Framework of Block Assessment
Introduction
Section 158BA provides the statutory framework governing the assessment of total undisclosed income in cases of search under Section 132 or requisition under Section 132A. The provision aims to ensure a comprehensive, consolidated, and legally robust mechanism for addressing undisclosed income, reducing litigation and streamlining tax administration.
Date of application
The block assessment procedure applies only when the search is initiated on or after 01-09-2024. If a search began before but concluded on or after this date, assessments shall be made under the reassessment provisions (Sections 147 to 151A).
Supremacy of block assessment provisions
Section 158BA begins with a non-obstante clause and, read with Section 158BH, establishes that:
- The provisions of Chapter XIV-B override all other provisions of the Act.
- Other provisions of the Income-tax Act apply only to the extent they are not inconsistent with this Chapter.
Thus, normal assessment procedures are restricted, while provisions relating to essential matters such as accounting methods and tax recovery continue to apply.
Abatement of pending proceedings
Section 158BA(2) mandates automatic abatement of any pending assessment, reassessment, or recomputation relating to any assessment year within the block period once a search or requisition is initiated.
Key features:
- All regular assessment proceedings for the block period stand discontinued.
- Notices issued between the initiation of search and the date of the block assessment order under Section 158BC(1)(c) also lead to abatement upon issue of such notice.
- Exception: the assessment year in which the last authorisationis executed is not subject to abatement.
- Under Section 158BA(3), proceedings involving transfer pricing references under Section 92CA also abate, ensuring unified assessment of issues arising from the search.
Sequential handling of multiple searches
Under Section 158BA(4):
- Where a fresh search or requisition occurs before completion of an ongoing block assessment, the first assessment must be completed before commencing the next.
- If the available time after completing the initial assessment is short, a minimum of three monthsis provided for completion of the subsequent assessment.
Revival of abated proceedings
Section 158BA(5) provides that if an assessment order under Section 158BC(1)(c) is annulled in appeal or any other legal proceeding:
- All previously abated proceedings(assessment, reassessment, recomputation, transfer pricing reference or order) stand revived.
- Revival takes effect from the date the annulment order is received by the Principal Commissioner or Commissioner.
- If the annulment is later reversed, the revival ceases.
Assessment of current year
Section 158BA(6) specifies that the total income of the year in which the last search authorisation or requisition was executed, excluding undisclosed income, is to be assessed separately under normal provisions of the Act. Only the undisclosed income is assessed under the block assessment procedure.
Tax on total undisclosed income of the block period
Under Section 158BA(7), the total undisclosed income determined for the block period is chargeable to tax at the rate prescribed under Section 113, ensuring uniform taxation of such income.