Section 158BE — Time Limit for Completion of Block Assessment

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

Section 158BE — Time Limit for Completion of Block Assessment

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

Status: Live (revived regime). The limitation provision. Substituted by the Finance (No. 2) Act, 2024 with effect from 1 September 2024 and amended by the Finance Act, 2025. It fixes twelve months from the end of the quarter in which the last authorisation was executed (searched person) and from the end of the quarter in which the section 158BC notice was issued (the section 158BD other person), with detailed exclusions.

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

A. SECTION COMMENTARY

Section 158BE caps the time for completing the block. For the searched person, the order under section 158BC must be passed within twelve months from the end of the quarter in which the last of the authorisations was executed or made (the old Chapter measured from the end of the 'month'). For the section 158BD other person, twelve months run from the end of the quarter in which the section 158BC notice was issued to him. Provisos extend the period for transfer-pricing references under section 92CA and where the return time is extended by thirty days under the fifth proviso to section 158BC(1)(a).

Because the clock starts from execution of the 'last of the authorisations', and the Explanation to section 158B deems that to occur on the conclusion of the search recorded in the last panchnama, the date of the last panchnama is the fulcrum of limitation. VLS Finance holds that limitation runs from the last panchnama and that a genuinely continued search concludes on the last panchnama, while cautioning that a section 132(3) restraint order cannot keep a concluded search artificially alive. The High Courts have developed this: a restraint order does not amount to seizure and cannot extend limitation (Sandhya P. Naik), and a search ends when the search party leaves — a panchnama recording mere revocation of a prohibitory order is not the 'last panchnama' (C. Ramaiah Reddy, Full Bench).

Sub-sections (2) and (4) provide exclusions in computing limitation: the period of any court stay (to the date the vacating order is received), exchange-of-information references under sections 90/90A, re-hearing under the proviso to section 129, a special audit/inventory direction under section 142(2A), valuation references under section 142A, GAAR references under section 144BA, and advance-ruling applications under section 245Q. Where, after exclusion, less than sixty days remain, the period is extended to sixty days, with end-of-month rounding.

Limitation under the Chapter is jurisdictional: an order passed beyond the permitted period (correctly computed after admissible exclusions) is barred. The recurring battlegrounds — the identity of the last panchnama, the genuineness of intervening 'searches', and the misuse of restraint orders to extend the search — are addressed by the authorities below.

B. STATUTORY POSITION (verbatim text)

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

158BE. (1) Notwithstanding the provisions of section 153, the order under section 158BC shall be passed within twelve months from the end of the quarter in which the last of the authorisations for search under section 132, or requisition under section 132A, was executed or made, as the case may be:

Provided that in a case where search under section 132 was initiated, or requisition under section 132A was made, and during the course of the proceedings for the assessment or reassessment of the total undisclosed income of the relevant block period, any reference under sub-section (1) of section 92CA is made, the period available for making an order of assessment or reassessment in respect of the block period shall be extended by twelve months:

Provided further that in a case where in pursuance to fifth proviso to clause (a) of sub-section (1) of section 158BC, the time allowed under the said clause for furnishing return is extended by a further period of thirty days, the provisions of this sub-section shall have effect, as if for the words "twelve months", the words "thirteen months" had been substituted.

(2) In computing the period of limitation under sub-section (1), the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account, or other documents or money or bullion or jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee, in whose case such search is initiated under section 132 or such requisition is made under section 132A, as the case may be, shall be excluded:

Provided that where after exclusion of the period referred to in this sub-section, the period of limitation for making an order of assessment or reassessment, as the case may be, expires before the end of a month, such period shall be extended to the end of such month.

(3) The period of limitation for completion of assessment or reassessment for the block period in the case of the other person referred to in section 158BD shall be twelve months from the end of the quarter in which the notice under section 158BC in pursuance of section 158BD, was issued to such other person:

Provided that in case where during the course of the proceedings for the assessment of undisclosed income of the block period in case of other person referred to in section 158BD, a reference under sub-section (1) of section 92CA is made, the period available for making an order of assessment in respect of the block period in case of such other person shall be extended by twelve months:

Provided further that in a case where in pursuance to fifth proviso to clause (a) of sub-section (1) of section 158BC, the time allowed under the said clause for furnishing return is extended by a further period of thirty days, the provisions of this sub-section shall have effect, as if for the words "twelve months", the words "thirteen months" had been substituted.

(4) In computing the period of limitation under this section, the following period shall be excluded,—

(i) the period commencing on the date on which stay on assessment proceedings was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner; or

(ii) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or

(iii) the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee to be re-heard under the proviso to section 129; or

(iv) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited or inventory valued under sub-section (2A) of section 142 and—

(a) ending with the last date on which the assessee is required to furnish a report of such audit or inventory valuation under that sub-section; or

(b) where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or

(v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or

(vi) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) of section 10, under sub-clause (i) of the first proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or

(vii) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order under clause (ii) or clause (iii) of the fifteenth proviso to clause (23C) of section 10 or clause (ii) or clause (iii) of sub-section (4) of section 12AB, as the case may be, is received by the Assessing Officer; or

(viii) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer; or

(ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or

(x) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R:

Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-section (1) or sub-section (3) available to the Assessing Officer for making an order under clause (c) of sub-section (1) of section 158BC is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly:

Provided further that where after extension of the period referred to in the first proviso, the period of limitation for making an order of assessment or reassessment, as the case may be, expires before the end of a month, such period shall be extended to the end of such month.

C. AUTHORITIES

The leading authority on reckoning block limitation from the last panchnama is VLS Finance (SC); the High Courts (Bombay; Karnataka Full Bench) have refined the restraint-order and 'last panchnama' rules. The recast section retains the same machinery.

1. Limitation runs from the last panchnama

VLS Finance Ltd. v. CIT (2016) 384 ITR 1 (SC)

Court: Supreme Court of India; judgment dated 22 April 2016 (237 Taxman 38 / 289 CTR 117).

Held: For block-assessment limitation under section 158BE, the search is deemed concluded on the date of the last panchnama drawn in relation to the person (Explanation 2); limitation runs from the end of that period (now the quarter). A restraint order under section 132(3) does not by itself extend a concluded search; but a search genuinely continued over several days concludes on the last panchnama.

Significance: The leading authority on reckoning block limitation; the recast section 158BE retains the same 'last authorisation / last panchnama' machinery.

2. A section 132(3) restraint order cannot artificially extend the search / limitation

CIT v. Sandhya P. Naik (2002) 253 ITR 534 (Bombay)

Court: High Court of Bombay.

Held: After insertion of the Explanation to section 132(3) (w.e.f. 1 July 1995), a restraint/prohibitory order does not amount to seizure and cannot be used to extend the time-limit for framing the block order. A restraint order may be passed only where there is a practical difficulty in seizing; an examination of materials covered by a restraint order does not mean that the search continued. Limitation therefore cannot be enlarged by passing a restraint order.

Significance: A leading High Court authority that a section 132(3) restraint order cannot artificially extend the search (and hence section 158BE limitation) — the proposition endorsed in VLS Finance.

C. Ramaiah Reddy v. ACIT (2011) 339 ITR 210 (Karnataka) (Full Bench)

Court: High Court of Karnataka; Full Bench.

Held: A search comes to an end when the search party leaves the premises; a prohibitory order under section 132(3) cannot be equated with continuation of the search. Where a prohibitory order is later revoked, the panchnama evidencing the revocation is not the 'last panchnama' for computing limitation. The Tribunal is also not estopped from examining the validity of the search.

Significance: A Full-Bench High Court authority refining the 'last panchnama' rule for section 158BE limitation; complements VLS Finance and Sandhya P. Naik.

3. The deeming of 'last authorisation' (read with section 158B Explanation)

Interaction with section 158B Explanation

Position: Section 158BE must be read with the Explanation to section 158B, which 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. The start of limitation is tied to that documented event — the point fixed by VLS Finance, Sandhya P. Naik and C. Ramaiah Reddy.

Significance: Because the recast Chapter retains this deeming intact, the panchnama-based reckoning continues unchanged in substance; only the unit of measurement (quarter, not month) has altered.

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.