CBDT Notifies ITR-B for Search-Related Income Tax Returns: A Step Toward Streamlined Block Assessments

Introduction

In a significant development aimed at streamlining the return-filing mechanism for search and seizure assessments, the Central Board of Direct Taxes (‘CBDT’) has notified a new return form, ITR-B, through a Notification[i]. This notification introduces r. 12AE into the Income-tax Rules, 1962 (‘Rules’) and formally introduces a specific return form under s. 158BC of the Income-tax Act, 1961 (‘Act’), dealing with block assessments pursuant to search and seizure operations under ss. 132 or 132A of the Act.

Titled the Income-tax (Tenth Amendment) Rules, 2025, these rules are set to have retrospective application from 01.09.2024, aligning procedural obligations under ch. XIV-B of the Act. The rationale behind this amendment stemmed from a persistent procedural gap, where the absence of a unified assessment mechanism had resulted in piecemeal reassessments, limited to time-barred years. The introduction of ITR-B not only marks a structural addition but also operationalizes long-standing provisions of the Act that, until now, lacked a dedicated return mechanism.

1. Background: Block Assessment under Ch. XIV-B.

Under s. 158BC(1)(a) of the Act, where a search is initiated under s. 132 or a requisition is made under s. 132A of the Act, the Assessing Officer (‘AO’) may issue a notice requiring the person searched to furnish a return in respect of the “block period.” This block period comprises previously unassessed years, typically spanning ten years preceding the date of the search.

Previously, the procedural rules did not specify a dedicated ITR form for such block assessments. The newly notified r.12AE and Form ITR-B addressed this long-standing vacuum by providing a concrete format and process for compliance.

2. Insertion of R. 12AE: The New Return Mechanism

The newly inserted r. 12AE sets out the return filing process as follows:

a. Sub-rule (1): Scope and Applicability

• It mandates that persons required to file a return under s. 158BC(1)(a) of the Act for any search initiated or requisition made on or after 01.09.2024, must now file such returns in the newly notified Form ITR-B.

• This return must be verified in the manner indicated in the form, bringing formalism and clarity to procedural requirements.

b.  Sub-rule (2): Modes of Filing Based on Taxpayer Type

The manner of filing depends on the status of the taxpayer, as detailed in the following table:

Sl. No.	Person	Manner of furnishing the return of income
(1)	(2)	(3)
1.	(a) person whose accounts are required to be audited under s. 44AB of the Act; (b) Company; (c) Political party.	Electronically under a digital signature.
2.	Any person other than a person mentioned in column (2) of Sl. No. (1) above.	(A) Electronically under digital signature; (B) Transmitting the data electronically in the return under an electronic verification code.

This bifurcation aligns with the general return filing framework under r. 12 but ensures digital authentication in sensitive search-based assessments.

c. Sub-rule (3): Role of DGIT (Systems)

The Principal Director General or Director General of Income-tax (Systems) (‘DGIT (Systems)’) has been entrusted with:

• Specifying procedures, formats, and standards for secure data capture and transmission.

• Implementing security, archival, and retrieval protocols.

This reflects the government’s increasing reliance on technology-enabled compliance systems, aiming for accuracy, security, and transparency.

d. Sub-rule (4): Verification of Tax Credit Claims

If an assessee claims credit of tax payments against undisclosed income of the block period, other than self-assessment tax. In that case, such claims shall be subject to verification and satisfaction of the AO.

This provision gives the revenue authority discretion to vet claims related to advance tax, TDS, TCS, or any other tax credits, thereby preventing misuse in high-stakes search assessments.

3. Introduction of Form ITR-B

The notification also introduces Form ITR-B in Appendix II of the Rules.

i. Purpose and Timing of Filing

• Form ITR-B is applicable only when a notice under s. 158BC of the Act is issued, pursuant to the conclusion of a search operation.

• The form is meant to capture the income for the block period—typically ten assessment years immediately preceding the year of search—based on evidence unearthed during the search.

ii. Key Features

• Disclosure of undisclosed income and its sources;

• Reporting of tax payments and credit claims;

• Schedule-wise breakup of income and assets discovered;

• Attestation and digital verification.

Our Analysis

The introduction of r. 12AE and Form ITR-B marks a significant procedural refinement in the domain of search-related assessments under the Act. By establishing a dedicated framework for filing returns post-search, the CBDT has bridged a critical gap in the implementation of s. 158BC of the Act, bringing greater certainty, uniformity, and traceability to such proceedings. From a compliance standpoint, the rule ensures that assessees have clear directions on the form, verification mode, and procedural safeguards applicable to them. It also empowers tax authorities to scrutinize credit claims more effectively, minimizing potential revenue leakage. The retrospective application from 01.09.2024 could raise interpretational challenges, particularly for assessees whose search proceedings concluded before the notification date but fall within the retroactive ambit. This aspect may become contentious in litigation, especially where procedural ambiguity existed prior to the notification.

End Note

[i] Notification No. 30/2025, dated 07.04.2025.

Authored by Kushagra Gahlot, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.