What Are Search & Requisition Assessments?
Search/requisition assessments are triggered when tax authorities conduct a search under section 132 or a books-requisition under section 132A of the Income-tax Act. These typically result in block assessments, which cover multiple past assessment years and enforce disclosure of undisclosed income/assets.
Key Changes Effective From 1 April 2026
- Form ITR-BN: A new return form specifically for block assessment cases has been introduced via CBDT Notification No. 97/2026. All persons/entities subject to notices under Sections 158BC or 158BC read with 158BD are required to file ITR-BN. (incometax.gov.in)
- Rule 332 Amendment and Appendix IV: These specify the manner and content of returns in search/requisition cases. They outline the formats to be used, verification requirements, and timelines. (incometax.gov.in)
Who Must Comply
- Any individual, HUF, company or other entity subjected to a search (sec 132) or requisition (sec 132A) on or after 1 September 2024, and issued notice for block assessment under sec 158BC or 158BC r.w.s. 158BD. (incometax.gov.in)
- Must file ITR-BN within the due date specified in the notice.
What Information Goes into ITR-BN
- Declaration of undisclosed income/assets for the block period
- Heads of income: salary, business & profession, capital gains, house property, etc.
- Valuation of assets: physical, financial, foreign assets, virtual digital assets, etc.
- TDS/TCS credits, tax already declared, reconciliations
Practical Tips for Compliance
- Maintain detailed records of income & assets spanning the block period, including for past years under assessment.
- For virtual assets, keep transaction records and cost basis clearly documented.
- File ITR-BN proactively once notice is served; missing the deadline can lead to penalties or loss of rights to objections/assert defenses.
Example Scenario
Suppose a taxpayer receives a requisition notice on 1 October 2024. They must collate details for the block period covering the six preceding assessment years plus period from 1 April of prior year to date of search, file ITR-BN under the amended rules, report all incomes/assets during that period, even those not previously disclosed.
Consequences of Non-Compliance
Failure to file ITR-BN properly can result in:
- Higher tax assessment without opportunity of normal return filing
- Penalties for understatement or concealment of income
- Interest for late payments, plus potentially prosecution in severe cases
Next Steps for Affected Taxpayers
- On receiving search/requisition notice, immediately consult a tax professional to prepare ITR-BN.
- Gather asset valuation and income information for block period.
- Ensure accurate reporting of foreign/resident virtual digital assets.
Navigating search & requisition assessments under the new ITR-BN rules demands careful documentation and timely action. Proper compliance helps preserve rights and reduce exposure to penalties.