New Procedural Aspects of Block Assessments:
A. Introduction:
Block Assessment provisions were introduced in Finance Act 2024, in order to avoid prolonged litigation and to assess income in a consolidated manner over six years, with undisclosed income attracting a special flat tax rate of 60%.
B. What is Block Period:
It refers to the period covering the previous six assessment years before the year in which the search is conducted. It includes the current year up to the date when the last search authorization is executed.
C. Section 158BA: Assessment of total income
1. This section applies to searches initiated on or after September 1, 2024.
2. It provides that any ongoing assessments or reassessments pending on the date of the search will be abated and fresh assessments will be conducted for the block period.
3. If there’s a subsequent search after an earlier one, the earlier search assessment must be completed first. If the search is nullified, pending assessments will be revived.
4. The total income for the block period is charged at a flat rate of 60%, with an additional surcharge.
D. Section 158BC: Procedure for Block Assessment
1. The assessee is required to file a return of income within 60 days, and this return cannot be revised later.
2. The Assessing Officer must complete the assessment within the prescribed time frame, and the assessee cannot approach the Dispute Resolution Panel (DRP) in these cases.
E. Section 158BE: Time-Limit for Completion of Block Assessment
1. The assessment must be completed within 12 months from the end of the month in which the last authorization for search was executed or requisition was made.
2. If there’s a reference to a Transfer Pricing Officer (TPO), this period is extended by 12 months.
F. Sec 158BFA: Waiver of penalty in some cases
1. The Assessing Officer or the Commissioner (Appeals) may levy a penalty @50% in respect of the undisclosed income .
2. However, no such penalty or penalty under section 271AAD or 271D or 271DA shall be imposed when: (i) The assessee has filed a return in response to the notice u/s 158BC. (ii) The tax payable on the basis of such return has been paid the assessee offers the valuable or any other assets so seized to be adjusted against the tax payable. (iii) No appeal has been filed against the assessment.
