What CBDT has notified
CBDT Notification No. 97/2026, dated 24 July 2026, inserts Appendix IV in the Income-tax Rules, 2026 and prescribes Form ITR-BN for a return of undisclosed income in block-assessment proceedings. The notification is deemed effective from 1 April 2026.
The form applies where a search is initiated under section 247 or a requisition is made under section 248 of the Income-tax Act, 2025 on or after 1 April 2026. It is not an ordinary annual income-tax return. It is a specialised return furnished in response to a notice under section 294, including proceedings against an “other person” under section 295.
Who must file—and by when
The filing obligation begins with the notice issued by the Assessing Officer under section 294(1)(a). The return must be filed within the period stated in that notice. The statute caps that period at sixty days; it does not create one universal due date calculated automatically from the date of search.
A further extension of thirty days is possible only in a limited audit situation: the immediately preceding tax year’s regular-return due date had not expired before the search or requisition, the assessee was liable to audit under section 63, the normal-course accounts were still unaudited when the notice was issued, and a written request is made to obtain the audit. The extension should therefore never be assumed.
- Record the notice date, DIN and the exact due date stated in the notice
- Do not treat sixty days as an automatic entitlement where the notice allows a shorter period
- Make any eligible audit-extension request promptly and in writing
- A return filed beyond the permitted period is not deemed to be a return under section 263
- A revised ITR-BN cannot be furnished after the original block return is filed
How the block period is mapped
For the searched or requisitioned person, the block period ordinarily aggregates the six tax years preceding the tax year in which the search or requisition begins, together with the period from 1 April of that tax year up to the date on which the last authorisation is deemed to have been executed.
ITR-BN labels the six preceding years as Y6 to Y1. The current-period component is Y0. If execution of the last authorisation crosses into the next tax year, Y0 becomes the complete first tax year and the part of the following tax year up to the last-authorisation date is reported as Y+1.
For an “other person” proceeded against under section 295, the Finance Act, 2026 and the notes to ITR-BN provide narrower block-period rules in specified cases, including where the undisclosed income relates only to the immediately preceding year/current period or to a single earlier tax year. This determination should be made from the statutory facts, not merely copied from the searched person’s working.
What information ITR-BN requires
The form is designed as a block-period reconciliation rather than a single total-income figure. Part A captures the search or requisition dates, the last-authorisation date, notice particulars and the history of returns and pending proceedings for each tax year.
Parts C and D then reconcile declared undisclosed income year by year, first by head of income and then by the nature of the item. The item-wise disclosure covers money, bullion, jewellery, virtual digital assets, expenditure, incorrect expense or exemption claims, deductions, allowances, book entries and other items.
- Last regular return, acknowledgement and section under which it was filed for each relevant year
- Processing, assessment, reassessment or recomputation already completed
- Proceedings pending on the date of search or requisition
- Normal-course income for an ended year whose regular-return due date has not expired
- Part-year income before and during the search period, supported by contemporaneous books
- Head-wise and item-wise undisclosed income with tax-year allocation and brief remarks
- Self-assessment tax, earlier unclaimed challans and eligible TDS/TCS credits
Undisclosed income and tax computation
The computation starts with undisclosed income declared in ITR-BN and may ultimately include additional undisclosed income determined by the Assessing Officer. Previously assessed or returned income and qualifying income recorded in normal-course books are excluded in the manner prescribed by section 293.
The statutory tax rate on the total undisclosed income of the block period is 60%. Form ITR-BN separately provides for surcharge, where applicable, and health and education cess at 4%, followed by interest under section 298(1), taxes paid and the balance payable or refundable.
The form permits claims for earlier advance tax or self-assessment tax and TDS/TCS credits not already claimed, but expressly makes their allowance subject to verification and the Assessing Officer’s satisfaction. A year-wise credit trail is therefore essential.
- Do not set off brought-forward losses or unabsorbed depreciation from before the block period against block undisclosed income
- For the part-tax-year segment, undisclosed income relating to international or specified domestic transactions is dealt with outside the block assessment under the applicable provisions
- Keep a separate reconciliation of income already disclosed, normal-course income and the amount now offered as undisclosed income
Interaction with regular returns and pending proceedings
ITR-BN does not replace every regular return. Where provisional figures are furnished for Y1 or a complete Y0 because the regular-return due date has not expired, the form states that those figures are not themselves a regular return. The relevant income must still be included in the return furnished under section 139 of the 1961 Act or section 263 of the 2025 Act, as applicable.
Assessment, reassessment or recomputation proceedings for tax years falling within the block period that are pending on the date of search or requisition generally abate under section 292. The form nevertheless requires year-wise disclosure of those proceedings so that the block computation begins from a complete procedural history.
Income other than undisclosed income for the tax year in which the last authorisation is executed is assessed separately under the regular provisions. Teams should therefore maintain two linked but distinct workstreams: the block-return reconciliation and the regular-return or regular-assessment position.
Consequences of delay and the assessment timeline
If ITR-BN is not furnished within the permitted notice period, section 298 provides for simple interest at 1.5% of the tax on undisclosed income determined by the Assessing Officer for every month or part of a month from the day after the notice deadline until completion of assessment.
A penalty equal to 50% of the tax leviable on the undisclosed income determined may also arise. The statutory protection from that penalty is conditional, including timely filing, payment or permitted adjustment of tax, furnishing evidence of payment and the appeal position concerning income shown in the return. Additional income determined over the returned amount remains separately exposed.
Under section 296, the block-assessment order for the searched or requisitioned person is ordinarily to be passed within eighteen months from the end of the quarter in which the search was initiated or requisition was made, subject to statutory exclusions and extensions. The corresponding time limit for an “other person” is separately linked to the quarter in which the section 294 notice pursuant to section 295 is issued.
A practical readiness checklist
The filing period is short compared with the breadth of the reconciliation. Preparation should begin from the date of search or requisition rather than waiting for the section 294 notice. The most reliable working is a year-wise evidence matrix that connects each amount to the return history, books, seized material and proposed tax treatment.
- Preserve every authorisation, panchnama, seizure or requisition record and notice with its DIN
- Determine the last-authorisation date and document the Y6-to-Y1, Y0 and possible Y+1 mapping
- Download all regular returns, acknowledgements, processing intimations and assessment orders
- Prepare a status sheet of proceedings pending on the search or requisition date
- Freeze and reconcile normal-course books, bank records, ledgers, digital records and seized material
- Build separate head-wise and item-wise schedules of proposed undisclosed income
- Trace challans and TDS/TCS credits and identify amounts already claimed in regular returns
- Evaluate the audit-extension conditions immediately after receiving the notice
- Complete a legal and factual review before verification because the filed return cannot be revised
What is still awaited
As at 28 July 2026, the official e-filing news page records the notification of Form ITR-BN, but a separate filing utility, schema, step-by-step portal guidance or dedicated FAQ has not been announced there. The operational mode, validations, attachments and verification flow should be checked again when the notice is received and before filing.
The absence of a published utility does not change the statutory notice deadline. Taxpayers and advisers should prepare the substantive reconciliation immediately and monitor the e-filing portal for the enabled filing process.
This article is a general professional overview based on the law and official material available on 28 July 2026. Search and block-assessment matters are fact-sensitive and require a case-specific review before any return, disclosure or legal position is finalised.