Introduction on block assessment of search cases - Income Tax - Ready Reckoner - Income Tax

Introduction on Block Assessment in Search Cases The block assessment scheme is a procedure for evaluating undisclosed income found during a search u/s 132 or requisition u/s 132A. Initially introduced in 1995, it allowed for the assessment of income over a 10 year block period, which was later reduced to 6 years. However, as of June 1, 2003, the Finance Act repealed this scheme and introduced Sections 153A, 153B, and 153C. These sections required taxpayers to file returns for the six assessment years relevant to the period in question. The Finance Act of 2017 further amended Section 153A, empowering the Assessing Officer (AO) to issue notices for assessment periods extending up to ten years if evidence showed that income exceeding ₹ 50 lakh, in the form of assets, had not been assessed. The Finance (No. 2) Act, 2024, has reinstated with effect from September 1, 2024 the block assessment scheme, replacing Chapter XIV-B (Sections 158B to 158BI). This revised scheme applies to cases where a search u/s 132 or a requisition u/s 132A is conducted on or after September 1, 2024. Under this scheme, the Assessing Officer is required to assess or reassess the total income of the taxpayer in accordance with the updated provisions of the chapter. Block Assessment under Chapter XIV-B is a prescribes and specialized framework for the assessment of cases where a search and seizure operation has been conducted by the income tax authorities. This chapter, titled Special Procedure for Assessment of Search Cases, introduces a distinctive approach known as block assessment, designed to address the unique challenges and complexities arising from such search operations. It is provide a structured and detailed method for evaluating concealed income over a defined period. Block assessment under Chapter XIV-B is designed to ensure that taxpayers cannot exploit procedural gaps to avoid tax liabilities that arise from concealed income. It underscores the importance of maintaining meticulous records and transparency in financial dealings, reinforcing the overarching goal of the Income Tax Act to promote fair taxation and curb tax evasion. Block assessment under Chapter XIV-B reflects a proactive approach by the tax authorities to combat tax evasion and enhance the effectiveness of tax enforcement. It underscores the commitment to maintaining the integrity of the tax system and ensuring equitable taxation. By addressing concealed income over an extended period, block assessments contribute to a more accurate and comprehensive understanding of a taxpayer's financial status, thereby reinforcing the principles of transparency and accountability in tax administration.