Time-limit for completion of block assessment
[Section-296 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 296(1) of Income Tax Act 2025
296(1) Irrespective of the provisions of section 296, the order under section 294 shall be passed within twelve months from the end of the month in which the last of the authorisations for search was executed, or requisition was made.
Section 296(2) of Income Tax Act 2025
296(2) Where search was initiated or requisition was made, and during the course of assessment or reassessment of the total income of the relevant block period, any reference under section 166(1) is made, the period available for completion of such assessment or reassessment proceeding shall be extended by twelve months.
Section 296(3) of Income Tax Act 2025
296(3) In computing the period of limitation under sub-section (1), the period (not exceeding one hundred eighty days) commencing from the date on which a search is initiated or a requisition is made and ending on the date on which seized or requisitioned items are handed over to the Assessing Officer having jurisdiction over the assessee shall be excluded.
Section 296(4) of Income Tax Act 2025
296(4) If after exclusion of the period referred to in sub-section (3), the remaining period of limitation for completion of assessment or reassessment, expires before the end of a month, such period shall be extended to end of such month.
Section 296(5) of Income Tax Act 2025
296(5) The period of limitation for completion of assessment or reassessment for the block period in the case of the other person referred to in section 295 shall be twelve months from the end of the month in which the notice under section 294 in pursuance of section 295, was issued to such other person.
Section 296(6) of Income Tax Act 2025
296(6) The period available for completion of assessment or reassessment proceeding in respect of the block period in a case referred to in sub-section (5) shall be extended by twelve months, where a reference under section 166(1) is made in such case.
Section 296(7) of Income Tax Act 2025
296(7) In computing the period of limitation under this section, the following period shall be excluded,—
- 296(7)(a) the period commencing on the date on which stay on assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by jurisdictional Principal Commissioner or Commissioner;
- 296(7)(b) the period commencing from the date on which a first of the reference for exchange of information (made by an authority competent under an agreement referred to in section 159) is made and ending with the date on which such information requested is last received by the jurisdictional Principal Commissioner or Commissioner or one year, whichever is less;
- 296(7)(c) the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee to be re-heard under section 244(2);
- 296(7)(d) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited or inventory valued under section 268(5) and—
- (i) ending with the last date on which the assessee is required to furnish a report of such audit or inventory valuation under that sub-section; or
- (ii) where such direction is challenged before a court, ending with the date on which the certified copy of the order setting aside such direction is received by the jurisdictional Principal Commissioner or Commissioner;
- 296(7)(e) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under section 269(1) and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer;
- 296(7)(f) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of Schedule III (Table: Sl. No. 23, 24 or 25) as referred to in section 270(11)(i) and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, under those clauses is received by the Assessing Officer;
- 296(7)(g) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner as per section 270(13) and ending with the date on which the copy of the order under section 351(2)(ii)(A) or (B), is received by the Assessing Officer;
- 296(7)(h) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the jurisdictional Principal Commissioner or Commissioner under section 274(1) and ending on the date on which a direction under sub-section (3) or (6) or an order under sub-section (5) of the said section is received by the Assessing Officer;
- 296(7)(i) the period commencing from the date on which an application is made before the Board for Advance Rulings under section 381(1) and ending with the date on which the order rejecting the application is received by the jurisdictional Principal Commissioner or Commissioner under section 384(5);
- 296(7)(j) the period commencing from the date on which an application is made before the Board for Advance Rulings under section 381(1) and ending with the date on which the advance ruling pronounced by it is received by the jurisdictional Principal Commissioner or Commissioner under section 384(8).
Section 296(8) of Income Tax Act 2025
296(8) Where immediately after the exclusion of the period referred to in sub-section (7), the remaining period of limitation referred to in sub-section (1) or (5) available to the Assessing Officer for completion of assessment under section 294 is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
Section 296(9) of Income Tax Act 2025
296(9) Where after extension of the period referred to in sub-section (8), the period of limitation for making an order of assessment or reassessment, expires before the end of a month, such period shall be extended to the end of such month.
FAQs on Section 296 of Income Tax Act 2025
What is the basic time-limit for passing an assessment order under section 294 in a block assessment case?
The order must be passed within twelve months from the end of the month in which the last of the authorisations for search was executed or requisition was made.
What happens if a reference under section 166(1) is made during assessment?
The time-limit for completion of assessment or reassessment is extended by twelve months.
How is the limitation period affected by the delay in handing over seized or requisitioned items?
Up to 180 days, starting from the date of search or requisition to the date of handing over such items to the Assessing Officer, is excluded from the limitation period.
What if, after excluding the period under sub-section (3), the remaining limitation ends before a month ends?
In such a case, the time-limit is extended to the end of that month.
What is the time-limit for assessment or reassessment in case of a person referred to in section 295?
It is twelve months from the end of the month in which the notice under section 294 is issued to such other person.
Is there an extension if a reference under section 166(1) is made in such other person’s case?
Yes, the period is extended by twelve months.
Are there specific periods excluded from the limitation computation under section 296(7)?
Yes, multiple periods are excluded, such as time during court stays, information exchange under tax treaties, reopening hearings, audit directions, valuation references, government intimations, GAAR references, and Advance Ruling proceedings.
What period is excluded due to court stay on assessment proceedings?
The period from the date of stay to the date the certified copy of order vacating the stay is received by the jurisdictional authority is excluded.
What if the remaining period after all exclusions is less than 60 days?
Then, it is extended to sixty days.
If the extended period still ends before the end of a month, what happens?
It shall be further extended to the end of that month.
Does a reference to the Valuation Officer under section 269(1) affect the limitation period?
Yes, the period from the date of reference to the date of receipt of the valuation report is excluded.
How does a GAAR reference under section 274(1) affect the assessment timeline?
The period from the date of such reference to the date the Assessing Officer receives the direction or order is excluded.
What exclusion applies if an application is made to the Board for Advance Rulings under section 381(1)?
The time from the date of such application to the date of receipt of rejection order or the pronounced ruling is excluded, depending on the situation.
Is there a cap on exclusion for tax treaty information exchange under section 159?
Yes, the exclusion is up to the date information is last received or one year, whichever is less.
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