Short answer: After a search, the Department examines the seized material and makes a block assessment of the undisclosed income of the block period, broadly the six years before the year of search plus the period up to the last authorisation. For searches from 1 September 2024 under the 1961 Act, and for searches under the Income-tax Act, 2025, such income is taxed at 60%, and other pending assessments for those years abate.
Which scheme applies to your search
The date the search was initiated decides the scheme. Earlier searches were assessed under Sections 153A and 153C of the Income-tax Act, 1961. The Finance (No. 2) Act, 2024 brought back block assessment under Chapter XIV-B of the 1961 Act for searches conducted on or after 1 September 2024. For searches initiated on or after 1 April 2026, Chapter XVI of the Income-tax Act, 2025 applies, beginning with Section 292 (“Assessment of total undisclosed income as a result of search”).
Block period, tax rate and abatement
Under the 1961 scheme, the block period covers the six assessment years before the previous year in which the search began, plus the period from 1 April of that year to the date of the last authorisation. Undisclosed income of the block period is taxed under Section 113 at 60%. The 2025 Act follows the same structure: Section 292 charges the total undisclosed income of the block period, and Section 192 taxes it “at the rate of 60%”.
Ordinary assessment and reassessment proceedings for years in the block period abate, and are folded into the block assessment. If the block assessment is annulled in appeal, the abated proceedings revive. Under the 1961 scheme, once block proceedings start, no Section 148 reassessment notice is to be initiated for those years. Income that is not undisclosed income is assessed separately in the normal way.
Procedure and timelines
Under the 1961 scheme, the Assessing Officer issues a notice requiring a return for the block period within the time stated, up to 60 days. A return filed late is not treated as a regular return, and a revised return cannot be filed under this chapter. The block assessment order must be passed within twelve months from the end of the month in which the last authorisation was executed, subject to extensions in specified situations.
A penalty of 50% of the tax on undisclosed income may be levied, but not where the return is filed, tax is paid on the income declared and that declared income is not appealed. Interest under Sections 234A to 234C and penalty under Section 270A do not apply to block-period undisclosed income; late or missing returns attract interest at 1.5% per month.
What evidence matters
The assessment should rest on material found in the search. The Delhi High Court in CIT v. Harjeev Aggarwal (2016) held that a statement under Section 132(4) cannot by itself trigger a block assessment; it must be linked to incriminating material. Reconciling each seized paper with your books is usually the core of the defence.
Related questions
What is the block period?
Broadly, the six years before the year of search plus the part of the year of search up to the last authorisation. The year of the last authorisation is otherwise assessed in the normal way for income that is not undisclosed.
Will my regular assessments for those years continue?
Pending assessments and reassessments for years in the block period abate and are subsumed in the block assessment. They revive if the block assessment is annulled.
Is 60% charged on my entire income?
No. The 60% rate applies to the undisclosed income of the block period. Other income is assessed under the regular provisions.
When will seized cash be returned?
Seized assets can be applied against the liabilities determined (Section 132B of the 1961 Act; Section 250 of the 2025 Act). In August 2026, the Delhi High Court in PCIT v. Kapoor Industries Limited refused to stay a direction to release about Rs 17.66 crore of seized cash once the searched person’s assessment was complete.
Practical points
- Confirm the date the search was initiated; it decides whether Sections 153A/153C, Chapter XIV-B or the 2025 Act applies.
- File the block return within the time stated in the notice; a late return loses its status.
- Prepare a paper-by-paper reconciliation of seized material with your books.
- Weigh the penalty consequences before deciding what to declare and what to appeal.
- Apply in writing for release or adjustment of seized assets once liabilities are determined.
Sources: Taxmann, Block assessment under the Finance (No. 2) Act, 2024; Income Tax Department, Section 292 of the Income-tax Act, 2025; Income Tax Department, Section 192 of the Income-tax Act, 2025; LiveLaw Biz, Kapoor Industries, 31 August 2026.
For a confidential discussion on income-tax search and assessment matters, see Income-tax Search and Seizure.
General legal information only; not legal advice or solicitation.
