s.158BE — Time limit for completion of block assessment
Fixes the last date for a block order: twelve months from the end of the quarter in which the search concluded under the 1961 Act, against eighteen months from the end of the quarter of initiation under the 2025 Act.
Applies to a search initiated, or requisition made, from 1 September 2024 to 31 March 2026. The Finance Act, 2025 amended the section with effect from 1 September 2024: "month" became "quarter" in sub-sections (1) and (3), the thirteen month provisos were added, and the court stay clause was substituted. The Finance Act, 2026 did not amend it. The counterpart in the Income-tax Act, 2025 is section 296, which applies to a search initiated on or after 1 April 2026. The Finance Act, 2026 substituted section 296(1) with effect from 1 April 2026, so the two Acts now differ in both the length of the period and the event from which it runs.
Income-tax Act, 1961
s.158BE
Income-tax Act, 2025
s.296
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 158BE(1) of the Income-tax Act, 1961 requires the order under section 158BC to be passed "within twelve months from the end of the quarter in which the last of the authorisations for search under section 132, or requisition under section 132A, was executed or made". In a search the last authorisation is executed on the conclusion of the search as recorded in the last panchnama. The first proviso extends the period by twelve months where a reference is made to the Transfer Pricing Officer under section 92CA(1). The second reads twelve months as thirteen where the thirty day extension for the block return was granted. Sub-section (2) excludes the period, not exceeding one hundred and eighty days, from the initiation of the search to the handing over of the seized books and assets to the Assessing Officer having jurisdiction, after which the period runs to the end of the month. Sub-section (3) gives the other person under section 158BD twelve months from the end of the quarter in which the notice under section 158BC was issued to him, with the same two provisos. Sub-section (4) excludes the periods listed in its ten clauses, among them a court stay, a special audit and a reference to the Valuation Officer, and extends the remaining period to sixty days where less is left. The section applies to a search initiated from 1 September 2024 to 31 March 2026. For a search initiated on or after 1 April 2026 the counterpart is section 296 of the Income-tax Act, 2025. Section 296(1), as substituted by the Finance Act, 2026, allows eighteen months from the end of the quarter in which the search was initiated or the requisition was made, with no separate limb for an extended return. A search initiated on 12 November 2026 gives an order due by 30 June 2028. A search under the 1961 Act initiated on 20 December 2025 and concluded on 3 January 2026 gives 31 March 2027. Both dates are before any exclusion.
What the provision does
Fixes the last date for the block order, for the person searched and for the other person, and lists the periods left out of the count. It does not fix any time for issuing the notice under section 158BC or for recording satisfaction under section 158BD. It does not apply the sixty day floor after the handing over exclusion in sub-section (2), which carries only the end of month rule. And it was not amended by the Finance Act, 2026, so the eighteen months in section 296(1) of the 2025 Act are not available for a search initiated before 1 April 2026.
Threshold questions
- Whether the search was initiated before 1 April 2026, so that section 158BE applies, or on or after that date, so that section 296 of the 2025 Act applies
- Whether the document relied on as the last panchnama in fact records the conclusion of the search, since under the 1961 Act the quarter in which it falls fixes the limitation date
- Whether the thirty day extension for the block return was granted, which makes the period thirteen months under the 1961 Act
- Whether a reference to the Transfer Pricing Officer was made, which adds twelve months under either Act
- Whether the date on which the seized material was handed over to the Assessing Officer is on record, since that exclusion runs from the initiation of the search and cannot exceed one hundred and eighty days
- Whether each other exclusion claimed, such as a court stay or a special audit, is evidenced by its start and end dates
- Whether, for the other person, the order was passed within twelve months from the end of the quarter in which the notice was issued to him
In practice
The recurring disputes.
Which panchnama is the last one under the 1961 Act
Under section 158BE(1) the period runs from the end of the quarter in which the last authorisation was executed, and a panchnama drawn a few days into a new quarter moves the limitation date by three months. The assessee's case rests on CIT v. S.K. Katyal (Delhi High Court, ITA 1198/2008, 12 November 2008). The panchnama the provision refers to "is a panchnama which documents the conclusion of a search" and "must be one which, in fact and not just in form, records the conclusion of search". A hiatus must be explained, and a panchnama drawn on a date does not prove that a search was conducted or concluded on that date. The Revenue's case rests on VLS Finance Ltd. v. CIT (Supreme Court, Civil Appeal No. 2667 of 2007, 28 April 2016), which counted limitation from a later panchnama. That was on the facts of that case, where the later visits had never been challenged, and the Court said it was deciding the point without going into the legal niceties. The question remains a limitation question for every search up to 31 March 2026, and it turns on what was done on the later date. Under section 296(1) of the 2025 Act the last panchnama no longer affects limitation.
The starting date where there is a requisition
Section 158BE(1) runs from the quarter in which the last authorisation for search, or requisition under section 132A, "was executed or made, as the case may be". The assessee's case is that those words are naturally read as the making of the requisition. That is the event from which section 296(1) of the 2025 Act runs, and from which abatement runs under section 158BA(2). The Revenue may rely on the Explanation to section 158B, which treats the authorisation in a requisition case as executed on the actual receipt of the books, documents or assets by the Authorised Officer, a later date. The point has not been decided.
Whether a stay of a special audit direction is a stay of the assessment
The old chapter excluded "the period during which the assessment proceeding is stayed by an order or injunction of any court". In VLS Finance the Supreme Court read that to cover a stay of a special audit direction, because the special audit "was an integral step towards assessment proceedings", although the assessment itself had not been stayed. The Revenue's case is that section 158BE(4)(i) and section 296(7)(a) still speak of a stay on the assessment proceedings, so that reading remains available. The exclusion now runs to the receipt of the certified copy of the vacating order, a later date than the order. The assessee's case is that a court challenge to a special audit direction now has its own exclusion, which ends when the order setting the direction aside is received (section 158BE(4)(iv)(b); section 296(7)(d)(ii), which requires the certified copy). A stay of the direction, on this view, is governed by that clause and is not a stay on the assessment proceedings. The Revenue will answer that the clause gives an end date only where the direction is set aside. Which clause governs a stayed special audit direction has not been decided on the current text.
When a search is initiated for the eighteen month limit
Section 296(1) of the 2025 Act runs from the end of the quarter in which the search was initiated, and the block provisions of neither Act define when that is. One reading takes the date of the authorisation, as the first formal act. The other takes the date on which the authorised officers commence the search. Either the assessee or the Revenue may take either reading, depending on the quarter in which each date falls. The second fits the text better. The exclusions from undisclosed income speak of books maintained "before the date of initiation of search". They treat the period "commencing from the date of initiation of the search" and ending with the last authorisation as a period of the operation. Saroj Kumar Sahoo v. National Faceless Assessment Centre (Orissa High Court, W.P.(C) No. 30861 of 2025, 18 February 2026) tested pendency "as on the date of search", though the date of the warrant was not in issue there. The first reading would let a warrant signed in one quarter and executed in the next alter the time limit by the Department's own timing. The firm's view is that initiation is the commencement of the search under the authorisation.