Section 292 · Assessment
Section 292 of the Income-tax Act, 2025 — Block Assessment of Undisclosed Income After Search
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XVI
📜 What the law says — Section 292, Income-tax Act 2025
292. (1) Irrespective of any other provision of this Act, where on or after the
commencement of this Act, in the case of any person, a search is initiated or
requisition is made, then, the Assessing Officer shall proceed to assess or reassess
the total undisclosed income of the block period as per provisions of this Part.
(2)(a) The assessment or reassessment or recomputation proceedings under the
provisions of this Act (other than of this part), if any, pertaining to any tax year
falling in the block period, pending on the date of initiation of search, or the date
of making of requisition, as the case may be, shall abate and shall be deemed to
have been abated on such date.
(b) Any proceeding for assessment or reassessment or recomputation under any
provisions of this Act (other than this Part) pertaining to any tax year falling in the
block period (other than the tax year in which last of the authorisations for a search
is executed or requisition is made), for which a notice has been issued during the
period commencing on date of initiation of search or the date of making of req-
uisition and ending on the date of making of order under section 294(1)(c), shall
abate and shall be deemed to have been abated on the date of issue of such notice.
(3) If any reference has been made under section 166(1) or order has been passed
under section 166(6), the assessment or reassessment or recomputation proceedings
referred to in sub-section (2) together with such reference or order, shall abate and
shall be deemed to have abated on the date referred to in sub-section (2).
(4) If any assessment under the provisions of this part is required to be made in
the case of an assessee, in whose case a search is initiated or a requisition is made
subsequently—
(a) such pending assessment shall be duly completed;
(b) assessment in respect of such subsequent search or requisition shall be
made thereafter under the provisions of this part; and
(c) if the period available for assessment in clause (b) is less than three
months, such period shall be extended to three months from the end
of the month in which the assessment, as referred to in clause (a) was
completed.
(5) Irrespective of anything contained in this part or section 286, if any proceeding
initiated under this part or any order of assessment or reassessment made under
section 294(1)(c) has been annulled in an appeal or any other legal proceeding, the
In plain language
What Section 292 actually says
Section 292 of the Income-tax Act, 2025 is the gateway provision of the new block-assessment regime (Chapter XVI-B, Sections 292 to 301). It says that where, on or after the commencement of the Act, a search under Section 247 is initiated or a requisition under Section 248 is made in the case of any person, the Assessing Officer (AO) shall proceed to assess or reassess the total undisclosed income of the "block period". This is the 2025 Act's re-enactment of the old block-assessment scheme that lived in Section 158BA of the Income-tax Act, 1961.
- Who it applies to: Any person (individual, HUF, firm, company, etc.) who is subjected to an income-tax search or whose assets/books are requisitioned.
- What gets assessed: Only the undisclosed income of the whole block period is bundled into one special assessment, taxed at a flat penal rate — not your normal, already-disclosed income.
- Trigger date: The date the search is initiated or requisition is made sets everything in motion.
The "block period" explained
The block period is the heart of the section. It covers the six tax years immediately preceding the tax year in which the search was initiated, plus the part-period of the search year running up to the date of execution of the last search authorisation. So a single block assessment can sweep up roughly 6 years and a few months of hidden income in one order, instead of reopening each year separately. The precise definition is anchored in Section 301 (interpretation) and Section 293 (computation).
Abatement — pending assessments freeze
A crucial mechanic in Section 292 is abatement. Any regular assessment, reassessment or recomputation for a year falling inside the block period that is pending on the date of the search immediately abates (stops). This prevents two parallel proceedings on the same years. Proceedings initiated after the search date but before the block order is passed also abate. If the block assessment is later annulled in appeal, the abated proceedings revive.
Regular income is assessed separately
Section 292(6) makes clear that the normal (disclosed) income of the search year is assessed separately under the ordinary provisions. The block route is reserved strictly for the undisclosed portion, so you are not taxed twice on the same money.
The tax rate — a flat 60%
Section 292(7) charges the total undisclosed income of the block period at the rate specified in Section 192, which is 60%, irrespective of the year to which the income relates. This flat rate is increased by surcharge where a Central Act specifies one (and cess as applicable). No slab benefit, no basic exemption, and importantly, brought-forward losses and unabsorbed depreciation cannot be set off against block-period undisclosed income.
How it interacts with related sections
- Section 293 tells you how to compute the total undisclosed income (aggregate of the block years, reduced by disclosed income already offered).
- Section 294 lays out the procedure — the AO issues a notice, the person files a block return of undisclosed income, and the AO determines the figure.
- Section 295 covers undisclosed income of any other person found during the search.
- Section 296 fixes the time limit — broadly 12 months from the end of the quarter in which the last search authorisation was executed (extendable).
Practical implications
- The 60% flat rate plus surcharge and possible penalty makes undisclosed income far costlier than voluntarily disclosing and paying normal slab tax.
- Maintain clean documentation — the burden is effectively on you to explain assets, cash and entries found in the search.
- Because pending assessments abate, everything is consolidated into one block order; engage a professional early.
💡 Example
Worked example 1 — the flat-rate hit. Suppose a search on 10 August 2026 uncovers unexplained cash and unrecorded receipts totalling ₹80,00,000 spread across the block period. Under Section 292(7) read with Section 192, this is taxed at a flat 60% = ₹48,00,000. Add, say, a 25% surcharge (illustrative) of ₹12,00,000 and 4% cess (₹2,40,000), and the outgo before any penalty is roughly ₹62,40,000 — over three-quarters of the amount. Contrast this with the same ₹80 lakh, had it been disclosed as regular income under normal slabs, where the effective rate would have been materially lower.
Worked example 2 — block period span. For a search initiated in tax year 2026-27, the block period covers the six preceding tax years 2020-21 to 2025-26, plus the part of 2026-27 up to 10 August 2026 (the search date). Undisclosed income unearthed in any of these years is aggregated into a single figure under Section 293 and taxed once under Section 292.
A relatable story. Rajesh, a jeweller in Jaipur, kept a second set of "kacha" books. When the department searched his premises, they matched the hidden ledger to bank deposits and stock. His regular return for 2026-27 was quietly assessed as usual, but the ₹1.2 crore of undisclosed profit across seven years was pulled into a block assessment under Section 292 and taxed at 60% plus surcharge — a lesson that the block regime is designed to make hiding income the most expensive option of all.
| Feature | Section 292 — Block Assessment (2025 Act) |
|---|
| Trigger | Search under Section 247 or requisition under Section 248 |
| Block period | 6 tax years preceding the search year + part-period up to the search date |
| What is taxed | Total undisclosed income of the block period (regular income assessed separately) |
| Tax rate | Flat 60% (rate in Section 192) + surcharge + cess as applicable |
| Set-off of losses/depreciation | Not allowed against block undisclosed income |
| Pending assessments | Abate on the date of search; revive if block order annulled |
| Time limit (Section 296) | Broadly 12 months from end of quarter of last authorisation (extendable) |
| 1961 Act equivalent | Section 158BA, Chapter XIV-B |
Related sections
Section 293 — Computation of total undisclosed income of block period Section 294 — Procedure for block assessment Section 295 — Undisclosed income of any other person Section 296 — Time-limit for completion of block assessment Section 192 — Tax on block-period income (60% rate) Section 247 — Search and seizure
Frequently asked questions
What is Section 292 of the Income-tax Act, 2025 in simple terms?
It is the provision that starts a special 'block assessment' whenever the income-tax department conducts a search or requisition. The Assessing Officer assesses the total undisclosed income of the whole block period in one consolidated order and taxes it at a flat penal rate.
What period does the block assessment cover?
It covers the six tax years immediately preceding the tax year of the search, plus the part-period of the search year up to the date the last search authorisation was executed — roughly six years and a few months.
At what rate is undisclosed income taxed under Section 292?
Undisclosed income of the block period is taxed at a flat 60% under the rate specified in Section 192, increased by surcharge (if any) and cess. Normal slab rates and the basic exemption do not apply.
Is my regular, already-disclosed income also taxed at 60%?
No. Section 292(6) requires that your regular income for the search year be assessed separately under the normal provisions. Only the undisclosed income goes into the block assessment at 60%.
What happens to assessments already pending for those years?
They abate — meaning they stop automatically on the date of the search — so that the income is dealt with only through the single block assessment. If the block order is later annulled on appeal, the abated proceedings revive.
Can I set off past losses or depreciation against block-period income?
No. Brought-forward losses and unabsorbed depreciation cannot be set off against the undisclosed income determined for the block period, which is one reason the effective cost is so high.
What was the equivalent provision under the old law?
Section 292 corresponds to Section 158BA (Chapter XIV-B) of the Income-tax Act, 1961, which contained the earlier block-assessment scheme for search cases.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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