Income Tax

Block Assessment in case of Search Proceedings Re-introduced in the Budget 2024

CA Adityavikram Banka

Block Assessment in case of Search Proceedings Re-introduced in the Budget 2024:

1. There is a radical change brought in Chapter XIV-B pertaining to conducting the assessment proceedings in consequent to a search proceeding with effect from 1st September, 2024.

2. As opposed to the present scheme of framing the assessment order U/s 147/148 of the Income Tax Act and further opposed to earlier scheme of framing the assessment order U/s 153A of the Income Tax Act, now a ‘block assessment’ order as per provisions of section 158BD for the consolidated period is required to be passed.

3. The said block period shall consist of previous years relevant to six assessment years preceding the previous year in which the search was conducted. There shall not be any parallel proceedings.

4. Such assessment shall be made of the ‘total income’ of the assessee. Meaning thereby that the said assessment shall cater the undisclosed income and the regular income which strictly does not relates to the incriminating material.

5. The amended scheme also provides for conducting the assessment in case of other than searched person. In this case also, where the Assessing Officer is satisfied that any undisclosed income belongs to or pertains to or relates to any person, other than the person with respect to whom search was made such material/documents shall be handed over to the Assessing Officer having jurisdiction over such other person.

6. The tax in consequence of such assessment order, shall be charged at sixty % for the block period. No interest under the provisions of section 234A, 234B or 234C of the Income Tax Act shall be charged or penalty U/s section 270A of the Income Tax Act shall be levied or imposed upon the assessee in respect of the undisclosed income assessed or reassessed for the block period.

7. It has however been mentioned that penalty on the undisclosed income of the block period as determined by the Assessing officer shall be levied at fifty % of the tax payable on such income. However, it has been provided that no such penalty shall be levied if the assessee offers undisclosed income in the return furnished in pursuance of search and pays the tax along with the return.

8. For issuing the notice for reassessment and before passing of the order, the approval of Joint/Additional Commissioner shall be required.

CA Adityavikram Banka
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