Section 294 — Procedure for block assessment. Successor to s.158BC of the 1961 Act.
Section 294 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
Sub-section (1) governs what follows a search or requisition. Clause (a) requires the Assessing Officer to issue a notice calling for a return, in the prescribed form and verification, of undisclosed income for the block period, within a period specified in the notice not exceeding sixty days. Five consequences follow: the return is considered as if furnished under section 263 and a notice under section 270(8) is then issued; a return furnished beyond the period allowed is not deemed to be a return under section 263; no notice under section 280 is required for a proceeding under this part; the person cannot furnish a revised return; and the time may be extended by a further thirty days where, for the tax year immediately preceding the search or requisition, the return due date had not expired before it began, the assessee was liable for audit under section 63 for that year, those accounts had not been audited on the date of the notice, and the assessee requests the extension in writing to get them audited.
Clause (b) requires the Officer to determine the total undisclosed income of the block period in the manner laid down in section 293, with sections 268, 270(8), 270(10), 271, 276, 277 and 278 applying so far as may be. Clause (c) requires an order of assessment or reassessment determining the tax payable, and provides that section 275 shall not apply to it. Clause (d) applies section 250 to assets seized under section 247 or requisitioned under section 248.
Sub-section (2) disapplies section 270(1) to a return furnished under this section. Sub-section (3) requires the prior approval of the Additional Commissioner, Additional Director, Joint Commissioner or Joint Director before the notice under sub-section (1)(a) is issued.
After a search the Department has material for several years at once, and block assessment lets it be dealt with in a single proceeding rather than by reopening year by year. The section supplies the procedure for that route and says what ordinary machinery is switched off. The prior approval in sub-section (3) is the check on the notice being issued at all.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Maximum period the notice may allow for the block return | A period specified in the notice, not exceeding sixty days | Sixty days is a ceiling on what the notice may allow; the notice may specify less | Sub-section (1)(a) |
| Extension of the time to furnish the block return | A further period of thirty days | Only where all four conditions in items (A) to (D) are met, including a written request by the assessee to get the unaudited accounts audited | Sub-section (1)(a)(v) |
Sixty days is the outer limit of what the notice may allow, not an entitlement, and the consequence of missing the period is severe: a return filed beyond it is not deemed to be a return under section 263 at all. Nor can a block return be corrected — item (iv) removes the right to revise, so the first filing is the only one. The thirty-day extension is cumulative in its conditions and the last of them requires a written request from the assessee, so it is not granted on the Officer's own motion. Two ordinary safeguards are switched off: no section 280 notice is required, and section 275 does not apply to the block assessment order. The protection added is in sub-section (3), and it is a condition precedent — the approval must be taken before the notice issues.
A search is initiated in the case of a firm. The Assessing Officer, after the Joint Commissioner's prior approval, issues a notice allowing forty-five days — within the sixty-day ceiling — for a block return of undisclosed income. The firm was liable for audit under section 63 for the immediately preceding tax year, whose return due date had not expired when the search began, and those accounts were unaudited on the date of the notice; it applies in writing for time to get them audited, and the period may be extended by thirty days. If it files after the period allowed, the return is not deemed to be one under section 263, and it cannot cure that by revising.
You meet this section as the notice following a search or requisition, calling for a return of undisclosed income for the block period within the period the notice specifies, and then as the block assessment or reassessment order passed under clause (c).
requiring him to furnish within a period specified in the notice, not exceeding sixty days, a return in the form and verified in the manner, as may be prescribed, setting forth his undisclosed income, for the block period
any return furnished beyond the period allowed in the notice shall not be deemed to be a return under section 263
a person who has furnished a return under this clause shall not be entitled to furnish a revised return
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.