The Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry of Finance, has notified the Income-tax (Third Amendment) Rules, 2026, introducing a dedicated Income-tax Return Form, ITR-BN, for filing returns of income in block assessment cases involving search and seizure proceedings under Chapter XVI-B of the Income-tax Act, 2025. The rules have been notified through Notification No. 97/2026 [G.S.R. 656(E)] dated 24 July 2026.
The amendment has been made in exercise of the powers conferred under section 294 read with section 533 of the Income-tax Act, 2025. The notified rules shall be deemed to have come into force with effect from 1 April 2026.
The new rules shall apply to every case where a search is initiated under section 247, or a requisition is made under section 248 of the Income-tax Act, 2025, on or after 1 April 2026. Rule 332 of the Income-tax Rules, 2026 has accordingly been amended, and Appendix IV containing Form ITR-BN has been inserted.
Form ITR-BN has been specifically designed as the Income-tax Return for Block Assessment and is to be used in response to a notice issued under section 294, including cases covered under section 295 of the Income-tax Act, 2025. The form captures the Document Identification Number, date of notice, due date for filing the return and the relevant block period.
The form requires taxpayers to provide comprehensive general information, including Permanent Account Number, Aadhaar number, contact and address details, status, residential status, date of initiation of search or requisition and the date of execution of the last authorisation. It also seeks details of returns previously filed for each tax year falling within the block period.
The block period ordinarily covers the six tax years preceding the tax year in which the search was initiated or requisition was made, together with the relevant period of the tax year in which such search or requisition takes place. Where execution of the last authorisation extends into a subsequent tax year, the relevant portion of that subsequent year is also required to be reported.
ITR-BN provides for a detailed computation of undisclosed income for each tax year comprising the block period. Separate computation tables have been prescribed for cases where the search or requisition is concluded in the same tax year and for cases where the last authorisation is executed in a subsequent tax year.
The form requires a head-wise break-up of undisclosed income under salaries, income from house property, profits and gains from business or profession, capital gains and income from other sources. It also requires an item-wise disclosure of undisclosed income relating to money, bullion, jewellery, valuable articles, virtual digital assets, expenditure, incorrect claims of expenses, exemptions, deductions or allowances, entries in books or documents and other transactions.
A dedicated tax-computation section has also been incorporated in ITR-BN. The form provides for computation of tax at 60 per cent of the undisclosed income of the block period, along with applicable surcharge, Health and Education Cess at four per cent and interest payable under section 298(1) of the Income-tax Act, 2025.
Separate schedules have been provided for furnishing details of self-assessment tax paid on undisclosed income and for claiming eligible credit in respect of advance tax, self-assessment tax, tax deducted at source and tax collected at source that has not been claimed earlier. Such claims will remain subject to verification and satisfaction of the Assessing Officer.
The notified form also contains a verification declaration requiring the person filing the block return to certify that the information furnished is correct, complete and in accordance with the provisions of the Income-tax Act, 2025. Details of the Tax Return Preparer, wherever applicable, are also required to be provided.
Undisclosed income relating to international transactions or specified domestic transactions pertaining to a part tax year included in the block period is to be assessed under provisions other than the block-assessment provisions. Accordingly, such income is not required to be included in the block return.
The notification clarifies that references in ITR-BN to a tax year commencing on 1 April 2025 or any earlier tax year shall be construed as references to the corresponding previous year under the Income-tax Act, 1961.
The notification bears Notification No. 97/2026/F. No. 370142/11/2026-TPL. The Government has certified that no person is being adversely affected by the retrospective operation of the notification from 1 April 2026.
The Notification can be accessed at: https://www.incometaxindia.gov.in/documents/d/guest/notification-97-2026-pdf
