Section 295 — Undisclosed income of any other person. Successor to s.158BD of the 1961 Act.
Section 295 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
Sub-section (1) applies where the Assessing Officer is satisfied that undisclosed income belongs to, pertains to or relates to a person (the other person) who is not the person with respect to whom a search was initiated under section 247 or a requisition made under section 248 (the specified person). In that case, clause (a) requires the money, bullion, jewellery, virtual digital asset or other valuable article or thing, or the books of account or other documents seized or requisitioned, or any other material or information relating to that undisclosed income, to be handed over to the Assessing Officer having jurisdiction over the other person; and clause (b) requires that Assessing Officer to proceed under section 294 against the other person, with the provisions of the Part applying accordingly.
Sub-section (2) fixes the block period for the other person. Clause (a): where there is one specified person relevant to him, his block period is the same as that of the specified person. Clause (b): where there is more than one, it is the same as that of the specified person whose block period ends on a later date. Clauses (c) and (d), inserted by Act No. 4 of 2026 with effect from 1 April 2026, cut the block period down in two situations, each irrespective of section 301(a). Under clause (c), where the other person's undisclosed income pertains only to the period commencing from the tax year immediately preceding the year of initiation of search or requisition (the specified year) and ending on the date of initiation of the search or making of the requisition, the block period comprises the specified year together with the period from the 1st April of the tax year in which the search was initiated or requisition made to the date of execution of the last of the authorisations. Under clause (d), where the undisclosed income pertains to a single tax year out of the five tax years preceding the specified year, the block period comprises only that single tax year.
Sub-section (3) adapts the abatement rule: for the other person, references in section 292(2) and (3) to the date of initiation of the search under section 247 or of making the requisition under section 248 are read as references to the date on which the seized or requisitioned material, or the other material or information, was received by the Assessing Officer having jurisdiction over him.
A search of one person routinely turns up evidence of someone else's undisclosed income, and that other person has not been searched, so there must be a route by which the material travels to his Assessing Officer and a block assessment is made in his own case. Left unqualified, that route would drag every such person into the full block period of the searched person's case; clauses (c) and (d) cure that by matching the assessment window to the period the evidence actually relates to. Sub-section (3) fixes the corresponding fairness problem on timing — the other person's proceedings cannot sensibly abate from a date on which nothing had reached his Assessing Officer.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Look-back within which a single-year block period is available | A single tax year out of the five tax years preceding the specified year | Where the other person's undisclosed income pertains to that single year; the block period is then only that year, irrespective of section 301(a); clause inserted by Act No. 4 of 2026 w.e.f. 1-4-2026 | Sub-section (2)(d) |
| Composition of the shortened block period under clause (c) | The specified year plus the period from the 1st April of the tax year of the search or requisition to the date of execution of the last of the authorisations | Where the undisclosed income pertains only to the period from the specified year to the date of initiation of the search or making of the requisition; irrespective of section 301(a); clause inserted by Act No. 4 of 2026 w.e.f. 1-4-2026 | Sub-section (2)(c) |
| Identification of the specified year | The tax year immediately preceding the year of initiation of search or requisition | Defined for the purposes of clauses (c) and (d) | Sub-section (2)(c)(i) |
The Assessing Officer of the searched person does not assess the other person: he must be satisfied that the undisclosed income belongs to, pertains to or relates to that other person, hand the material over, and leave the assessment to the Assessing Officer having jurisdiction, who then proceeds under section 294. The block period of the other person is normally borrowed, not computed afresh — from the specified person, and where there are several, from the one whose block period ends later, which is the longer exposure. The 2026 insertions are the point to work from now: where the evidence relates only to the recent window in clause (c), or to a single tax year within the five tax years preceding the specified year under clause (d), the block period shrinks to that window or to that single year, and both clauses operate irrespective of section 301(a). Sub-section (3) shifts the abatement trigger for the other person from the date of search or requisition to the date his own Assessing Officer received the material, which is usually later.
A search is initiated on a firm in one tax year, and among the seized documents is material showing undisclosed income of a company that was not searched. The material is handed to the company's own Assessing Officer, who proceeds against it under section 294. If the material shows undisclosed income relating only to a single tax year falling within the five tax years preceding the specified year, clause (2)(d) confines the company's block period to that one tax year, instead of the whole block period of the searched firm. For abatement under section 292(2) and (3), the relevant date in the company's case is the date its Assessing Officer received the material, not the date the firm was searched.
A person meets this section when a notice under section 294 arrives from his own Assessing Officer although he was never searched, on the strength of material handed over from someone else's search or requisition. It is also where a reader looks to test whether the block period stated in that notice is the right one, and whether his pending proceedings abate from the correct date.
any money, bullion, jewellery, virtual digital asset or other valuable article or thing or any books of account or other documents seized or requisitioned or any other material or information relating to the aforesaid undisclosed income shall be handed over to the Assessing Officer having jurisdiction over such other person
where there is more than one specified persons relevant to such other person, the block period for such other person shall be the same as that for the specified person in whose case the block period ends on a later date
where the undisclosed income of the other person pertains to a single tax year out of the five tax years preceding the specified year, then irrespective of the provisions of section 301(a), the block period in respect of such other person shall comprise of only that single tax year.
See the full 1961 to 2025 concordance.