Section 293 of the Income-tax Act, 2025 — Computation of Total Undisclosed Income of the Block Period

In plain language

What Section 293 is about

Section 293 of the Income-tax Act, 2025 lays down the arithmetic of a block assessment — that is, exactly how the Assessing Officer (AO) works out the "total undisclosed income of the block period" after a search under Section 247 (search and seizure) or a requisition under Section 248. It is the operational engine behind Chapter XIV's special assessment machinery and directly replaces Section 158BB of the old Income-tax Act, 1961. It applies for tax year 2026-27 onwards (the Act is effective 1 April 2026).

In plain terms: when the tax department raids a person and finds unaccounted cash, jewellery, property, foreign assets or now virtual digital assets (crypto), Section 293 tells the officer how to convert all of that into one figure that will then be taxed at a flat penal rate.

Who it applies to

• Any person searched under Section 247 or against whom a requisition under Section 248 is made.
• Other persons whose undisclosed income surfaces from that search (dealt with by Section 295, but computed the same way).
• Individuals, HUFs, firms, LLPs, companies — every category of assessee is covered.

How the total undisclosed income is computed [Section 293(1)]

The AO aggregates the following, spread across the whole block period:

• Undisclosed income declared by the assessee in the block return furnished under Section 294;
• Undisclosed income determined by the AO on his own examination; plus
• income already assessed / declared / determined through the regular route (assessments completed, returns already filed, and income recorded in the normal books of account before the search).

Crucially, sub-section (2) says the undisclosed portion must be computed on the basis of (a) evidence found during the search, survey or requisition, and (b) any other material or information available with the AO or coming to his notice during proceedings. The officer cannot tax on pure guesswork — there must be an evidentiary trail.

What is kept out / reduced

• Already-taxed income is excluded: income earlier assessed under the regular provisions, or declared in returns filed before the search, is not taxed again as "undisclosed."
• International & specified domestic transactions [293(3)]: transfer-pricing income for the part-period (1 April of the search year up to the date the last authorisation is executed) is pulled out of the block and assessed separately under the normal provisions.
• Firms [293(4)]: a firm's block income is computed before deducting remuneration/interest to partners.

The strict rule on losses and depreciation [293(7)–(8)]

• No set-off: brought-forward business losses from years before the block, and unabsorbed depreciation, cannot be set off against the undisclosed income of the block period. This prevents taxpayers from wiping out a penal assessment using old losses.
• Carry forward preserved: such losses and unabsorbed depreciation are not lost — they may be carried forward to the year following the end of the block period and set off there under the normal rules.

How it interacts with related sections

• Section 292 defines the block period and — importantly — charges the block income to tax at a flat 60% (a deliberately penal rate, with surcharge and cess on top). Pending regular assessments for those years abate.
• Section 294 is the procedure: the AO issues a notice requiring the block return within up to 60 days, after prior approval of a senior officer.
• Section 295 extends the machinery to undisclosed income of any other person found during the search.

Practical implications

• The whole block (six preceding tax years + the part-year up to the search date) is telescoped into a single assessment order, avoiding year-by-year litigation.
• Because the rate is 60% flat and losses can't cushion it, the cost of concealment is severe — good books and honest returns filed before any search are the only real protection.
• Since the definition now expressly captures crypto/virtual digital assets, undisclosed holdings in wallets and exchanges are squarely within the net.