Received a notice under Section 158BC of the Income Tax Act? The Income Tax Department has now enabled the online filing of Form ITR-B for such cases via the official income tax portal. Available under the e-Proceedings tab, this functionality aims to simplify compliance, enhance transparency, and reduce the need for physical interaction in block assessment cases.
The department has operationalised the digital submission of Form ITR-B, replacing the earlier manual process.
What is section 158BC and why does it matter?
Section 158BC is invoked when undisclosed income is unearthed during a search or seizure operation conducted by the Income Tax Department. This section empowers the assessing officer to serve a notice requiring the taxpayer to file a return for a block assessment period, which typically includes six previous assessment years and part of the current year in which the search was conducted.
The return is to be filed in Form ITR-B, a format specifically designed for such disclosures.
CBDT’s advisory to taxpayers
The Central Board of Direct Taxes (CBDT) has advised all taxpayers who have received notices under Section 158BC to make use of the new e-filing facility at the earliest. Instructions for smooth online submission are available on the portal.
Experts say the digitised filing mechanism will help reduce the procedural burden on affected taxpayers.
“Allowing taxpayers who have received a notice under Section 158BC of the Income Tax Act to now submit Form ITR-B electronically through the e-Proceedings tab on the Income Tax portal is understood to be a significant step towards digitising compliance processes for cases involving search and seizure assessments,” say tax practitioners and experts.
Reintroducing the search assessment regime
“The procedure under Chapter XIV-B, including filing of return in ITR-B under section 158BC, was a self-contained code for handling search-related undisclosed income for a block period,” an tax expert says.
“This regime has now been reintroduced by replacing the earlier provisions of assessment in search cases (Sections 153A to 153D) for searches conducted on or after 1st September 2024.”
The Income Tax Department has now operationalised this facility, providing a more structured method for filing returns in block assessment cases.
Everything Else You Need to Know
Who Must File Form ITR-B?
Taxpayers against whom search or requisition proceedings were initiated under Section 132 or 132A on or after September 1, 2024, are required to file Form ITR-B. This return pertains to undisclosed income found during such operations.
What Period Does the Notice Cover?
The block period typically includes the six previous financial years before the search and the part of the current year until the date of the search.
For instance, if a search is conducted on September 15, 2024, the block period will cover FY 2018–19 to FY 2023–24, along with part of FY 2024–25.
What Does the Block Assessment Involve?
Under Chapter XIV-B, the block assessment procedure includes:
- Return in Form ITR-B: Taxpayer must disclose all undisclosed income, whether previously reported or not.
- Single Consolidated Assessment: Assessment is made for the entire block period in one go.
- Flat Tax Rate: A fixed 60% tax rate under Section 113 is applied without deductions.
- Assessment Time Limit: The process must be completed within the timeframe defined in Section 158BE, based on the end of the quarter in which the last search authorisation was executed.
How Is Undisclosed Income Computed?
Undisclosed income is calculated as the total income across the block period, based on search findings, excluding any income already disclosed or assessed in regular returns.
What If You Miss the Filing Deadline?
Failing to file Form ITR-B on time can trigger several consequences:
- The filing window is disabled on the e-portal.
- The Assessing Officer may conduct an ex-parte assessment without input from the taxpayer.
- Interest at 1.5% per month is levied under Section 158BFA(1).
- Penalties of up to 50% of the assessed tax can be imposed.
- In extreme cases, prosecution under the Income Tax Act may be initiated.
How Has the e-Proceedings Facility Simplified the Process?
The e-Proceedings system streamlines communication between the taxpayer and the Assessing Officer:
- Notices can be viewed and responded to digitally.
- Real-time tracking of cases and submission history is available.
- All records are stored online, improving transparency and accountability.
- Significantly reduces the need for in-person visits.
- The digital launch of online ITR-B filing under Section 158BC is part of the Income Tax Department’s larger effort to make compliance simpler, faster, and more transparent—especially in complex cases involving search and seizure assessments. Taxpayers are encouraged to respond promptly and use the online facility to avoid penalties and prosecution.
