The Central Board of Direct Taxes has formalised a new reporting route for search-linked block assessments through the introduction of Form ITR-BN, intensifying compliance demands for taxpayers involved in search and requisition cases from April 2026.
India’s Central Board of Direct Taxes has moved to formalise a new reporting route for search-linked block assessments by notifying Form ITR-BN under the Income-tax (Third Amendment) Rules, 2026. According to the notification dated 24 July 2026, the form applies to block assessment proceedings arising from search and requisition cases and is treated as effective from 1 April 2026, meaning it covers proceedings begun from the start of the current tax year.
The new return is tied to notices issued under section 294 of the Income-tax Act, 2025, and the filing period specified by the assessing officer cannot exceed 60 days. The form is designed for use in cases involving search under section 247 and requisition under section 248, with reporting requirements that include the dates of initiation and authorisation, the block period, and full notice details, including the document identification number. Tax on undisclosed income in the block period remains a flat 60%, with surcharge, if applicable, and cess added on top.
What sets ITR-BN apart is the level of disclosure it demands. As described in the notification and subsequent tax commentary, the form requires taxpayers to list every return already filed for each year covered by the block period, identify the legal basis for each filing, provide acknowledgement numbers, and disclose any pending assessments or reassessments under both the 1961 Act and the 2025 Act. It also calls for a detailed computation of undisclosed income, including valuable assets, virtual digital assets, expenditure claims, deductions and exemptions.
Tax advisers say the most contentious feature is likely to be Rule 180(4), which makes credits against undisclosed income other than self-assessment tax subject to verification and the satisfaction of the assessing officer. In practical terms, that means credits for tax deducted at source, tax collected at source and advance tax may not be automatically accepted in a block assessment. The result is a more demanding compliance burden and a sharper evidentiary fight before the return is even filed, rather than later in the hearing process.
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