Block Assessment Period Curtailed for Third Parties Under Finance Bill 2026

 

 

Existing Sec 295 (Undisclosed income of any other person):

Section 295 of the Income Tax Act, 2025, provides, inter-alia, that where Assessing officer is satisfied that any undisclosed income belongs to or pertains to or relates to any person (herein after referred to as the ‘other person’), other than the person (herein after referred to as the ‘specified person’) with respect to whom search was initiated under section 247 or requisition was made under section 248, then –

(a) any money, bullion, jewellery, virtual digital asset or other valuable article or thing or any books of account or other documents seized or requisitioned or any other material or information relating to the aforesaid undisclosed income will be handed over to the Assessing Officer having jurisdiction over such other person; and

(b) Assessing Officer of the other person shall proceed under section 294 against such other person and the provisions of this section will apply accordingly.

Furthermore, in the existing provisions of Block assessment, the block period is same for the specified person or other person.

Amendment:

Accordingly, it is proposed to amend the section 295(2) of the Act so as to limit the period of block in case of third party.

This amendment will take effect from the 1st day of April, 2026, for search or requisition is initiated or made as the case maybe, on or after 1st day of April, 2026.