Section 292: special procedure for assessment of search cases

Introduction

Section 292 opens the special block-assessment procedure following a search or requisition. It coordinates the block proceeding with ordinary assessments for overlapping years.

The search date, covered block period and any subsequent search determine which proceedings abate or revive.

Key takeaways

The core rule: block assessment applies

Irrespective of any other provision of the Act, where a search is initiated or a requisition is made in the case of any person on or after the commencement of the Act, the Assessing Officer must proceed to assess or reassess the person's total undisclosed income for the block period, as per this Part (sections 292 to 300).

Abatement of overlapping proceedings

Any assessment, reassessment or recomputation proceeding under the rest of the Act, pending on the date of the search or requisition and relating to a tax year falling within the block period, abates (stands halted) from that date.

A proceeding for which a notice is issued during the period between the search/requisition and the date of the block-assessment order under section 294(1)(c) - for a tax year in the block period other than the year in which the last search authorisation is executed - also abates from the date such notice is issued.

If a transfer pricing reference under section 166(1) has been made, or an order passed under section 166(6), in relation to an abated proceeding, that reference or order abates too.

Subsequent search or requisition on the same person

If a further search or requisition occurs while an earlier block assessment is still pending, the pending assessment must be completed first, and the assessment for the subsequent search/requisition follows under this Part thereafter. If less than three months would otherwise remain for the later assessment, that period is extended to three months from the end of the month the earlier assessment was completed.

Revival if the block assessment is annulled

If a block-assessment proceeding, or an order made under section 294(1)(c), is annulled in appeal or other legal proceedings, the assessment/reassessment/recomputation (or reference/order) that had abated revives from the date the Principal Commissioner or Commissioner receives the order of annulment - but this revival itself ceases if the annulment order is later set aside.

Income of the search year, and tax rate

Income (other than undisclosed income) of the tax year in which the last search authorisation is executed, or the requisition is made, is assessed separately under the other, normal provisions of the Act.

The total undisclosed income of the block period, as referred to in section 293(7), is charged to tax at the rate specified in section 192, as income of the block period, irrespective of which particular tax year(s) within the block it actually relates to.

Step-by-step flow for block assessment under Section 292

1. 1

   Was a search initiated or a requisition made on or after the commencement of the Act?

   Section 292(1): the Assessing Officer then assesses or reassesses the total undisclosed income of the block period under this Part. Block period is defined in Section 301(a).

   • No: Section 292 does not apply.
   • Yes: Go to the next step.
2. 2

   Which other proceedings for block period years abate?

   Proceedings pending on the search or requisition date abate on that date (Section 292(2)(a)). Proceedings started by a notice issued between that date and the order under Section 294(1)(c) also abate, except for the year of the last authorisation (Section 292(2)(b)). A transfer pricing reference or order under Section 166 abates with them (Section 292(3)).

3. 3

   Is a block assessment already pending from an earlier search?

   • Yes: Complete the pending one first, then make the later one. If less than three months is left for the later one, it is extended to three months from the end of the month in which the first is completed (Section 292(4)).
   • No: Go to the next step.
4. 4

   Assess the income of the year of the last authorisation separately

   Income other than undisclosed income of that year is assessed under the other provisions of the Act (Section 292(6)).

5. 5

   Charge tax on the total undisclosed income

   Under Section 292(7), it is taxed at the rate in Section 192 as income of the block period, whatever year it relates to. If the block proceeding or order is annulled, the abated proceedings revive (Section 292(5)).

Practical checklist

Frequently asked questions