A search took place in November 2024 while my client's scrutiny assessment for an earlier year was pending. What happens to that assessment, and what happens if the block assessment is later annulled?
The pending assessment abates. Section 158BA(2)(a) provides that any assessment, reassessment or recomputation under provisions other than Chapter XIV-B, pertaining to any assessment year falling in the block period and pending on the date of initiation of the search or the making of the requisition, shall abate and be deemed to have abated on that date. If the block proceeding or the block order is later annulled in appeal or other legal proceedings, section 158BA(5) revives the abated proceeding from the date the Principal Commissioner or Commissioner receives the order of annulment — and the revival itself ceases if the annulment is set aside.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2024-09-01, reported as Income-tax Act 1961, s.158BA, substituted w.e.f. 1 September 2024 by s.49 of the Finance (No. 2) Act 2024 (Act No. 15 of 2024) and amended with retrospective effect from the same date. It bears on section 158BA, section 158BC, section 158BB, section 92CA, section 153, section 132, section 132A of the Income Tax Act 1961, in Search, Survey & Block Assessment, Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters.
Abatement under the revived Chapter is wider than under section 153A in two directions and narrower in one. Wider, first, because it reaches recomputation and not merely assessment and reassessment; and it also reaches a transfer-pricing reference under section 92CA(1) or an order under section 92CA(3) made in a pending proceeding, which abates along with the assessment under section 158BA(3). Wider, second, because section 158BA(2)(b) abates a proceeding for which a NOTICE IS ISSUED AFTER the search — during the period from initiation to the making of the block order under section 158BC(1)(c) — for any assessment year in the block period other than the assessment year in which the last authorisation was executed. The department therefore cannot open a parallel reassessment for a block year while the block assessment is running. Narrower, because what abates is confined to years falling in the block period, and because section 158BA(6) carves out the search year: the total income other than undisclosed income of the assessment year relevant to the previous year in which the last authorisation was executed is assessed SEPARATELY under the other provisions of the Act. A client searched in November 2024 therefore faces two assessments for that year — the block assessment for the undisclosed income and an ordinary assessment for the rest. Section 158BA(4) deals with a second search while a block assessment is pending: the earlier assessment is completed first, and if less than three months are then left for the later one, that period is extended to three months from the end of the month in which the earlier assessment was completed.
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Not a case. Section 158BA(2)(a) provides that an assessment, reassessment or recomputation under provisions of the Act other than Chapter XIV-B, pertaining to any assessment year falling in the block period and pending on the date of initiation of the search under section 132 or the making of the requisition under section 132A, shall abate and be deemed to have abated on that date. Clause (b) provides that a proceeding for assessment, reassessment or recomputation under any provision other than the Chapter, pertaining to any assessment year falling in the block period other than the assessment year in which the last of the authorisations is executed or the requisition made, for which a notice has been issued in the period from initiation of the search or making of the requisition to the making of the order under section 158BC(1)(c), shall abate and be deemed to have abated on the date of issue of that notice. Sub-section (3) provides that where a reference under section 92CA(1) has been made or an order under section 92CA(3) passed in such a pending proceeding, the assessment together with the reference or order shall also abate on the date of initiation of the search or the making of the requisition. Sub-section (4) requires a block assessment already required to be made to be completed before a block assessment on a subsequent search, with a proviso extending the period for the later assessment to three months from the end of the month in which the earlier one was completed if less than three months remain. Sub-section (5) provides for revival of the abated proceedings, notwithstanding anything in the Chapter or section 153, with effect from the date of receipt by the Principal Commissioner or Commissioner of an order annulling the block proceeding or block order, with a proviso that the revival ceases if the annulment is set aside. Sub-section (6) requires the total income other than undisclosed income of the assessment year relevant to the previous year in which the last of the authorisations is executed or the requisition made to be assessed separately in accordance with the other provisions of the Act.
Statutory position — no holding is asserted; this entry reproduces statutory text. Assessments, reassessments and recomputations for block years pending on the date of initiation of the search abate on that date, as do transfer-pricing references and orders made in them; a proceeding for which notice is issued after the search and before the block order also abates, except for the assessment year in which the last authorisation was executed. Abated proceedings revive from the date the Principal Commissioner or Commissioner receives an order annulling the block proceeding or order, and the revival ceases if the annulment is set aside. The income of the search year other than undisclosed income is assessed separately under the other provisions of the Act.
Not a judicial route. The abatement and revival provisions exist to prevent two assessments of the same income and, equally, to prevent a taxpayer escaping assessment altogether if the block assessment fails. Abatement is deemed to occur on the date of the search rather than on any later administrative step, so nothing turns on when the file is transferred. Clause (b) closes the gap that would otherwise allow a parallel reassessment to be launched after the search for a block year. Revival is keyed to receipt of the annulment order by the Principal Commissioner or Commissioner because that is the point at which the department is in a position to act, and it is expressly made to operate notwithstanding section 153, which would otherwise have barred the revived proceeding by limitation. Sub-section (6) is the counterpart of the definition of the block period: because the block period ends at the execution of the last authorisation and not at the end of the previous year, the remainder of that year's income has to be picked up somewhere, and it is picked up in an ordinary assessment.
If any proceeding initiated under this Chapter or any order of assessment or reassessment made under clause (c) of sub-section (1) of section 158BC has been annulled in appeal or any other legal proceeding, then, notwithstanding anything in this Chapter or section 153, the assessment or reassessment or recomputation or reference or order relating to any assessment year which has abated under sub-section (2) or sub-section (3), shall revive with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner:
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Handle my notice → Ask a CA on WhatsAppThe pending assessment abates. Section 158BA(2)(a) provides that any assessment, reassessment or recomputation under provisions other than Chapter XIV-B, pertaining to any assessment year falling in the block period and pending on the date of initiation of the search or the making of the requisition, shall abate and be deemed to have abated on that date. If the block proceeding or the block order is later annulled in appeal or other legal proceedings, section 158BA(5) revives the abated proceeding from the date the Principal Commissioner or Commissioner receives the order of annulment — and the revival itself ceases if the annulment is set aside. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 158BA, section 158BC, section 158BB, section 92CA, section 153, section 132, section 132A of the Income Tax Act 1961. It is reported as Income-tax Act 1961, s.158BA, substituted w.e.f. 1 September 2024 by s.49 of the Finance (No. 2) Act 2024 (Act No. 15 of 2024) and amended with retrospective effect from the same date. Abatement under the revived Chapter is wider than under section 153A in two directions and narrower in one. Wider, first, because it reaches recomputation and not merely assessment and reassessment; and it also reaches a transfer-pricing reference under section 92CA(1) or an order under section 92CA(3) made in a pending proceeding, which abates along with the assessment under section 158BA(3). Wider, second, because section 158BA(2)(b) abates a proceeding for which a NOTICE IS ISSUED AFTER the search — during the period from initiation to the making of the block order under section 158BC(1)(c) — for any assessment year in the block period other than the assessment year in which the last authorisation was executed. The department therefore cannot open a parallel reassessment for a block year while the block assessment is running. Narrower, because what abates is confined to years falling in the block period, and because section 158BA(6) carves out the search year: the total income other than undisclosed income of the assessment year relevant to the previous year in which the last authorisation was executed is assessed SEPARATELY under the other provisions of the Act. A client searched in November 2024 therefore faces two assessments for that year — the block assessment for the undisclosed income and an ordinary assessment for the rest. Section 158BA(4) deals with a second search while a block assessment is pending: the earlier assessment is completed first, and if less than three months are then left for the later one, that period is extended to three months from the end of the month in which the earlier assessment was completed. If it applies to you, the first step is this: List every proceeding that was pending on the date of initiation of the search — scrutiny, reassessment, rectification-by-recomputation, and any transfer-pricing reference — and check each against the block period. Everything pending for a block year abates by force of the statute on that date; nothing further need be done to bring that about.
Not a case. Section 158BA(2)(a) provides that an assessment, reassessment or recomputation under provisions of the Act other than Chapter XIV-B, pertaining to any assessment year falling in the block period and pending on the date of initiation of the search under section 132 or the making of the requisition under section 132A, shall abate and be deemed to have abated on that date. Clause (b) provides that a proceeding for assessment, reassessment or recomputation under any provision other than the Chapter, pertaining to any assessment year falling in the block period other than the assessment year in which the last of the authorisations is executed or the requisition made, for which a notice has been issued in the period from initiation of the search or making of the requisition to the making of the order under section 158BC(1)(c), shall abate and be deemed to have abated on the date of issue of that notice. Sub-section (3) provides that where a reference under section 92CA(1) has been made or an order under section 92CA(3) passed in such a pending proceeding, the assessment together with the reference or order shall also abate on the date of initiation of the search or the making of the requisition. Sub-section (4) requires a block assessment already required to be made to be completed before a block assessment on a subsequent search, with a proviso extending the period for the later assessment to three months from the end of the month in which the earlier one was completed if less than three months remain. Sub-section (5) provides for revival of the abated proceedings, notwithstanding anything in the Chapter or section 153, with effect from the date of receipt by the Principal Commissioner or Commissioner of an order annulling the block proceeding or block order, with a proviso that the revival ceases if the annulment is set aside. Sub-section (6) requires the total income other than undisclosed income of the assessment year relevant to the previous year in which the last of the authorisations is executed or the requisition made to be assessed separately in accordance with the other provisions of the Act. The matter was decided on 2024-09-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Statutory position — no holding is asserted; this entry reproduces statutory text. Assessments, reassessments and recomputations for block years pending on the date of initiation of the search abate on that date, as do transfer-pricing references and orders made in them; a proceeding for which notice is issued after the search and before the block order also abates, except for the assessment year in which the last authorisation was executed. Abated proceedings revive from the date the Principal Commissioner or Commissioner receives an order annulling the block proceeding or order, and the revival ceases if the annulment is set aside. The income of the search year other than undisclosed income is assessed separately under the other provisions of the Act.
Not a judicial route. The abatement and revival provisions exist to prevent two assessments of the same income and, equally, to prevent a taxpayer escaping assessment altogether if the block assessment fails. Abatement is deemed to occur on the date of the search rather than on any later administrative step, so nothing turns on when the file is transferred. Clause (b) closes the gap that would otherwise allow a parallel reassessment to be launched after the search for a block year. Revival is keyed to receipt of the annulment order by the Principal Commissioner or Commissioner because that is the point at which the department is in a position to act, and it is expressly made to operate notwithstanding section 153, which would otherwise have barred the revived proceeding by limitation. Sub-section (6) is the counterpart of the definition of the block period: because the block period ends at the execution of the last authorisation and not at the end of the previous year, the remainder of that year's income has to be picked up somewhere, and it is picked up in an ordinary assessment. In the words reproduced by the source cited on this page: "If any proceeding initiated under this Chapter or any order of assessment or reassessment made under clause (c) of sub-section (1) of section 158BC has been annulled in appeal or any other legal proceeding, then, notwithstanding anything in this Chapter or section 153, the assessment or reassessment or recomputation or reference or order relating to any assessment year which has abated under sub-section (2) or sub-section (3), shall revive with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner:"
It was decided by the CBDT Circulars & Instructions on 2024-09-01 and is reported as Income-tax Act 1961, s.158BA, substituted w.e.f. 1 September 2024 by s.49 of the Finance (No. 2) Act 2024 (Act No. 15 of 2024) and amended with retrospective effect from the same date. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 158BA, section 158BC, section 158BB, section 92CA, section 153, section 132, section 132A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Statutory position — no holding is asserted; this entry reproduces statutory text. Assessments, reassessments and recomputations for block years pending on the date of initiation of the search abate on that date, as do transfer-pricing references and orders made in them; a proceeding for which notice is issued after the search and before the block order also abates, except for the assessment year in which the last authorisation was executed. Abated proceedings revive from the date the Principal Commissioner or Commissioner receives an order annulling the block proceeding or order, and the revival ceases if the annulment is set aside. The income of the search year other than undisclosed income is assessed separately under the other provisions of the Act. It arises in Search, Survey & Block Assessment, Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters, on section 158BA, section 158BC, section 158BB, section 92CA, section 153, section 132, section 132A of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the department continues a proceeding that has abated, take the point at once: the order is made without jurisdiction, not merely irregularly. Watch for notices issued AFTER the search for block years. Section 158BA(2)(b) abates them on the date of issue, unless the year is the assessment year in which the last authorisation was executed. For the assessment year in which the last authorisation was executed, expect and prepare for two assessments — the block assessment of undisclosed income and a separate assessment of the rest of the income under section 158BA(6). Do not let the same income be taxed in both. If the block assessment is annulled on appeal, diary the date on which the Principal Commissioner or Commissioner RECEIVES the annulment order: that is when the abated proceedings revive, and limitation for them runs from it. Where a second search follows before the first block assessment is complete, check the proviso to section 158BA(4) before conceding that the later assessment is out of time.
Still good law. In force from 1 September 2024 as amended. The only decision located on the abatement provision is Saroj Kumar Sahoo v National Faceless Assessment Centre (Orissa High Court, 18 February 2026), which is already in this library; the fetch of that judgment truncated at its paragraph 8.27, before the disposal, so nothing about its outcome is stated here. Clause (b) of sub-section (2) rests on a single source, as recorded in the editor note. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The split of sub-section (2) into clauses (a) and (b) appears only on the current departmental page (Year: 2026), where it is footnoted 'Sub. by Act No. 29 of 2025, w.r.e.f. 1-9-2024'. I could not verify what Act No. 29 of 2025 is, and I have not stated its short title. The Orissa High Court's reproduction of the Chapter in Saroj Kumar Sahoo, in a judgment delivered on 18 February 2026 after a hearing on 4 December 2025, prints sub-section (2) as a single unsplit sub-section corresponding to what is now clause (a); clause (b) does not appear there. Sub-sections (3), (4), (5), (6) and (7) are word for word identical on both routes. A reader relying on clause (b) — the abatement of a notice issued after the search — should confirm its presence and its commencement before pleading it, because it rests on a single source. The departmental pages /w/section-158ba and /w/section-158ba-1 to -5 are archived versions printing the 1995 section and must not be used. This is a statutory entry and not a decision: 'bench' and 'favours' carry no case values, 'tier' is set to 'cbdt' because the library's fixed tier vocabulary has no value for a statutory entry and the source is the Income-tax Department's own section pages rather than a Board circular, and 'decided_on' is not a date of decision but the date the substituted Chapter XIV-B commences, 1 September 2024. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Statutory position — no holding is asserted; this entry reproduces statutory text. Assessments, reassessments and recomputations for block years pending on the date of initiation of the search abate on that date, as do transfer-pricing references and orders made in them; a proceeding for which notice is issued after the search and before the block order also abates, except for the assessment year in which the last authorisation was executed. Abated proceedings revive from the date the Principal Commissioner or Commissioner receives an order annulling the block proceeding or order, and the revival ceases if the annulment is set aside. The income of the search year other than undisclosed income is assessed separately under the other provisions of the Act.
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