Section 293: computation of total undisclosed income of block period

What makes up total undisclosed income

The total undisclosed income of the block period is the aggregate of: (a) undisclosed income declared in the return furnished under section 294; and (b) undisclosed income determined by the Assessing Officer under sub-section (4).

What is excluded

The following are NOT included in total undisclosed income of the block period:

• Total income already determined/assessed under specified sections of this Act (section 270(1)/(10), 271, 279, 294(1)(c)) or the corresponding provisions of the Income-tax Act, 1961, before the date of the search/requisition, for any tax year in the block period.
• Total income already declared in a return filed under section 263 of this Act (or section 139 of the 1961 Act), or in response to a notice under section 268(1) (or section 142(1) of the 1961 Act), before the search/requisition date, for a tax year in the block period, and not already covered above.
• Income computed by the assessee based on entries recorded in the ordinary books of account and other documents maintained in the normal course, for (i) a completed tax year whose return due date has not yet expired, (ii) the period from 1 April of the search year up to the day before the search/requisition, and (iii) the period from the search/requisition date to the date the last search authorisation is executed - each based on entries recorded on or before the relevant cut-off date.
• Total income referred to in section 207(8), section 216, section 393(1) (Table Sl. No. 8(iii)) of this Act, or the corresponding 1961 Act provisions.

Recomputing income the assessee claims was already disclosed

Where the Assessing Officer believes any part of the income the assessee computed under sub-section (2)(c) is actually undisclosed, he may recompute that income.

Basis for computing undisclosed income

Undisclosed income within the block period is computed based on: (a) evidence found as a result of the search, survey or requisition; and (b) any other material or information available to, or coming to the notice of, the Assessing Officer during the block-assessment proceedings.

International / specified domestic transactions carved out

Where income determined as above relates to an international transaction or specified domestic transaction under section 166, and pertains to the period from 1 April of the year of the last search authorisation up to that execution date, that income is excluded from the total undisclosed income of the block period and is instead considered in the assessment made under the Act's other provisions.

Firm income, and applying sections 102-105 and 166

For a firm's undisclosed income, the amount assessed for each tax year in the block period is computed before allowing deduction of salary, interest, commission, bonus or remuneration to a non-working partner.

Sections 102, 103, 104 and 105 apply, with references to "tax year" read as references to the relevant tax year within the block period.

Section 166 (transfer pricing) applies similarly, excluding the carved-out period referred to above.

Losses and unabsorbed depreciation

Losses brought forward from before the block period under Chapter VII, or unabsorbed depreciation under section 33(11), cannot be set off against undisclosed income determined in the block assessment.

Such losses or unabsorbed depreciation may instead be carried forward for set-off in the tax year after the block period ends, for the remaining permitted period (taking the block period into account), as per the Act's normal rules.

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