A post by the Income Tax India handle on X (formerly Twitter), read:
“KIND ATTENTION, TAXPAYERS!
Taxpayers who have received notice under Section 158BC can now submit Form ITR-B via the e-Proceeding tab on the Income Tax portal.”
Let us take a look at what this means.
Who Are Required To File Form ITR-B Under Section 158BC
ITR-B pertains to income for the “block period”, and would consist of undisclosed income detected during a search or requisition, and income for the 10 years immediately preceding the previous year in which the search took place (block period is generally 10 assessment years), according to Deepak Kumar Jain, founder, and CEO, TaxManager.in, the tax advisory and e-filing portal platform.
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Any taxpayer who has been served with notice u/s 158BC of the Income-tax Act, 1961, which deals with search and seizure cases conducted by the income tax department, needs to file ITR-B for the block period as required. Explains Sandeep Bhalla, partner, Dhruva Advisors: "Chapter XIV-B of the Income Tax Act, 1961 (for searches conducted after 1st September 2024) laid down a special procedure for assessment of search cases for a block period, which refers to a period of six previous years immediately preceding the year of search, along with the relevant part of the previous year in which the search was conducted/ completed."
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ITR-B is meant for individuals, Hindu Undivided Families (HUFs), companies, partnerships, or any other assessee in whose case a search or requisition has been carried out by the income tax department. Filing it is compulsory, regardless of whether the person or entity agrees with the findings or plans to dispute the income unearthed during the search.
The purpose of ITR-B is to bring such previously unreported income into the tax net, in accordance with legal provisions. Along with the return, the assessee must provide relevant documents, including detailed income calculations and supporting evidence.
How Will e-Proceedings Change It
The introduction of the e-Proceedings facility has made the block assessment process more structured, efficient, and transparent.
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The e-Proceedings facility involves a simplified and digitised process, and the assessee can reply to the notice in a paperless manner and remotely from anywhere. This has made the process faster and more transparent, as it is a time-bound process.
Consequences of Not Filing Form ITR-B Within The Specified Timeline
Failing to respond to the notice u/s 158BC and not filing ITR-B within the specified timeline can lead to serious consequences.
Says Jain: “The assessing officer (AO) can declare the assessee as e-parte and pass the judgement with heavy tax liability, interest, and penalties even leading to prosecution (276CC) with imprisonment up to seven years and at extreme cases, even freezing assets.”
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One should not ignore the notice under this section and should comply with the process as required, as ignoring it could lead to serious legal and financial consequences. "Not filing Form ITR-B within the given time after receiving a notice under Section 158BC can lead to serious outcomes. In case the tax payer fails to comply with the timelines for filing of returns in response to notice under section 158BC (ITR - B), the portal would disable the option to file the return whereafter, the tax officer can go ahead and pass an ex-parte assessment (where the officer decides your income without your input), interest on tax due (1.5 per cent per month), penalties upto 50 per cent of the tax payable on assessed income and even the risk of prosecution," adds Bhalla.
