Income Tax Act 2025: Section 294 for Tax Year 2026-27

Procedure for block assessment

[Section-294 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 294(1) of Income Tax Act 2025

294(1) Where any search has been initiated or requisition is made in the case of any person, then,––

• 294(1)(a) the Assessing Officer shall, in respect of such search or requisition, issue a notice to such person, 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 prescribed, setting forth his total income, including the undisclosed income, for the block period, and––
  • (i) such return shall be considered as if it was a return furnished under section 263 and thereafter notice under section 270(8) shall be issued;
  • (ii) any return furnished beyond the period allowed in the notice shall not be deemed to be a return under section 259;
  • (iii) no notice under section 280 is required to be issued for the purpose of proceeding under this Chapter;
  • (iv) a person who has furnished a return under this clause shall not be entitled to furnish a revised return;
• 294(1)(b) the Assessing Officer shall proceed to determine the total income including the undisclosed income of the block period in the manner laid down in section 293 and the provisions of sections 268, 270(8), 270(10), 271, 276, 287 and 288 shall, so far as may be, apply;
• 294(1)(c) the Assessing Officer, on determination of the total income of the block period as per this Chapter, shall pass an order of assessment or reassessment and determine the tax payable by him on the basis of such assessment or reassessment, so, however that—
  • (i) the provisions of section 275 shall not apply in respect of such order;
  • (ii) where the order of assessment or reassessment is made in pursuance of section 295, the block period for such assessment or reassessment shall be the same as that determined in respect of the person in whose case search was initiated or requisition was made and proceedings under the said section were initiated due to such search or requisition;
• 294(1)(d) the assets seized under section 247 or requisitioned under section 248 shall be dealt with as per section 250.

Section 294(2) of Income Tax Act 2025

294(2) The provisions of section 270(1) shall not apply to the return furnished under this section.

Section 294(3) of Income Tax Act 2025

294(3) The Assessing Officer, before issuance of notice under sub-section (1)(a), shall take prior approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director.

FAQs on Section 294 of Income Tax Act 2025

What triggers the block assessment procedure under Section 294(1)?
A block assessment is triggered when a search is initiated or a requisition is made in the case of any person.

What is the first step an Assessing Officer must take after a search or requisition?
The Assessing Officer must issue a notice requiring the person to furnish a return within a specified period, not exceeding sixty days.

What should the return under Section 294(1)(a) include?
The return must include the total income for the block period, including the undisclosed income, and must be in the prescribed form and verified as specified.

How is the return furnished under Section 294(1)(a) treated?
It is treated as a return furnished under Section 263 and leads to the issuance of a notice under Section 270(8).

Is a return furnished after the deadline in the notice valid?
No, such a return is not deemed to be a return under Section 259.

Is notice under Section 280 required for block assessment proceedings?
No, notice under Section 280 is not required for proceedings under this Chapter.

Can a person revise the return filed under Section 294(1)(a)?
No, a revised return is not permitted once the return under this clause has been furnished.

How is the total income for the block period determined?
The Assessing Officer determines it in accordance with Section 293 and applies provisions of Sections 268, 270(8), 270(10), 271, 276, 287, and 288 as applicable.

What happens after the income for the block period is determined?
The Assessing Officer passes an assessment or reassessment order and determines the tax payable.

Are the provisions of Section 275 applicable to such assessment orders?
No, Section 275 does not apply to assessment or reassessment orders under this Chapter.

What is the block period when assessment is made under Section 295?
It is the same block period as that of the person in whose case the original search or requisition occurred.

How are seized or requisitioned assets handled?
Assets seized under Section 247 or requisitioned under Section 248 are dealt with according to Section 250.

Does Section 270(1) apply to returns filed under Section 294?
No, Section 270(1) does not apply to such returns.

Is prior approval required before issuing a notice under Section 294(1)(a)?
Yes, the Assessing Officer must obtain prior approval from the Additional Commissioner, Additional Director, Joint Commissioner, or Joint Director.