CBDT Introduces ITR-BN for Block Assessment Cases
CBDT Introduces ITR-BN for Block Assessment Cases Under the Income-tax Act, 2025 – Key Features Explained
The Central Board of Direct Taxes (CBDT) has notified Form ITR-BN, a new Income-tax Return exclusively meant for taxpayers covered under block assessment proceedings following a search or requisition under the Income-tax Act, 2025.
The new return has been introduced through the Income-tax (Third Amendment) Rules, 2026 by inserting Appendix IV into the Income-tax Rules, 2026. It applies to search and seizure cases initiated on or after 1 April 2026.
In this article, we explain the purpose of ITR-BN, who is required to file it, and the important disclosures required under the newly prescribed return.
What is ITR-BN?
ITR-BN is a specialized Income-tax Return prescribed for taxpayers whose cases are subjected to block assessment due to a search or requisition by the Income Tax Department.
Unlike regular income tax returns filed every year, ITR-BN is intended to report undisclosed income detected during search proceedings for the prescribed block period.
It is applicable only in specific search-related cases and does not replace the normal ITR forms such as ITR-1, ITR-2, ITR-3, ITR-5, ITR-6, or ITR-7.
Applicability of ITR-BN
The newly notified return is applicable where:
- A search is initiated under Section 247 of the Income-tax Act, 2025; or
- A requisition is made under Section 248 of the Act.
The provisions apply to searches or requisitions conducted on or after 1 April 2026.
Understanding the Block Period
Unlike regular assessments that relate to a single tax year, a block assessment covers multiple years.
Generally, the block period includes:
- Six tax years immediately preceding the year in which the search is initiated.
- The relevant part of the current tax year up to the date of execution of the last search authorization.
- In certain situations, a portion of the following tax year where the search continues beyond the end of the current tax year.
This allows the tax authorities to assess undisclosed income detected during the search across the entire block period in one proceeding.
Information Required in Form ITR-BN
1. General Information
The return begins with basic details of the taxpayer, including:
- PAN and Aadhaar
- Name and address
- Residential status
- Details of the search
- Date of initiation of search
- Date of execution of the last authorization
- Document Identification Number (DIN) of the notice
- Return filing history for each year covered under the block period
- Status of pending assessments
2. Income for the Relevant Part Year
Where the search takes place during an ongoing tax year, the taxpayer is required to disclose income earned during the relevant period under various heads such as:
- Salary
- Income from House Property
- Profits and Gains from Business or Profession
- Capital Gains
- Income from Other Sources
3. Computation of Undisclosed Income
This is the most significant part of ITR-BN.
The return requires year-wise computation of undisclosed income after considering factors such as:
- Income already disclosed in earlier returns
- Income assessed previously
- Income recorded in books before the search
- Income relating to years where the due date for filing the return had not expired
- Additional income identified during the search
Based on these adjustments, the undisclosed income chargeable under block assessment is determined.
4. Classification of Undisclosed Income
The return requires undisclosed income to be classified in two different ways.
A. Head-wise Classification
Income is classified under the standard heads:
- Salary
- House Property
- Business or Profession
- Capital Gains
- Other Sources
B. Nature of Undisclosed Assets or Transactions
The taxpayer must also identify the source of undisclosed income, including items such as:
- Cash
- Bullion
- Jewellery
- Precious articles
- Virtual Digital Assets (Cryptocurrency)
- Unexplained expenditure
- Incorrect claims of deduction
- Wrong exemption claims
- Incorrect allowance claims
- False expense claims
- Unrecorded book entries
- Any other undisclosed asset or transaction
This classification helps the tax department understand the nature of the undisclosed income identified during the search.
Tax Calculation in ITR-BN
The return contains a separate computation of tax payable on undisclosed income.
The computation includes:
- Tax on undisclosed income
- Applicable surcharge
- Health and Education Cess
- Interest, wherever applicable
- Credit for taxes already paid
- Net tax payable or refundable
Reporting of Tax Payments
ITR-BN also captures details relating to:
- Self-assessment tax
- Challan Identification Number (CIN)
- BSR Code
- Date of payment
- Amount deposited
Credit for Taxes Already Paid
The return provides schedules for claiming credit of:
- Advance Tax
- Self-assessment Tax
- Tax Deducted at Source (TDS)
- Tax Collected at Source (TCS)
Such credits can be claimed where they relate to the block assessment and have not already been claimed in earlier income tax returns.
Important Points to Remember
- ITR-BN is not a regular annual income tax return.
- It is applicable only in search and requisition cases resulting in block assessment.
- The return covers multiple tax years forming the prescribed block period.
- Y6–Y1 are the six tax years preceding the search year.
- Y0 may be a part year or complete year depending on when the last search authorization is executed.
- Y+1 is applicable if the search extends into the next tax year.
- Income for years whose return due date has not expired is reported provisionally based on the books of account and must later be included in the regular return.
- Undisclosed income relating to international transactions or specified domestic transactions for a part tax year is not included in the block return and is assessed under other provisions.
Conclusion
The introduction of Form ITR-BN marks an important procedural change under the Income-tax Act, 2025. It establishes a dedicated reporting mechanism for block assessment cases arising from search and seizure operations. By requiring comprehensive disclosures of undisclosed income, assets, tax payments, and prior filings across the entire block period, the form aims to streamline assessments and ensure uniform reporting.
Taxpayers covered by search proceedings should carefully evaluate the reporting requirements of ITR-BN and maintain complete documentation to ensure accurate compliance with the new provisions.
Keywords: ITR-BN, Block Assessment, Income-tax Act 2025, CBDT Notification, Search Assessment, Block Return, Form ITR-BN, Income Tax Search Cases, CBDT Rules 2026, Income-tax Return for Block Assessment.
Also Read: “CBDT Notifies New Forms PAN CR-01 & PAN CR-02 for PAN Correction from 1 April 2026”
Also Read: FAQs and Guidance notes on Forms under Income-tax Rules, 2026
Read More: Union Budget 2026 – CA Cult
