The Central Board of Direct Taxes (CBDT) has introduced a dedicated ITR-B form for block assessment proceedings under the Income-tax Rules, 2026. The move is an important procedural development under the new Income-tax Act, 2025 and is particularly relevant for taxpayers who become subject to search or requisition proceedings.
Through Notification No. 97/2026 dated 24 July 2026, the CBDT notified the Income-tax (Third Amendment) Rules, 2026. The notification amends Rule 332 of the Income-tax Rules, 2026 and inserts a new Appendix IV containing ITR-B, or Income-tax Return for Block Assessment. The amended rules are deemed to have come into force from 1 April 2026 and apply to searches initiated under Section 247 or requisitions made under Section 248 of the Income-tax Act, 2025 on or after that date.
The introduction of this form is significant because block assessment is different from an ordinary income-tax assessment. It is triggered by specific search or requisition proceedings and covers a defined block period during which undisclosed income may be identified and assessed.
For taxpayers, businesses, chartered accountants, tax consultants and other professionals, understanding the purpose of ITR-B and the information required in it is therefore important.
What is ITR-B?
ITR-B is a special income-tax return prescribed for block assessment cases arising from search and requisition proceedings.
It is not a replacement for regular ITR forms such as ITR-1, ITR-2, ITR-3, ITR-5, ITR-6 or ITR-7. Instead, it is a separate return designed specifically for taxpayers whose cases fall within the block assessment provisions.
Under the 2026 framework, the form is linked to search proceedings under Section 247 or requisition proceedings under Section 248 of the Income-tax Act, 2025.
The purpose of introducing a separate form is to provide a structured method for taxpayers to disclose information relating to the block period, including regular income, undisclosed income and other information relevant to the search or requisition.
The Income Tax Department has also explained the concept of ITR-B under the earlier block assessment framework. Its official guidance describes ITR-B as the return required for the block period in search and requisition cases.
Why has CBDT introduced a separate ITR-B?
Search and seizure proceedings are fundamentally different from ordinary income-tax assessments.
In a normal assessment, the taxpayer generally reports income for a particular tax year through the applicable ITR form. The tax department then processes the return or undertakes assessment proceedings where required.
A search or requisition case can be much broader. During such proceedings, the department may come across documents, books of account, digital records, cash, jewellery, bullion, investments, property-related documents or other evidence that may indicate income or assets not properly disclosed in the regular tax returns.
A dedicated block assessment return makes it easier to bring all relevant information into a structured reporting mechanism.
The new ITR-B therefore serves several purposes:
- It identifies the relevant block period.
- It captures information relating to previous returns.
- It provides details of income reported for the relevant years.
- It facilitates disclosure of undisclosed income.
- It captures information connected with the search or requisition.
- It provides a framework for computation of income for block assessment.
- It creates a standardized reporting mechanism for taxpayers and tax professionals.
Applicability of ITR-B under Income-tax Rules 2026
The new ITR-B framework applies to search and requisition cases covered by the Income-tax Act, 2025.
According to Notification No. 97/2026, the amended rules apply to:
Searches initiated under Section 247 or requisitions made under Section 248 on or after 1 April 2026.
The notification specifically states that the Income-tax (Third Amendment) Rules, 2026 are deemed to have come into force from 1 April 2026.
This date is important because taxpayers and professionals need to determine which statutory framework applies to a particular search or requisition.
What is the block period?
One of the most important concepts in a block assessment is the block period.
The ITR-B form requires taxpayers to provide information for multiple tax years falling within the relevant block period.
The rules explain the period using tax years identified as Y6 to Y1, Y0 and, in certain situations, Y+1.
Broadly, Y6 to Y1 represent the six tax years preceding the tax year in which the search was initiated or requisition was made.
Y0 generally covers the tax year in which the search or requisition was initiated, with the exact period depending upon when the last authorization was executed.
Where the last authorisation is executed in a subsequent tax year, the rules also provide for a Y+1 period in appropriate circumstances.
This makes the calculation of the block period more technical than filing an ordinary annual income-tax return.
Information required in ITR-B
The new ITR-B is comprehensive and requires taxpayers to provide significant information.
The form begins with general information about the taxpayer. This includes details such as:
- PAN
- Name
- Date of birth or incorporation
- Aadhaar details, where applicable
- Address
- Mobile number
- Email address
- Residential status
- Nature of employment
- Status of the taxpayer
- Details relating to the search or requisition
The form also requires details relating to the date of initiation of search or requisition and the date on which the last authorisation is deemed to have been executed.
The taxpayer must also provide information concerning the applicable block period.
Details of earlier income-tax returns
Another important feature of ITR-B is the requirement to provide details of returns filed for the years falling within the block period.
The form requires information such as:
- Date of filing of the return
- Relevant statutory provision under which the return was filed
- Acknowledgement or receipt number
- Whether assessment, reassessment or recomputation was pending
- Relevant statutory provision governing such proceedings
This information allows the tax authorities to compare the taxpayer’s earlier disclosures with information identified during search or requisition proceedings.
For taxpayers, this means that old income-tax returns, acknowledgements, assessment orders and related documents should be preserved and reconciled carefully.
Reporting income under different heads
ITR-B contains reporting requirements covering several major heads of income.
The form includes schedules relating to:
Income from Salary
Income from salary is required to be reported where applicable.
Although search proceedings may primarily focus on undisclosed business income, investments or assets, the return remains comprehensive and requires reporting of relevant income.
Income from House Property
Income arising from house property is also covered.
Taxpayers should reconcile rental income, interest deductions and other relevant information with their books, bank statements and earlier returns.
Profits and Gains from Business or Profession
Business and professional income can be particularly important in search-related proceedings.
The form covers business income, including areas such as speculative business, specified business and income taxable at special rates.
Businesses should therefore reconcile their books of account, sales records, purchase records, bank transactions, cash transactions and other financial data before preparing the return.
Capital Gains
ITR-B also provides for reporting of capital gains.
This includes different categories of capital gains and information relating to gains taxable at specified rates and certain transactions involving international tax considerations.
Taxpayers with substantial investments in shares, securities, immovable property or other capital assets should pay particular attention to this section.
Income from Other Sources
Income taxable under the head “Income from Other Sources” is also covered.
The form includes provisions for income taxable at special rates and certain other categories of income.
Disclosure of undisclosed income
One of the most important aspects of ITR-B is the reporting of undisclosed income for the block period.
Search proceedings can uncover information that was not reflected in the taxpayer’s regular income-tax returns.
For example, assume that a search finds evidence indicating that a business received ₹50 lakh in cash outside its recorded books during the relevant block period.
The taxpayer cannot simply treat the search-related disclosure as an ordinary annual return adjustment without considering the specific block assessment provisions.
The information must be examined in light of the applicable provisions, the evidence found during the search, the books of account and the relevant block period.
ITR-B provides a structured mechanism for reporting the income relevant to the block assessment.
Example of ITR-B application
Consider the following example.
Mr. A operates a manufacturing business. A search is initiated at his business premises after 1 April 2026.
During the search, the department finds:
- Unrecorded cash of ₹20 lakh
- Unrecorded jewellery valued at ₹10 lakh
- Business documents indicating undisclosed receipts of ₹40 lakh
- Digital records relating to transactions not appearing in the regular books
Mr. A had also filed regular income-tax returns for earlier tax years.
In such a situation, the tax authorities may examine the material seized or obtained during the search and determine whether it indicates undisclosed income.
If Mr. A receives the applicable notice requiring a block return, he would need to prepare the ITR-B by considering the relevant block period and the information required under the form.
The taxpayer would need to reconcile the search material with the regular books and earlier returns and determine the income that is required to be disclosed under the applicable block assessment provisions.
The important point is that ITR-B is not simply another annual income-tax return. It is connected specifically with block assessment proceedings.
ITR-B and regular ITR are different
Taxpayers should not confuse ITR-B with their normal annual income-tax return.
A regular ITR is generally filed to report income for a particular tax year under the ordinary return filing provisions.
ITR-B, on the other hand, is connected with block assessment proceedings arising from search or requisition.
The distinction can be understood as follows:
| Particulars | Regular ITR | ITR-B |
|---|---|---|
| Purpose | Annual income-tax reporting | Block assessment reporting |
| Trigger | Normal return filing requirement | Search or requisition proceedings |
| Coverage | Relevant tax year | Specified block period |
| Nature | Regular tax compliance | Special search-related compliance |
| Undisclosed income | Generally not the specific purpose | Central to block assessment reporting |
| Applicable taxpayers | Taxpayers required to file regular ITR | Persons covered by applicable block assessment proceedings |
| Form | ITR-1, ITR-2, ITR-3, ITR-5, ITR-6, ITR-7 etc. | ITR-B |
Importance of maintaining proper records
The introduction of ITR-B makes proper record keeping even more important.
Businesses should maintain complete books of account and supporting documentation, including:
- Sales invoices
- Purchase invoices
- Bank statements
- Cash books
- Ledgers
- Stock records
- Fixed asset registers
- Investment records
- Property documents
- Loan documents
- Digital transaction records
- Agreements and contracts
- Details of investments
- Details of cash transactions
Search proceedings can involve extensive financial information. If records are incomplete or inconsistent, explaining transactions to the tax authorities can become difficult.
Proper documentation is therefore not merely a bookkeeping requirement. It can also become an important part of defending the taxpayer’s position during tax proceedings.
Practical impact on taxpayers
The new ITR-B framework is likely to increase the importance of careful reconciliation in search cases.
A taxpayer who receives a notice relating to block assessment should not prepare the return based only on the information available in the latest annual ITR.
Instead, the taxpayer and professional should examine:
- The search or requisition date.
- The date of execution of the last authorisation.
- The applicable block period.
- Earlier income-tax returns.
- Books of account.
- Bank statements.
- Assets and investments.
- Documents and digital records found during the search.
- Undisclosed income identified during the proceedings.
- Applicable tax and interest provisions.
This process can be considerably more detailed than ordinary ITR preparation.
Special importance for businesses
Businesses are likely to face substantial compliance requirements where search proceedings involve books of account and financial records.
A business may have several sources of information, including accounting software, bank accounts, GST records, TDS records, stock registers, invoices and digital payment records.
If these records do not reconcile, questions may arise regarding the nature and source of transactions.
Businesses should therefore consider conducting periodic reconciliations between:
- Books of account and bank statements
- Sales and GST records
- Purchases and vendor records
- TDS/TCS information and books
- Fixed assets and supporting documents
- Cash balances and physical cash
- Investments and financial statements
Such reconciliation can help identify discrepancies before they become significant issues during assessment proceedings.
Importance for tax professionals
The introduction of ITR-B also creates additional responsibilities for chartered accountants, tax consultants and other professionals assisting taxpayers in block assessment cases.
Professionals will need to understand both the procedural requirements of the form and the underlying facts of the search case.
A return should not be prepared merely by transferring figures from previous ITRs.
The professional should examine the search material, block period, previous returns, books of account and relevant statutory provisions.
Particular attention should be given to the explanatory notes attached to ITR-B because the form contains specific instructions concerning different tax years and circumstances.
Provisional figures in certain situations
The new framework also recognises situations where the accounts or return filing deadline for a particular tax year may not have been completed.
The notification provides guidance regarding provisional figures for certain tax years where the relevant year has ended but the statutory return filing due date has not expired.
Such provisional information is based on the books of account maintained in the normal course and does not itself constitute the regular return for that tax year.
The relevant income may subsequently need to be included in the regular income-tax return as applicable.
This is an important distinction because taxpayers should not assume that figures reported for block assessment purposes automatically replace the regular return filing requirement.
Treatment of international and specified domestic transactions
The rules also contain an important provision concerning undisclosed income relating to international transactions or specified domestic transactions for a part of a tax year forming part of the block period.
The notification states that such income is to be assessed under provisions other than the applicable block assessment provisions and therefore is not required to be submitted as part of the block return in the specified circumstances.
This illustrates why block assessment cases can become technically complex, particularly for companies and businesses having international transactions or specified domestic transactions.
How taxpayers can prepare for block assessment
Taxpayers facing search or requisition proceedings should take a systematic approach.
Step 1: Identify the search or requisition date
Determine when the search under Section 247 or requisition under Section 248 was initiated.
Step 2: Determine the block period
Calculate the applicable tax years, including Y6 to Y1, Y0 and Y+1 wherever relevant.
Step 3: Collect previous ITR records
Keep copies of all relevant returns, acknowledgements, computation statements and assessment orders.
Step 4: Reconcile books and financial records
Compare accounting records with bank statements, investments, assets and other financial information.
Step 5: Examine search-related material
Review documents, digital records and other evidence relevant to the proceedings.
Step 6: Identify potential undisclosed income
Determine whether any income, assets or transactions require disclosure under the applicable provisions.
Step 7: Prepare ITR-B carefully
Complete the relevant schedules and provide accurate information for the block period.
Step 8: Review tax computation
Verify the tax, interest and other amounts applicable to the block assessment.
Step 9: Verify and submit
The return should be properly verified and filed through the prescribed electronic mechanism.
Where can taxpayers access official Income Tax information?
Taxpayers should rely on the official Income Tax Department portal for the latest instructions, forms, utilities and filing-related information.
The official portal currently provides ITR-related downloads and filing resources for taxpayers.
For ITR-B specifically, the Income Tax Department’s official guidance explains who is required to file the form, the relevant prerequisites and the electronic filing process.
Because tax forms and procedures can change through notifications and updates, taxpayers should always verify the latest version before filing.
Conclusion
The introduction of ITR-B under the Income-tax Rules, 2026 is an important procedural development in India’s direct-tax framework.
CBDT Notification No. 97/2026 provides a dedicated form for block assessment cases connected with searches and requisitions under the Income-tax Act, 2025. The amendment to Rule 332 and insertion of Appendix IV create a structured reporting mechanism for taxpayers involved in such proceedings.
The form goes well beyond basic income reporting. It requires information concerning the search or requisition, the block period, earlier returns, different heads of income, undisclosed income and other relevant particulars.
For taxpayers, the key lesson is that search-related tax compliance requires much more detailed preparation than an ordinary annual ITR. Proper books of account, complete financial records, transaction-level documentation and accurate reconciliation can play an important role in explaining the taxpayer’s position.
Tax professionals should also carefully review the applicable provisions and the explanatory notes accompanying ITR-B before preparing the return.
As India’s new income-tax framework continues to evolve, taxpayers and professionals should closely monitor CBDT notifications and official Income Tax Department updates so that procedural changes are understood and complied with on time.