Searched After 1 April 2026?The block-assessment return is now ITR-BN

A search under the income-tax law is a long day for a family or a business — and the day itself is rarely the hard part. What follows is. Some weeks later a notice arrives requiring a return of undisclosed income for a period stretching back years, within a window measured in days, on a form most taxpayers have never seen. On 24 July 2026 the CBDT notified that form for searches under the new law: ITR-BN.

What was notified on 24 July 2026

By Notification No. 97/2026 [G.S.R. 656(E)] dated 24 July 2026, the CBDT brought in the Income-tax (Third Amendment) Rules, 2026. The amendment is short: in sub-rule (1) of Rule 332 of the Income-tax Rules, 2026 the words "Appendix III" are replaced by "Appendix III and Appendix IV", and a new Appendix IV is inserted containing Form ITR-BN — Income-tax Return for Block Assessment for Search and Seizure cases.

The rules are deemed to have come into force on 1 April 2026, and apply to any search initiated under Section 247 or requisition made under Section 248 of the Income-tax Act, 2025 on or after 1 April 2026. Section 247 is the new Act's search-and-seizure provision; Section 248 is the power to requisition books and assets held by another authority.

The line falls where it does because the Income-tax Act, 2025 came into force on 1 April 2026. Searches in the eighteen months before that date stay under the 1961 Act, on the old track. Filing the wrong form is not a drafting slip; it is a defective response to a statutory notice.

What a "block assessment" actually is

Ordinary assessment looks at one tax year. Block assessment looks at a block. Under Section 292 of the 2025 Act, once a search is initiated or requisition made, the Assessing Officer assesses or reassesses the total income of the block period under Chapter XVI-B; Section 293 governs how that period's undisclosed income is computed.

Section 301 supplies the definitions. The block period comprises the six tax years preceding the tax year of the search or requisition, plus the period from 1 April of the tax year of the search to the date of execution of the last of the authorisations. Undisclosed income is defined widely — money, bullion, jewellery, virtual digital assets or other valuable articles, any expenditure, or income based on any entry in the books or other documents or transactions, that wholly or partly represents income or property not disclosed for the purposes of the Act; it also covers an exemption, deduction or allowance claimed and later found incorrect.

Two consequences follow. Assets and entries are read together — a stock of jewellery and a cash-book entry can feed the same computation. And a claim that was merely wrong, not concealed, can be swept in if it is found to be incorrectly claimed.

The Section 294 notice — and the sentence most people miss

The procedure sits in Section 294. The Assessing Officer issues a notice requiring the person to furnish, within a period specified in it not exceeding sixty days, a return setting forth the undisclosed income of the block period, in the prescribed form and verified in the prescribed manner. That form is now ITR-BN.

A further thirty days may be allowed, but only where four things hold together: the due date for the preceding tax year's return had not expired before the search or requisition; the assessee was required to get accounts audited under Section 63; the accounts were not audited by the date of the notice; and the assessee asks in writing for time to complete the audit. A narrow door, not a general adjournment.

Then the sentence that governs everything else: a person who has furnished a return under this clause is not entitled to furnish a revised return.

In ordinary filing, a mistake is a correction away. In a block return there is no second draft — the first figure you sign is the figure you argue from for the rest of the assessment.

That restriction is why the sixty days belong to reconstruction, not to the form: seized material inspected, copies obtained, cash and stock reconciled against books, each item classified — before anything is entered.

What the block period costs

Section 192(1) charges the total income of the block period determined under Section 294 to tax at 60 per cent, increased under Section 192(2) by any surcharge levied by a Central Act, with cess as applicable. No slab rates, no ordinary reliefs. Above that, Section 298 adds two layers:

• Interest under Section 298(1) — simple interest at 1.5 per cent of the tax on undisclosed income, for every month or part of a month, where the return required by the notice under Section 294(1)(a) is furnished late or not at all. It runs from the day after the notice period expires until the assessment is completed.
• Penalty under Section 298(2) — 50 per cent of the tax leviable on the undisclosed income determined by the Assessing Officer.

Section 298(3) supplies the relief. No penalty is imposed on undisclosed income to the extent it is disclosed in the return, where the tax is paid (or seized money offered for adjustment), evidence of payment is furnished with the return, and no appeal is filed against that assessed disclosed income. Where the Assessing Officer determines undisclosed income in excess of what was returned, the 50 per cent penalty applies to the excess.

Section 297 relieves the other way: interest under Sections 423, 424 and 425 and penalty under Section 439 are not to be levied on undisclosed income assessed or reassessed for the block period. The block regime is a self-contained charge, not the ordinary charge with extras stacked on it.

The department's clock

Limitation cuts both ways. Under Section 296, the order under Section 294 must be passed within twelve months from the end of the quarter in which the last of the authorisations was executed or the requisition made, subject to the extensions that section allows. Dating the last authorisation correctly therefore fixes the outer limit of the department's power.

Under Section 295, where the Assessing Officer is satisfied that undisclosed income belongs to a person other than the one searched, the material passes to that other person's Assessing Officer, who proceeds under Section 294 against them. Someone never searched can therefore receive a block-assessment notice — with the block period aligned to the searched person's, and abatement dates reckoned from when the material was received.

The first sixty days, in order

A block assessment is not an ordinary return exercise under pressure. It is an assessment of six years and part of a seventh, at a flat 60 per cent, on a return that cannot be amended, answered in sixty days. The notification of 24 July 2026 settles the form; the reconciliation behind the figure is still what the rest of the proceeding rests on.