Income Tax Law / Search Assessments

Section 158BA: Assessment of Undisclosed Income After Search

Section 158BA of the Income-tax Act, 1961 governs special block assessments arising from income-tax searches and requisitions. Its framework was substantially reintroduced for searches beginning on or after 1 September 2024, and the law must be read with subsequent amendments and the Income-tax Act, 2025.

Legal status: The text formerly displayed on this page described the earlier 1995-2003 block assessment regime. For searches from 1 September 2024, the reintroduced Chapter XIV-B and subsequent amendments govern. From 1 April 2026, consult the Income-tax Act, 2025 and applicable transition provisions for the relevant tax year and proceedings.

1. When Section 158BA applies

Section 158BA(1), as reintroduced by the Finance (No. 2) Act, 2024 and amended by the Finance Act, 2025, provides a special mechanism to assess or reassess total undisclosed income of the block period where a search is initiated under section 132 or a requisition is made under section 132A on or after 1 September 2024. The Finance Act, 2025 clarified the focus on undisclosed rather than total income.

For searches initiated before that date, the applicable assessment framework depends on the date of search and relevant transitional rules. The old provisions reproduced below must not be treated as the current text for a new search.

2. Meaning of important terms

Block period: The statutory period covered by the special assessment. Under the reintroduced framework, it generally includes the six previous years preceding the year of search or requisition and the prescribed part of the year of search, subject to the statutory definition and amendments.
Undisclosed income: Income or property not disclosed, or which would not have been disclosed, including qualifying unreported assets, entries, transactions and false claims, as defined in section 158B.
Abatement: Discontinuance by operation of law of specified pending ordinary assessment, reassessment or recomputation proceedings, subject to the detailed conditions and exceptions in section 158BA.
Assessing Officer: The income-tax authority authorised to conduct the assessment, subject to the rank and approval requirements of the applicable provisions.

3. Explanation of the operative framework

Section 158BA(1): Special assessment

Once a qualifying search or requisition takes place, the Assessing Officer proceeds under Chapter XIV-B to determine undisclosed income for the block period rather than using the ordinary assessment procedure for that undisclosed income.

Section 158BA(2) and (3): Pending proceedings and transfer pricing

Specified pending regular assessments, reassessments or recomputations may abate. Proceedings involving a reference or order under section 92CA require separate attention. The Finance Act, 2025 and subsequent amendments changed the wording and operation of abatement, so the amended statutory text must be checked for the relevant search date.

Section 158BA(4): Subsequent search

Where a further search or requisition occurs while an earlier block assessment is being dealt with, the law prescribes how the successive proceedings are handled and the time available for completion.

Section 158BA(5): Revival after annulment

Where the block assessment is annulled in appeal or other proceedings, specified proceedings that previously abated may revive, subject to the statutory conditions and the outcome of any further challenge.

Section 158BA(6) and (7): Other income and tax

The provisions distinguish undisclosed income assessed in the block proceedings from income assessable under the normal provisions. The special tax treatment is linked to section 113, which prescribes a basic rate of 60% on the relevant block income, with applicable surcharge and cess considered separately.

4. How block assessment proceeds

A search under section 132 or requisition under section 132A is initiated.
The Assessing Officer determines the block period and examines seized or requisitioned material and other legally permissible evidence.
A notice for a block return is issued under section 158BC, subject to prescribed approvals and time limits.
The assessee files the prescribed return and responds to notices, evidence requests and proposed additions.
The Assessing Officer computes undisclosed income under section 158BB and passes the block assessment order in accordance with section 158BC.
Statutory appeal and other remedies remain subject to the applicable law.

5. Earlier Section 158BA: Historical law (1995-2003)

The original section applied where a search was initiated or assets or records were requisitioned after 30 June 1995. It required assessment of undisclosed income under Chapter XIV-B. Under subsection (2), block income was taxed under section 113 irrespective of the year to which it related or whether regular assessments were pending.

The former Explanation clarified that the block assessment was additional to regular assessments, income already assessed regularly was excluded from block undisclosed income, and income assessed in the block assessment was not again included in regular assessments.

Former subsection (3) excluded certain income attributable to an uncompleted previous year or a year for which the return deadline had not expired, where contemporaneous books or records maintained in the normal course supported its disclosure. The Explanation was inserted by the Finance (No. 2) Act, 1998 with effect from 1 July 1995. This historical version should be applied only where legally relevant to older proceedings.

Section 158BI ended the operation of that earlier chapter for searches after 31 May 2003; the block-assessment chapter was later reintroduced for searches from 1 September 2024.

6. Income-tax Act, 2025 and transitional application

The Income-tax Act, 2025 took effect on 1 April 2026. Its special block assessment provisions are contained in the chapter addressing search cases, including section 292 (assessment of undisclosed income as a result of search), section 293 (computation) and section 294 (procedure). Consult the enacted text and the repeal-and-savings provisions before determining which law governs an existing notice, assessment, appeal or search.

The official Income-tax Act, 2025 (PDF) and the Income Tax Department's Section 158BA text should be read with the Finance Act, 2025 amendment.

7. Illustrative example

Suppose a qualifying search begins in October 2024 and evidence indicates income that was not disclosed in the taxpayer's records or returns. The authorities must determine the statutory block period, identify income satisfying the definition of undisclosed income, and follow the special notice, computation and assessment rules. A mere difference in figures does not, by itself, settle whether an amount qualifies as undisclosed income; the evidence and applicable statutory provisions control.

8. Official legal references

Updated 26 October 2026. This article provides general legal information; the precise law depends on the date of search, applicable amendments and the facts of the case.