CBDT Introduces ITR-BN for Search and Seizure Cases: New Block Assessment Return Rules 2026

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CBDT Notification No. 97/2026 has amended Rule 332 of the Income-tax Rules, 2026 and inserted Appendix IV containing Form ITR-BN.

The form is meant for a return of undisclosed income for the block period in a search or requisition case. It applies where the search under Section 247 or requisition under Section 248 is on or after 1 April 2026.

The notified form asks for the notice details, earlier return particulars for each relevant tax year, undisclosed income, head-wise and item-wise breakup, tax calculation, tax payments, TDS or TCS credits and verification. The due date must be taken from the notice issued under Section 294.

What exactly has CBDT notified

The amendment changes Rule 332(1) so that it refers to both Appendix III and the newly inserted Appendix IV. Appendix IV contains ITR-BN, titled Income Tax Return for Block Assessment for search and seizure cases under Chapter XVI-B.

The notification is dated 24 July 2026 and the rules are deemed to have come into force from 1 April 2026. Therefore, the date of the search or requisition is important when deciding whether this form applies.

A taxpayer should not select ITR-BN merely because an income-tax enquiry, verification email or ordinary scrutiny notice has been received. The form is specifically linked to the statutory search or requisition provisions and the corresponding block assessment notice.

Who may be required to file Form ITR-BN

• A person against whom a search is initiated under Section 247 of the Income-tax Act, 2025.
• A person whose books, documents or assets are covered by a requisition under Section 248.
• Another person whose undisclosed income is connected with material covered by a search or requisition, where the applicable legal conditions and notice are satisfied.
• An individual, HUF, firm, LLP, company or another taxpayer covered by the block assessment notice.

ITR-BN is different from a normal annual income-tax return

A normal ITR reports total income for one year. ITR-BN is a block assessment return and may require year-wise information across the statutory block period, together with a separate computation of undisclosed income.

Filing ITR-BN does not automatically replace every normal ITR obligation. The form notes specifically deal with situations where the due date of a normal return has not expired. In such cases, provisional details may be needed for block assessment, while the regular return may still need to be filed separately under the applicable provisions.

The return should therefore be prepared with two reconciliations: first, year-wise declared income and tax records; second, the additional or undisclosed income connected with the search material.

How the block period is presented in the new form

The form uses labels Y6 to Y1 for the six tax years preceding the tax year in which the search was initiated or requisition was made.

It uses Y0 for the relevant period in the tax year in which the search or requisition begins. Where the last authorisation is executed in a later tax year, the form can also include Y+1 for the applicable part of that later year.

The exact start and end dates depend on when the search or requisition started and when the last authorisation is treated as executed. The block period is system-derived in the form from these dates. Do not manually assume the period without checking the notice and authorisation details.

Important information required in Part A

• PAN, name, date of birth or incorporation, Aadhaar where applicable, mobile, email and address.
• Taxpayer status and residential status.
• Date of initiation of search or requisition and date of execution of the last authorisation.
• The block period and whether the return is filed in response to a notice under Section 294, including a case connected through Section 295.
• DIN or unique number and date of the notice, along with the due date stated for the block return.
• Year-wise details of returns filed earlier, acknowledgement numbers, declared income and processing or assessment position.
• Information about pending assessment, reassessment or recomputation proceedings for the relevant years.
• Value of international transactions and specified domestic transactions, wherever applicable.

How undisclosed income is reported

Part C computes undisclosed income for each tax year forming part of the block period. The structure compares the amount declared as undisclosed income with relevant income already returned, processed, assessed or otherwise covered under the law.

Part D requires both a head-wise breakup and an item-wise breakup. Heads include salary, house property, business or profession, capital gains and other sources.

The item-wise table includes money, bullion, jewellery, other valuable articles, virtual digital assets, expenditure, incorrect expense claims, incorrect exemptions, deductions or allowances, international transactions, specified domestic transactions, entries in books or documents and any other undisclosed item.

This classification matters. A single lump-sum disclosure without a reliable year, head and item mapping can create inconsistencies in tax calculation, credit matching and later assessment.

Tax payable shown in Form ITR-BN

The notified form calculates tax at 60% of the undisclosed income of the block period. It then provides for surcharge, if applicable, and 4% Health and Education Cess, followed by interest under Section 298(1).

This is a special computation for block assessment. It should not be mixed with the normal slab-rate calculation used in a regular individual return.

The final payable amount must be worked out after considering the statutory rate, applicable surcharge, cess, interest, eligible tax payments and credits. The figure should be reconciled with the challans and the computation filed with the return.

Can earlier tax payments, TDS and TCS be claimed

The form contains separate parts for self-assessment tax paid for the block period and for certain earlier advance tax, self-assessment tax, TDS or TCS credits that were not claimed earlier.

A credit is not automatic merely because it appears in Form 26AS or AIS. The form states that the claim and its allowability are subject to the verification and satisfaction of the Assessing Officer.

Prepare a year-wise credit chart showing the deductor or collector, TAN or PAN, tax year, total credit, amount already claimed in an earlier return and balance claimed in ITR-BN. Never claim the same credit twice.

Practical example of the block-period working

Assume a search is initiated during Tax Year 2026-27 and the last authorisation is executed in the same tax year. The form can cover the six preceding years as Y6 to Y1 and the relevant part of Tax Year 2026-27 as Y0, subject to the statutory dates and notice.

Suppose the records indicate undisclosed business receipts in two years, unexplained jewellery in one year and an incorrect expenditure claim in another year. Each amount should be placed in the correct year, income head and item category. Supporting seized material and the regular books should be cross-referenced.

If total undisclosed income finally declared is ₹10,00,000, the basic tax line in the form would be ₹6,00,000 at 60%, before applicable surcharge, 4% cess, interest and adjustment of eligible credits. This illustration is only for understanding the form and is not a final tax computation for any real case.

Documents to collect immediately after receiving the notice

• Copy of the search or requisition documents, authorisations, panchnama and inventory, where applicable.
• Section 294 notice, DIN, notice date and the exact filing due date.
• All normal ITR acknowledgements, computations and processing or assessment orders for the block years.
• Books of account, trial balances, ledgers, audited financial statements and tax audit reports.
• Bank statements, cash book, loan confirmations and party-wise debtor and creditor records.
• Purchase, sales, expense, stock, property, investment and capital-gain documents.
• AIS, TIS, Form 26AS, TDS certificates and tax challans for each year.
• Digital-asset exchange statements, wallet records and transaction working where a virtual digital asset is involved.
• Details of pending assessment, reassessment, appeal or rectification proceedings.
• A seized-material index connecting every proposed adjustment with the relevant page, year, person and explanation.

Step-by-step practical preparation method

• Read the notice first and record the due date. Do not rely on an assumed normal ITR deadline.
• Confirm that the case falls under Section 247 or Section 248 and that the notified ITR-BN rules apply.
• Create a block-period calendar showing Y6, Y5, Y4, Y3, Y2, Y1, Y0 and Y+1 where applicable.
• Collect the latest valid return and assessment details for every relevant year.
• Make a document-wise list of the material found or requisitioned and record the taxpayer explanation.
• Classify each possible amount by tax year, income head and the item categories used in Part D.
• Separate already disclosed income from possible undisclosed income to avoid duplication.
• Reconcile the computation with books, bank records, AIS, TIS, Form 26AS and normal ITRs.
• Prepare a tax, surcharge, cess, interest and credit working supported by challans.
• Complete verification through the legally competent person and retain the full filing set and evidence.

Common mistakes that can create serious problems

• Treating a normal scrutiny, information request or e-campaign as a search assessment.
• Using a normal ITR form instead of the special ITR-BN where a valid block return is required.
• Calculating the block period incorrectly or omitting Y+1 where the facts require it.
• Reporting one consolidated amount without year-wise, head-wise and item-wise classification.
• Including income that was already properly disclosed, causing double counting.
• Leaving out a regular return, assessment order or pending proceeding from Part A.
• Claiming TDS, TCS or tax paid that was already claimed in an earlier return.
• Ignoring virtual digital assets, foreign transactions or specified domestic transactions appearing in the records.
• Filing without matching the declared figure to the seized or requisitioned material.
• Waiting until the notice due date to begin a multi-year reconciliation.

Frequently asked questions

Is ITR-BN required for every taxpayer? No. It is a special block assessment return for specified search and requisition cases. Ordinary taxpayers should continue to use the applicable normal ITR unless a valid notice and the law require ITR-BN.

From which date do the new rules apply? The Income-tax (Third Amendment) Rules, 2026 are deemed effective from 1 April 2026 and apply to a search initiated under Section 247 or requisition made under Section 248 on or after that date.

What is the due date for ITR-BN? The notified form contains a field for the due date stated in the Section 294 notice. Read the actual notice and do not assume the ordinary annual ITR due date.

Can TDS or advance tax be adjusted? The form allows specified credits to be reported, but credits not claimed earlier remain subject to verification and satisfaction of the Assessing Officer. A year-wise no-duplication reconciliation is essential.

Does filing ITR-BN remove the need to file a normal ITR? Not necessarily. The form notes recognise situations where regular-return obligations continue. The answer depends on the relevant year, due date and facts of the case.

Can undisclosed income be reported as one lump sum? The form requires detailed year-wise, head-wise and item-wise information. A supported classification is safer and more consistent with the notified structure.

Key takeaway

Form ITR-BN creates a structured, multi-year return for block assessments under the Income-tax Act, 2025. The most important work is not merely filling the form. It is reconciling the notice, block period, previous returns, seized material, books, tax payments and year-wise undisclosed income.

A search assessment can involve high tax exposure, interest and fact-sensitive legal issues. Start the year-wise reconciliation immediately after receiving the notice, keep every explanation supported by documents and obtain case-specific professional advice before filing.