurisdiction over such other person.
Time-limit for completion of block assessment.
296.  
63
[ (1) Irrespective of the provisions of section 286, the order under section 294
shall be passed within eighteen months from the end of the quarter in which the
search was initiated or requisition was made. ]
(2) Where search was initiated or requisition was made, and during the course of
assessment or reassessment of the total undisclosed income of the relevant block
period, any reference under section 166(1) is made, the period available for completion
of such assessment or reassessment proceeding shall be extended by twelve months.
(3) In computing the period of limitation under sub-section (1), the period (not
exceeding one hundred   and eighty days) commencing from the date on which a
search is initiated or a requisition is made and ending on the date on which assets
[as provided in section 261( b )] and material seized or requisitioned [as provided
in section 261( i )] are handed over to the Assessing Officer having jurisdiction over
the assessee shall be excluded.
(4) If after exclusion of the period referred to in sub-section (3), the remaining period
of limitation for completion of assessment or reassessment, expires before the end
of a month, such period shall be extended to end of such month.
(5) The period of limitation for completion of assessment or reassessment for the
block period in the case of the other person referred to in section 295 shall be
twelve months from the end of the quarter in which the notice under section 294
in pursuance of section 295, was issued to such other person.
(6) The period available for completion of assessment or reassessment proceeding in
respect of the block period in a case referred to in sub-section (5) shall be extended
by twelve months, where a reference under section 166(1) is made in such case.
(7) In computing the period of limitation under this section, the following period
shall be excluded,—
( a )   the period commencing on the date on which stay on assessment pro -
ceeding was granted by an order or injunction of any court and ending
on the date on which certified copy of the order vacating the stay was
received by jurisdictional Principal Commissioner or Commissioner; or
63.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(1) read as under :
‘(1)( a ) Irrespective of the provisions of section 286, the order under section 294 shall be passed
within twelve months from the end of the quarter in which the last of the authorisations for
search was executed, or requisition was made.
( b ) Where in pursuance to section 294(1)( a )( v ), the time allowed under the said section for
furnishing return is extended by a further period of thirty days, the provisions of sub-sections
(1) and (5) shall have effect, as if for the words “twelve months”, the words “thirteen months”
had been substituted.’