Search and seizure: the block assessment scheme that now applies

Short answer: for searches conducted on or after 1 September 2024, the assessment follows the block assessment scheme in Chapter XIV-B, reintroduced by the Finance (No. 2) Act 2024 — not Section 153A. The block period covers the six preceding assessment years plus the current year up to the date of search, assessed together, with undisclosed income charged at a flat 60%.

Much of the material available on search assessments still describes the Section 153A framework. For a search after that date, that description is out of date.

Search and survey are not the same thing

The distinction determines what could lawfully have happened.

A survey is the narrower power. Where a survey is conducted as though it were a search — cash removed, residential premises entered — that is a matter to record contemporaneously, because it goes to the validity of what follows.

What may and may not be seized in a search

Among the powers under Section 132 are entry and search of premises, breaking open locks where keys are unavailable, seizure of books of account, documents, money, bullion, jewellery and other valuable articles, placing marks of identification and taking copies, and recording a statement on oath.

Two limits are worth knowing:

• Stock-in-trade cannot be seized. The authorised officer may make a note or inventory of it, but seizure is outside the power.
• Where physical seizure is impracticable, a deemed seizure may be effected by order restraining removal — but that is a restraint, not an open-ended freeze, and its duration is regulated.

The statement under Section 132(4)

A statement recorded on oath during a search is admissible and carries real evidentiary weight. It is frequently the single most consequential document produced during the action.

Practical points, in order of importance: read it before signing; do not accept figures you have not verified; and do not offer a surrender of income you cannot substantiate merely to conclude the process, because the surrender will be assessed while the basis for it may not withstand examination later.

Retraction is possible, but it is a difficult route. To carry weight it must be prompt, reasoned, and supported by material showing why the original statement was wrong. The case law on statements said to have been obtained under pressure, and on surrenders unsupported by any seized material, is genuinely contested — it is not a reliable escape from an inaccurate statement, and it should not be relied on as though it were.

The block assessment scheme

Reintroduced by the Finance (No. 2) Act 2024 for searches initiated on or after 1 September 2024:

• One block, not several years. The block period broadly comprises the six assessment years preceding the year of search, plus the period of the current year up to the date of search — assessed together rather than as separate yearly assessments.
• Pending proceedings abate. Assessments or reassessments pending on the date of the search abate and are subsumed into the block assessment.
• Flat 60% on undisclosed income. Undisclosed income determined for the block is charged at that rate.

The stated purpose of returning to a block scheme was to consolidate what had become a year-by-year process generating prolonged litigation.

For searches before 1 September 2024, the previous framework applies: assessment under Section 153A for the searched person, and Section 153C where material relating to another person is found. Under 153C, the recording of satisfaction that the seized material relates to the other person is a jurisdictional requirement, not a formality.

The safeguard that carries across

The Supreme Court's decision in ACIT vs Hotel Blue Moon (2010) 321 ITR 362 held that a notice under Section 143(2) is mandatory, and applied that reasoning to block assessment as well. The absence of the notice is fatal rather than curable.

So even in a search assessment, the procedural questions are live: was the required notice issued, was it within time, was the authorisation valid, and — for a 153C-era case — was satisfaction properly recorded. These are examined before the merits of any addition, because a defect here can dispose of the matter without reaching them. The same layered approach set out in the reassessment guide applies.

During the action

Rights commonly stated in the department's own material, and worth knowing in advance rather than looking up afterwards:

• To see the authorisation and verify the identity of the officers.
• To have the search conducted in the presence of two respectable witnesses.
• Personal search of a woman only by a woman.
• To call a medical practitioner in case of emergency.
• For children to leave for school, after their bags are checked.
• To inspect the seals placed, and to have copies or extracts of seized material.
• To have the panchnama — the record of the proceedings — and a copy of the inventory of what was seized.

Retain the panchnama and the inventory. They define what was actually taken and are the reference point for everything that follows.

What follows

After the action, the assessment proceeds — for a post-September-2024 search, on the block basis described above. In practice the sequence involves notices calling for the return for the block period and for information and documents, in a process similar in form to Section 142(1) inquiry, followed by the assessment order.

Two things are worth doing early: obtain copies of the seized material, since you cannot meaningfully respond to what you cannot see; and reconstruct the position for the block period from your own records rather than working only from what was seized, because the seized set is rarely complete.

Under the Income-tax Act 2025

Block assessment provisions have continued to be adjusted, so the version applicable to a particular search should be identified by reference to the date of the action. The section mapping guide covers the wider renumbering.

Search and seizure is a high-stakes and heavily litigated area, and the position turns closely on the date of the action, the authorisation and what was actually found. This note describes the general framework and is not a substitute for advice on a specific case.