Block Assessment
Introduction
Block assessment is a special procedure applicable in cases where a search under Section 132 or a requisition under Section 132A is initiated on or after 01-09-2024. It provides for a single consolidated assessment of the total undisclosed income for the block period. Any pending assessments or reassessments abate and merge with the block assessment. The undisclosed income assessed under this scheme is taxable at 60%. A notice requiring the assessee to furnish a return must be issued within 60 days after obtaining approval from the competent authority.
Statutory framework of block assessment
Chapter XIV-B comprises the following provisions:
- Section 158B– Definitions of “block period”, “undisclosed income”, and “last authorisation”.
- Section 158BA– Assessment of total undisclosed income as a result of search.
- Section 158BB– Computation of total undisclosed income of the block period.
- Section 158BC– Procedure for block assessment.
- Section 158BD– Assessment of undisclosed income of any other person.
- Section 158BE– Time limits for completion of block assessment.
- Section 158BF– Immunity from interest under Sections 234A, 234B, 234C and penalty under Section 270A.
- Section 158BFA– Levy of interest and penalties in specified cases.
- Section 158BG– Competent authority to make the assessment.
- Section 158BH– Applicability of other provisions of the Act to block assessment.
Meaning of block period
The block period comprises:
- The 6 previous yearspreceding the year in which the search or requisition is initiated; and
- The period from 1st April of the previous yearin which the search or requisition is initiated up to the date of execution of the last authorisation.
The date of initiation of the search determines the block period.
Meaning of undisclosed income
Section 158B(b) provides an inclusive definition. Undisclosed income covers:
- Undisclosed assets
Assets representing income or property not disclosed or that would not have been disclosed, including money, bullion, jewellery, virtual digital assets, other valuable articles or things, and income reflected in books, documents, or transactions.
- Incorrect claims
Incorrect claims of expenses, exemptions, deductions, or allowances are treated as undisclosed income.
Execution of “last authorisation”
The last authorisation is deemed executed:
- Upon conclusion of search as recorded in the last panchnamafor the person searched; or
- In case of requisition under Section 132A, on actual receipt of books, documents, or assets by the authorised officer.
A panchnama documents the events of the search, items found, seized, and inventoried.
Authority competent to make block assessment
As per Section 158BG:
- Only an Assessing Officer not below the rank of Deputy/Assistant CIT or Deputy/Assistant Directormay conduct the assessment.
- The assessment order requires prior approvalof the Additional Commissioner/Additional Director/Joint Commissioner/Joint Director.
Applicability of other provisions
Under Section 158BH, all other provisions of the Income-tax Act apply to block assessments except where specifically overridden by Chapter XIV-B. This includes provisions relating to the issue of notice of demand, recovery, etc.