Section 296 — Time-limit for completion of block assessment. Successor to s.158BE of the 1961 Act.
Section 296 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
Sub-section (1), as substituted by Act No. 4 of 2026 with effect from 1 April 2026, sets the basic limit: irrespective of section 286, the order under section 294 shall be passed within eighteen months from the end of the quarter in which the search was initiated or the requisition was made. The substituted text ran to twelve months from the end of the quarter in which the last of the authorisations for search was executed, with a thirteen-month variant where the return time was extended by thirty days.
Sub-section (2) extends that period by twelve months where, during the assessment or reassessment of total undisclosed income of the relevant block period, a reference under section 166(1) is made. Sub-section (3) excludes from the sub-section (1) period the period, not exceeding one hundred and eighty days, from the initiation of the search or making of the requisition to the handing over of the assets under section 261(b) and the material seized or requisitioned under section 261(i) to the Assessing Officer having jurisdiction. Sub-section (4) extends a period that, after that exclusion, would expire before the end of a month to the end of that month.
Sub-section (5) sets a separate limit for the other person referred to in section 295: twelve months from the end of the quarter in which the notice under section 294 in pursuance of section 295 was issued to that person. Sub-section (6) extends that by twelve months where a section 166(1) reference is made in such a case.
Sub-section (7) lists ten exclusions applying to the whole section: the period of a court stay on the assessment proceeding, to the date the certified copy of the vacating order is received by the jurisdictional Principal Commissioner or Commissioner; the period from the first reference for exchange of information under a section 159 agreement to the date the information is last received, or one year, whichever is less; the time taken in reopening the proceeding or giving the assessee an opportunity to be re-heard under section 244(2); the period of a direction to get accounts audited or inventory valued under section 268(5), to the last date for furnishing the report, or where the direction is challenged, to receipt of the certified copy of the order setting it aside; the period of a reference to a Valuation Officer under section 269(1) to receipt of his report; the period from an intimation of contravention of Schedule III (Table: Sl. No. 23, 24 or 25) under section 270(11)(i) to receipt of the order withdrawing approval or rescinding the notification; the period from a reference to the Principal Commissioner or Commissioner under section 270(13) to receipt of the order under section 351(2)(ii)(A) or (B); the period from receipt of a reference for declaration of an impermissible avoidance arrangement under section 274(1) to receipt of a direction under sub-section (3) or (6) or an order under sub-section (5) of that section; and two periods running from an application to the Board for Advance Rulings under section 383(1), one ending with receipt of the order rejecting the application under section 384(5) and the other with receipt of the advance ruling under section 384(8).
Sub-section (8) provides a floor: where, immediately after an exclusion under sub-section (3) or (7), the remaining period under sub-section (1) or (5) is less than sixty days, it is extended to sixty days. Sub-section (9) then extends a period that would expire before the end of a month to the end of that month.
A block assessment following a search draws on material that has to be handed over, valued, audited, referred abroad or ruled upon, and every one of those steps is outside the Assessing Officer's control. The section therefore fixes an outer limit and then suspends it for each such step, with a sixty-day floor so that an exclusion ending late does not leave the officer with days rather than weeks. The 2026 substitution lengthened the basic period from twelve to eighteen months and moved the starting point from execution of the last authorisation to initiation of the search or making of the requisition.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Basic limitation for a block assessment order | Eighteen months from the end of the quarter in which the search was initiated or requisition was made | Substituted by Act No. 4 of 2026 with effect from 1 April 2026 for twelve months from the end of the quarter in which the last of the authorisations for search was executed; applies irrespective of section 286 | Sub-section (1) |
| Extension for a transfer pricing reference | Twelve months | Where a reference under section 166(1) is made during the assessment or reassessment of total undisclosed income of the block period | Sub-section (2) |
| Exclusion for handing over of seized assets and material | Not exceeding one hundred and eighty days | From initiation of the search or making of the requisition to the handing over of assets under section 261(b) and material under section 261(i) to the Assessing Officer having jurisdiction | Sub-section (3) |
| Limitation for the other person under section 295 | Twelve months from the end of the quarter in which the section 294 notice was issued to him | In pursuance of section 295 | Sub-section (5) |
| Extension for a transfer pricing reference in an other-person case | Twelve months | Where a reference under section 166(1) is made in a case referred to in sub-section (5) | Sub-section (6) |
| Cap on the exchange of information exclusion | One year, or the actual period, whichever is less | From the first reference for exchange of information made under an agreement referred to in section 159 to the date the information is last received by the jurisdictional Principal Commissioner or Commissioner | Sub-section (7)(b) |
| Minimum period remaining after an exclusion | Sixty days | Where, immediately after an exclusion under sub-section (3) or (7), the remaining period under sub-section (1) or (5) is less than sixty days | Sub-section (8) |
Both the eighteen-month and the twelve-month periods run from the end of a quarter, not from a date, so a search initiated on any day of a quarter and one initiated on its last day share the same deadline. The starting event changed in 2026: it is now the initiation of the search or the making of the requisition, not the execution of the last authorisation, which can move the deadline for a search executed in stages. The two extension provisions and the exclusion provisions stack in a particular order — sub-section (3) excludes up to one hundred and eighty days for the handover, sub-section (7) excludes the ten listed periods, and only then does the sixty-day floor in sub-section (8) apply, followed by the month-end rounding in sub-section (9). The exchange of information exclusion is capped at one year even if the information takes longer to arrive, and several of the other exclusions end not when an order is passed but when the jurisdictional Principal Commissioner or Commissioner or the Assessing Officer receives it. An other person under section 295 has a shorter clock than the searched person and a different starting event: the issue of the section 294 notice to him.
A search is initiated on 5 November 2026. The quarter ends 31 December 2026, so under sub-section (1) the section 294 order is due by 30 June 2028. Seized material is handed over to the jurisdictional Assessing Officer 90 days after the search, so those 90 days are excluded under sub-section (3), moving the date to 28 September 2028. If a reference under section 166(1) is also made during the assessment, sub-section (2) adds twelve months. If a court stay had ended so late that only 40 days remained, sub-section (8) would stretch that remainder to 60 days and sub-section (9) would carry it to the end of the month.
In the date on a block assessment order under section 294 and in any objection that the order is barred by time. The exclusions are what an assessee tests when computing that date — the handover period, a court stay, an audit direction under section 268(5), a valuation reference, or an advance ruling application.
the order under section 294 shall be passed within eighteen months from the end of the quarter in which the search was initiated or requisition was made
the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated or a requisition is made and ending on the date on which assets ... and material seized or requisitioned ... are handed over to the Assessing Officer having jurisdiction over the assessee shall be excluded
or one year, whichever is less
such remaining period shall be extended to sixty days
See the full 1961 to 2025 concordance.