Section 293 — Computation of total undisclosed income of block period. Successor to s.158BB of the 1961 Act.
Section 293 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
Sub-section (1) makes the total undisclosed income of the block period referred to in section 292(1) the aggregate of undisclosed income declared in the return furnished under section 294 and undisclosed income determined by the Assessing Officer under sub-section (4).
Sub-section (2) takes four categories out of that total. Clause (a) excludes total income already determined or assessed under section 270(1) or (10), 271, 279 or 294(1)(c) of this Act, or under section 143, 144, 147, 153A, 153C, 158BC or 245D(4) of the Income-tax Act, 1961, before the date of initiation of search or requisition, for any tax year in the block period. Clause (b) excludes total income already declared in a return under section 263 of this Act or section 139 of the 1961 Act, or in response to a notice under section 268(1) of this Act or section 142(1) of the 1961 Act, before that date and not covered by clause (a). Clause (c) excludes income the assessee has computed for three windows on the basis of entries recorded in books maintained in the normal course: a completed tax year whose return due date had not expired before the search or requisition; the period from 1 April of the tax year of the search or requisition to the day immediately preceding it; and the period from initiation to the date of execution of the last of the authorisations. Clause (d) excludes income referred to in section 207(8), 216 or 393(1) [Table: Sl. No. 8(iii)] of this Act, or section 115A(5), 115G or 194P(1) of the 1961 Act. Sub-section (3) qualifies clause (c): the Assessing Officer may recompute any part of that income he is of the opinion is undisclosed.
Sub-section (4) fixes the basis of computation: evidence found as a result of search or survey or requisition, and any other material or information available with the Assessing Officer or coming to his notice during proceedings under Part B.
Sub-section (5) carves out transfer pricing. Where such income relates to an international transaction or specified domestic transaction referred to in section 166 and pertains to the period from 1 April of the tax year in which the last of the authorisations was executed to the date of that execution, then irrespective of section 292(6) it is not considered in the block total and is considered instead in the assessment made under other provisions of the Act.
Sub-section (6) adds three computation rules: a firm's undisclosed income for each tax year in the block period is determined before deduction of salary, interest, commission, bonus or remuneration to a partner who is not a working partner; sections 102 to 105 apply, reading tax year as the relevant tax year in the block period; and section 166 applies in the same way, excluding the period in sub-section (5). Sub-section (7) charges the tax referred to in section 292(7) on the total so determined. Sub-section (8) bars set-off, against that income, of losses brought forward under Chapter VII from a year before the block period and of unabsorbed depreciation under section 33(11); sub-section (9) preserves them for set off in the tax year after the block period ends, for the remaining period, taking the block period and that year into account.
A block assessment following a search is meant to reach income never disclosed, not to reassess income the Department already had. Sub-section (2) is therefore as important as sub-section (1): it strips out everything already assessed, already returned, or already written up in books kept in the normal course, so the block figure is a residue. Sub-sections (8) and (9) keep the block charge from being diluted by past losses without destroying them, and sub-section (5) keeps transfer pricing adjustments in the ordinary assessment where that machinery can operate.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Start of the current part-year window whose regularly recorded income is excluded | 1 April of the tax year in which the search is initiated or the requisition made | Running to the day immediately preceding that date, and only for income computed on entries recorded in books maintained in the normal course on or before that day | Sub-section (2)(c)(ii) |
| Period whose transfer pricing income is taken out of the block | 1 April of the tax year in which the last of the authorisations was executed, to the date of that execution | Income relating to an international transaction or specified domestic transaction referred to in section 166; it goes into the assessment under other provisions instead | Sub-section (5) |
| Year from which barred losses and unabsorbed depreciation may be set off | The tax year subsequent to the tax year in which the block period ends | For the remaining period, taking into account the block period and that tax year | Sub-section (9) |
The block figure is a residue, and an argument in a block assessment is normally about what sub-section (2) takes out rather than about what sub-section (4) puts in. The three windows in clause (c) turn entirely on entries recorded in books maintained in the normal course by the cut-off day each window states, so when an entry was made matters as much as the entry itself — and sub-section (3) still leaves the Assessing Officer free to recompute within that exclusion. The loss position is asymmetric: sub-section (8) refuses set-off against block income, but sub-section (9) does not destroy the loss, which survives for the year after the block period ends.
A search is initiated on a company partway through a tax year. Rs 3 crore for earlier years in the block period had already been assessed, and Rs 80 lakh for the current part year up to the day before the search was recorded in books maintained in the normal course; neither goes into the block total, under sub-section (2)(a) and (2)(c)(ii). Cash of Rs 1.2 crore found and unexplained, and Rs 40 lakh traced from seized material, are determined under sub-section (4) and taxed under section 292(7). A brought forward business loss of Rs 90 lakh cannot reduce that Rs 1.6 crore — sub-section (8) — though sub-section (9) keeps it alive for the year after the block period ends.
In the return of undisclosed income called for under section 294 and in the block assessment order under section 294(1)(c). This is the section that decides what goes into the figure the block assessment taxes, so an objection to a block addition is usually framed on one of the exclusions in sub-section (2).
The total undisclosed income of the block period referred to in section 292(1) shall be the aggregate of the following
evidence found as a result of search or survey or requisition
such income shall not be considered for the purposes of determining the total undisclosed income of the block period
losses brought forward from the tax year (prior to the first tax year comprising the block period) under Chapter VII or unabsorbed depreciation under section 33(11) shall not be set off against the undisclosed income determined in the block assessment under this part
See the full 1961 to 2025 concordance.