Chapter XVI - Procedure for Assessment
Section 296
Section 296: time limit for completing a block assessment
Section 296 sets the completion clock for block assessment under section 294. Search initiation or requisition starts the main quarter-based clock; section 295 cases and statutory adjustments have separate rules.
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Need advice on Section 296?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Irrespective of the provisions of section 286, the order under section 294 shall be passed within eighteen months from the end of the quarter in which the search was initiated or requisition was made.
(2) Where search was initiated or requisition was made, and during the course of assessment or reassessment of the total undisclosed income of the relevant block period, any reference under section 166(1) is made, the period available for completion of such assessment or reassessment proceeding shall be extended by twelve months.
(3) In computing the period of limitation under sub-section (1), the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated or a requisition is made and ending on the date on which assets [as provided in section 261(b)] and material seized or requisitioned [as provided in section 261(i)] are handed over to the Assessing Officer having jurisdiction over the assessee shall be excluded.
(4) If after exclusion of the period referred to in sub-section (3), the remaining period of limitation for completion of assessment or reassessment, expires before the end of a month, such period shall be extended to end of such month.
(5) The period of limitation for completion of assessment or reassessment for the block period in the case of the other person referred to in section 295 shall be twelve months from the end of the quarter in which the notice under section 294 in pursuance of section 295, was issued to such other person.
(6) The period available for completion of assessment or reassessment proceeding in respect of the block period in a case referred to in sub-section (5) shall be extended by twelve months, where a reference under section 166(1) is made in such case.
(7) In computing the period of limitation under this section, the following period shall be excluded,— (a) the period commencing on the date on which stay on assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by jurisdictional Principal Commissioner or Commissioner; or (b) the period commencing from the date on which a first of the reference for exchange of information (made by an authority competent under an agreement referred to in section 159) is made and ending with the date on which such information requested is last received by the jurisdictional Principal Commissioner or Commissioner or one year, whichever is less; or (c) the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee to be re-heard under section 244(2); or (d) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited or inventory valued under section 268(5), and— (i) ending with the last date on which the assessee is required to furnish a report of such audit or inventory valuation under that sub-section; or (ii) where such direction is challenged before a court, ending with the date on which the certified copy of the order setting aside such direction is received by the jurisdictional Principal Commissioner or Commissioner; or (e) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under section 269(1) and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or (f) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of Schedule III (Table: Sl. No. 23, 24 or 25) as referred to in section 270(11)(i) and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, under those clauses is received by the Assessing Officer; or (g) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner as per section 270(13) and ending with the date on which the copy of the order under section 351(2)(ii)(A) or (B), is received by the Assessing Officer; or (h) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the jurisdictional Principal Commissioner or Commissioner under section 274(1) and ending on the date on which a direction under sub-section (3) or (6) or an order under sub-section (5) of the said section is received by the Assessing Officer; or (i) the period commencing from the date on which an application is made before the Board for Advance Rulings under section 383(1) and ending with the date on which the order rejecting the application is received by the jurisdictional Principal Commissioner or Commissioner under section 384(5); or (j) the period commencing from the date on which an application is made before the Board for Advance Rulings under section 383(1) and ending with the date on which the advance ruling pronounced by it is received by the jurisdictional Principal Commissioner or Commissioner under section 384(8).
(8) Where immediately after the exclusion of the period referred to in sub-section (3) or (7), the remaining period of limitation referred to in sub-section (1) or (5) available to the Assessing Officer for completion of assessment under section 294 is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
(9) Where after extension of the period referred to in sub-section (8), the period of limitation for making an order of assessment or reassessment, expires before the end of a month, such period shall be extended to the end of such month.
Introduction
Section 296 fixes the completion period for block assessment, which is distinct from the ordinary assessment deadline.
The operative date and any statutory extension or exclusion must be calculated from the particular search or requisition facts.
Key takeaways
Main base period
Subsection (1) provides eighteen months from the end of the quarter in which search was initiated or requisition made, overriding section 286.
Other-person base period
For section 295 cases, subsection (5) uses twelve months from the end of the quarter in which the section 294 notice pursuant to section 295 was issued.
Adjust the date
References, excluded periods and the statutory month-end and minimum-period rules can change the final deadline.
Choose the correct starting event
For the searched person, subsection (1) uses the quarter of search initiation or requisition. The old last-authorisation wording was replaced by Finance Act 2026. For an other-person assessment under section 295, subsection (5) instead uses the quarter of issue of the section 294 notice pursuant to section 295.
Extensions and excluded periods
A reference under section 166(1) during the relevant assessment or reassessment extends the applicable period by twelve months under subsection (2) or (6). Subsection (3) excludes up to 180 days between search initiation or requisition and handover of the specified assets and material to the jurisdictional Assessing Officer.
Subsection (7) lists further exclusions, including a court stay and a qualifying exchange-of-information request. Apply the precise statutory conditions and documentary dates. Subsections (4), (8) and (9) provide month-end and minimum remaining-period adjustments.
Hypothetical base-period illustration
Assume search is initiated on 10 May 2026. The quarter ends on 30 June 2026. With no reference, excluded period or other adjustment, the eighteen-month base period ends on 31 December 2027. This deliberately simplified illustration is not a complete deadline calculation for an actual case.
Step-by-step flow for the block-assessment time limit under Section 296
- 1
Whose block assessment is being completed?
The starting point differs for the person searched (or whose books or assets were requisitioned) and for the other person referred to in Section 295.
- The person searched or requisitioned: Go to step 2 (Section 296(1)).
- The other person under Section 295: Skip to step 3 (Section 296(5)).
- 2
Fix the base period for the searched person
Under Section 296(1), irrespective of Section 286, the order under Section 294 must be passed within eighteen months from the end of the quarter in which the search was initiated or the requisition was made. Exclude the period, not exceeding 180 days, from search or requisition to handover of the assets and material to the jurisdictional Assessing Officer (Section 296(3)); if the remaining period then ends before a month-end, it runs to the end of that month (Section 296(4)). A reference under Section 166(1) during the assessment adds twelve months (Section 296(2)). Then go to step 4.
- 3
Fix the base period for the other person
Under Section 296(5), the period is twelve months from the end of the quarter in which the Section 294 notice, issued in pursuance of Section 295, was issued to that other person. A reference under Section 166(1) in that case adds twelve months (Section 296(6)).
- 4
Exclude the periods listed in Section 296(7)
These include a court stay, an exchange-of-information reference (capped at one year), re-hearing under Section 244(2), special audit or inventory valuation under Section 268(5), a Valuation Officer reference, the Schedule III, Section 270(13) and Section 274 references, and Board for Advance Rulings applications. Each period runs between the dates stated in the clause; record both dates.
- 5
Apply the minimum-period and month-end rules
If, immediately after an exclusion under Section 296(3) or (7), less than sixty days remain, the remaining period is extended to sixty days (Section 296(8)). If the extended period then ends before a month-end, it runs to the end of that month (Section 296(9)).
Practical checklist
Do
- Record search initiation or requisition and identify whether section 295 applies.
- For an other-person case, retain the section 294 notice and its issue date.
- Record any section 166(1) reference and evidence for each excluded period.
- Apply subsections (4), (8) and (9) before concluding the final date.
Avoid
- Use section 286’s ordinary assessment deadline without checking this special rule.
Illustrative example
Worked example: deadline for a searched person with a handover gap
Hypothetical facts (illustration only, not a real taxpayer): A search is initiated on a trading firm on 20 August 2026. The seized assets and material are handed over to the jurisdictional Assessing Officer on 9 October 2026. Assume there is no Section 166(1) reference and none of the Section 296(7) events occurs.
Base period
The quarter of search ends on 30 September 2026. Eighteen months from that date under Section 296(1) ends on 31 March 2028.
Handover exclusion
The period from 20 August 2026 to 9 October 2026 is 12 + 30 + 9 = 51 days, counting both dates (an assumed counting convention). It is within the 180-day cap in Section 296(3), so all 51 days are excluded.
Shift the end date
31 March 2028 plus 51 days: 30 days take it to 30 April 2028 and the remaining 21 days to 21 May 2028.
Month-end rule
Because the period now ends before the end of a month, Section 296(4) extends it to 31 May 2028. Far more than sixty days remain, so Section 296(8) does not apply.
Outcome
- On these assumed facts, the order under Section 294 must be passed by 31 May 2028.
- A Section 166(1) reference would add twelve months, and any Section 296(7) period would be excluded, so the date must be recomputed if either occurs.
Frequently asked questions
Is every block assessment due in eighteen months?
No. Subsection (1) gives that base period, while subsection (5) gives a twelve-month base period for section 295 cases. Statutory references, exclusions and adjustments may change either deadline.
Does the clock start with the last search authorisation?
Current subsection (1), as substituted by Finance Act 2026, uses the quarter of search initiation or requisition. Last-authorisation wording appears in the superseded provision.
Can a transfer-pricing reference extend the period?
A section 166(1) reference during the relevant assessment or reassessment extends the applicable period by twelve months under subsection (2) or (6).
Need help applying this provision to your situation?
Get help responding to a block assessment / search caseLast updated 10 October 2026