Section 158B — Definitions (Block Period and Undisclosed Income)

CHAPTER XIV-B — SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES (BLOCK ASSESSMENT)

Section 158B — Definitions ('Block Period' and 'Undisclosed Income')

Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise

Status: Live (revived regime). The definition section. Substituted by the Finance (No. 2) Act, 2024 with effect from 1 September 2024 and refined by the Finance Act, 2025. It defines 'block period' and 'undisclosed income' and fixes, through the Explanation, when the last of the authorisations is deemed executed.

FA 2026: No amendment by the Finance Act, 2026.

A. SECTION COMMENTARY

A note on the revived regime: Chapter XIV-B (block assessment) was originally introduced by the Finance Act, 1995 with effect from 1 July 1995 and applied to searches initiated between 1 July 1995 and 31 May 2003, after which it was displaced by the section 153A–153C regime (the old section 158BI having shut the Chapter for searches after 31 May 2003). The Finance (No. 2) Act, 2024 has revived and substantially re-enacted Chapter XIV-B, with effect from 1 September 2024, for searches under section 132 or requisitions under section 132A initiated on or after that date; the Finance Act, 2025 then refined the revived provisions (and omitted section 158BI). Because the revived sections are new, there is as yet no judicial construction of them. The authorities collected here are decisions on the materially identical provisions of the 1995–2003 Chapter XIV-B (and, where flagged, on the cognate sections 153A–153C); they remain the most reliable guide to the meaning of the recast text, and are cited as such with that caveat stated candidly.

Section 158B is the gateway to the Chapter. The 'block period' comprises the previous years relevant to the six assessment years preceding the previous year of search/requisition, plus the broken period from 1 April of the previous year of search up to the date of execution of the last authorisation. Its reach therefore turns on the date of initiation of the search, which makes the timing provisions and the Explanation's deeming of central importance.

'Undisclosed income' is the substantive trigger and is defined widely: it includes any money, bullion, jewellery, virtual digital asset or other valuable article or thing, or any expenditure, or any income based on any entry in the books or other documents or transactions, representing wholly or partly income or property not disclosed (or which would not have been disclosed) for the purposes of the Act; and it extends to any expense, exemption, deduction or allowance claimed under the Act which is found to be incorrect, in respect of the block period. The inclusion of 'virtual digital asset' and of wrongly-claimed deductions/exemptions are notable expansions over the 1995 definition.

The Explanation deems the last authorisation executed, in a search, on the conclusion of the search recorded in the last panchnama, and, in a requisition under section 132A, on actual receipt of the books/documents/assets by the Authorised Officer. This deeming feeds both the span of the block period and the start of limitation (section 158BE).

The whole Chapter rests on the disclosed/undisclosed dichotomy. The settled learning — that disclosure is tested by whether income was, or would have been, brought to the Department's notice (typically through a return) rather than by tax paid, and that the block reaches only what is genuinely undisclosed and found in the search — is illustrated by the authorities below, which span the Supreme Court, the High Courts and the Tribunal.

B. STATUTORY POSITION (verbatim text)

Reproduced from the local Act (base text to the Finance Act, 2025).

158B. In this Chapter, unless the context otherwise requires,—

(a) "block period" means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was initiated under section 132 or any requisition was made under section 132A and also includes the period starting from the 1st day of April of the previous year in which search was initiated or requisition was made and ending on the date of the execution of the last of the authorisations for such search or such requisition;

(b) "undisclosed income" includes any money, bullion, jewellery, virtual digital asset or other valuable article or thing or any expenditure or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, virtual digital asset, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, exemption, deduction or allowance claimed under this Act which is found to be incorrect, in respect of the block period.

Explanation.—For the purposes of this Chapter, the last of the authorisations shall be deemed to have been executed,—

(a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued;

(b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer.

C. AUTHORITIES

The revived section 158B is new; the authorities below construe the materially identical definitions in the 1995–2003 Chapter XIV-B and span the Supreme Court, High Courts and the Income-tax Appellate Tribunal.

1. Meaning of 'undisclosed income' — disclosure is tested by the return, not by tax paid

Assistant CIT v. A. R. Enterprises (2013) 350 ITR 489 (SC)

Court: Supreme Court of India; judgment dated 30 January 2013 (350 ITR 489 / 213 Taxman 64).

Held: Payment of advance tax (or deduction of tax at source) does not by itself amount to disclosure of income so as to take it outside 'undisclosed income'. Where the due date for the return under section 139(1) had expired and no return was filed when the search took place, the income was 'undisclosed', notwithstanding advance tax referable to it had been paid. Disclosure is tested by the filing of a return, not by tax payment alone.

Significance: The leading gloss on 'undisclosed income' — the gateway concept of the Chapter (section 158B(b)); continues to inform the recast definition.

Microland Ltd. v. ACIT (1999) 67 ITD 446 / 63 TTJ 701 (Bangalore ITAT)

Court: Income-tax Appellate Tribunal, Bangalore Bench.

Held: Income which had already been disclosed in the return and processed/accepted (including by intimation under section 143(1)) before the search cannot be assessed again as 'undisclosed income' in a block assessment; the block is confined to income not disclosed, or that would not have been disclosed, for the purposes of the Act.

Significance: A Tribunal authority illustrating the exclusion of already-disclosed income from the block — reflected in the carve-outs of section 158BB(1A) of the recast provision.

2. Income already disclosed in the regular record is outside the block

CIT v. Shamlal Balram Gurbani (2001) 249 ITR 501 (Bombay)

Court: High Court of Bombay.

Held: Income which has been reflected in the accounts/returns filed for the relevant assessment years cannot be treated as 'undisclosed income' for the purpose of a block assessment; the block reaches only what is genuinely undisclosed, not what stands disclosed in the regular record.

Significance: A High Court application of the disclosed/undisclosed dichotomy that defines the Chapter; complements Ravi Kant Jain and A. R. Enterprises.

Microland Ltd. v. ACIT (1999) 67 ITD 446 / 63 TTJ 701 (Bangalore ITAT)

Court: Income-tax Appellate Tribunal, Bangalore Bench.

Held: Income which had already been disclosed in the return and processed/accepted (including by intimation under section 143(1)) before the search cannot be assessed again as 'undisclosed income' in a block assessment; the block is confined to income not disclosed, or that would not have been disclosed, for the purposes of the Act.

Significance: A Tribunal authority illustrating the exclusion of already-disclosed income from the block — reflected in the carve-outs of section 158BB(1A) of the recast provision.

3. The block is anchored to material found in the search (no presumption)

CIT v. Ravi Kant Jain (2001) 250 ITR 141 (Delhi)

Court: High Court of Delhi; Division Bench, judgment dated 15 March 2001.

Held: Block assessment under Chapter XIV-B is not a substitute for a regular assessment; its scope is limited to the undisclosed income unearthed as a result of the search. Income not detected on the basis of material gathered in the search cannot be brought to tax under the block; the regular and block streams run separately.

Significance: The classic High Court statement of the limited, search-anchored scope of block assessment, preserved by the recast scheme (section 158BA(6)).

CIT v. Mukundray K. Shah (2007) 290 ITR 433 (SC)

Court: Supreme Court of India; judgment dated 10 April 2007 (209 CTR 97 / 160 Taxman 276).

Held: Material found in a search (there, a diary) which becomes the starting point of an enquiry that, read with its other results, leads to detection of undisclosed income, can validly found a block assessment under section 158BB. Block computation must rest on evidence found as a result of the search and material relatable thereto.

Significance: Illustrates the evidentiary anchor of block computation; applies to the recomputation power in the recast section 158BB.

Sunder Agencies v. DCIT (1997) 63 ITD 245 (Mumbai ITAT)

Court: Income-tax Appellate Tribunal, Mumbai Bench.

Held: The scheme of Chapter XIV-B does not empower the Revenue to presume or draw assumptions about undisclosed income. Additions or disallowances in a block assessment must be based on evidence found at the time of the search, and cannot rest on presumptions or inferences drawn from the material otherwise on record.

Significance: An early and frequently-cited Tribunal authority establishing that block additions must be evidence-based, not presumption-based — the principle now embedded in section 158BB(2).

Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the local Act (base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a sub-section omitted by amendment. Finance Act, 2026 changes are flagged in the commentary. Citations are stated as reported and have been cross-checked; decisions of the Income-tax Appellate Tribunal and High Courts are identified as such, and decisions rendered under the 1995–2003 Chapter XIV-B or the cognate sections 153A–153C are flagged where relied upon, since the revived sections are not yet judicially construed. Where a section is genuinely sparse of authority, that is stated candidly rather than padded. Not legal advice.