Income Tax Law / Search and Seizure / Chapter XIV-B

Section 158BC: Procedure for Block Assessment

Section 158BC of the Income-tax Act, 1961 prescribes how the Income Tax Department conducts a block assessment following a search under section 132 or requisition under section 132A. The provision was reintroduced for searches or requisitions initiated on or after 1 September 2024, with subsequent amendments under the Finance Act, 2025.

What is a block assessment?

A block assessment is a special consolidated assessment of undisclosed income associated with a search or requisition. Section 158B defines the block period and undisclosed income; section 158BA establishes the assessment framework; section 158BB governs computation; and section 158BC sets out the procedure. The applicable search date and governing legislation must be checked before determining the correct procedure.

Section 158BC: Procedure explained

1. Notice and filing of return - section 158BC(1)(a)

For a search or requisition on or after 1 September 2024, the Assessing Officer (AO) issues a notice requiring the person concerned to furnish a return of undisclosed income for the block period within the period stated in the notice, which cannot exceed 60 days. The return must be in the prescribed form and manner.

A return filed within the permitted period is treated as a return under section 139 for specified procedural purposes, followed by a notice under section 143(2). A return filed after the permitted period does not receive that treatment. No separate notice under section 148 is required for proceedings under this Chapter, and a revised block return is not permitted.

2. Extension of time for audit-related cases

The Finance Act, 2025 inserted a limited provision, retrospectively from 1 September 2024, permitting the AO to grant a further 30 days where the statutory conditions are satisfied: the immediately preceding previous year's return due date had not expired at search or requisition; the assessee was liable to audit under section 44AB; the relevant normal-course accounts were not audited when the notice was issued; and the assessee makes a written request to complete the audit. This is not a general automatic extension.

3. Form ITR-B and electronic filing

CBDT Notification No. 30/2025, dated 7 April 2025, introduced Rule 12AE and Form ITR-B for returns under section 158BC, with effect from 1 September 2024. Filing and verification must follow the applicable electronic filing requirements. See the official CBDT notification.

4. Determination of undisclosed income - section 158BC(1)(b)

The AO computes the total undisclosed income under section 158BB. Subject to the special Chapter, relevant procedural and accounting provisions include section 142 (inquiries and evidence), sections 143(2) and 143(3) (scrutiny), section 144 (best judgment), and sections 145, 145A and 145B (accounting and valuation rules).

5. Assessment order - section 158BC(1)(c)

After determining undisclosed income, the AO passes an assessment or reassessment order and calculates the tax payable. Section 144C, relating to the Dispute Resolution Panel, does not apply to an order under this provision. The time limit for completing a block assessment is separately governed by section 158BE.

6. Seized assets - section 158BC(1)(d)

Assets seized under section 132 or requisitioned under section 132A must be handled in accordance with section 132B, which regulates the application and release of such assets.

7. Processing and prior approval - sections 158BC(2) and (3)

A return filed under section 158BC is not processed under section 143(1). Before issuing a notice under section 158BC(1)(a), the AO must obtain prior approval of the Additional Commissioner, Additional Director, Joint Commissioner or Joint Director, as applicable. This approval is distinct from approvals required at later stages under other provisions.

Procedure at a glance

Earlier section 158BC: historical provisions

The original Chapter XIV-B applied to searches initiated after 30 June 1995 and, subject to the statutory cut-off, before 1 June 2003. The earlier version required a block return containing total income including undisclosed income; for searches or requisitions from 1 January 1997, the notice generally specified a period of not less than 15 and not more than 45 days. The AO computed undisclosed income under section 158BB, passed an assessment order, and dealt with seized assets under section 132B. There was no requirement for a separate section 148 notice and a revised return was not permitted.

These older time limits and formulations remain relevant for interpreting historical assessments and litigation, but should not be confused with the revived framework effective from September 2024. The historical clause (a) was substituted by the Finance Act, 1997, and clauses (b) and (d) were amended by the Finance Act, 2002.

Income-tax Act, 2025: corresponding provision

The official statutory navigator maps section 158BC of the Income-tax Act, 1961 to section 294 of the Income-tax Act, 2025, headed "Procedure for block assessment". The 2025 Act came into force on 1 April 2026. For a live proceeding, confirm whether the new Act or saved provisions of the 1961 Act apply and read the relevant rules and notifications alongside the statute.

Official legal references

• Income Tax Department - section 158BC (1961 Act, updated text)
• Income Tax Department - block assessment guidance
• CBDT Notification 30/2025 - Rule 12AE and ITR-B
• Finance Act, 2025 - official highlights
• Income-tax Act, 1961 as amended by Finance Act, 2025

Frequently asked questions

What is the deadline for filing a block assessment return?

The notice specifies a period not exceeding 60 days under the revived section 158BC framework. A further 30-day extension is available only in specified audit-related circumstances.

Which form is used for a section 158BC return?

Form ITR-B, prescribed by Rule 12AE, applies to the relevant search or requisition cases.

Can a revised block return be filed?

No. Section 158BC expressly restricts filing a revised return under this procedure.

Is a separate reassessment notice under section 148 necessary?

No. The special Chapter XIV-B procedure does not require a separate section 148 notice.

This article is general legal information. Applicability depends on the search date, assessment year, transitional law and facts of the case.