Navigating Income Tax Notice Under Section 158BC / 158BD: A Step-by-Step Guide

What This Notice Means

• Section: Issued under Section 158BC read with Section 158BD of the Income-tax Act, 1961.
• Context: Section 158BD notices are issued to a person (other than the person searched in a raid) when books of account, assets, or undisclosed income belonging to them are discovered during a search/seizure operation on another party.
• Subject Matter: You are required to prepare and submit a return of undisclosed income for the specified Block Period.
• Block Period Specified: Let’s say 01/04/2019 to 20/11/2025.

3. Mandatory Timeline & Requirements

• Filing Requirement: Prepare a true and correct return of income for the block period in the prescribed form and manner as per Rule 12AE of the Income-tax Rules, 1962.
• Deadline: The return must be filed within 60 days from the date of service of this notice.
• Important Note: Returns filed beyond the allowed 60-day period will not be considered valid under Section 139.

4. Recommended Action Steps

1. Verify Authenticity:
   • Log into the official e-Filing Portal (www.incometax.gov.in) and navigate to e-Proceedings or use the “Notice/Order Issued by ITD” tool to verify the DIN
2. Consult a Chartered Accountant / Tax Lawyer Immediately:
   • Block assessment proceedings under Sections 158BC / 158BD involve legal complexities, search-related findings, and specific income calculations across multiple years. Professional representation is strongly recommended.
3. Gather Relevant Financial Records:
   • Collect bank statements, asset purchase records, ITR filings, and books of account spanning the block period (let’s suppose April 1, 2019 to November 20, 2025).

The return mentioned in this notice (Form ITR-B) must be submitted online through the Income Tax Department’s official e-filing portal.

How to Access and Submit the Return

1. Log in to the Portal:
   • Go to the Income Tax e-Filing Portal: incometax.gov.in.
   • Log in using your PAN (ACCPH9521P) and password.
2. Navigate to the Notice Response:
   • Go to the e-File or Pending Actions tab on the top menu.
   • Select e-Proceedings.
   • Look for the notice corresponding to DIN
3. Select the Required Form:
   • Click on Submit Response or Submit Return in response to notice u/s 158BC / 158BD.
   • Select Form ITR-B (the prescribed form under Rule 12AE for block period returns).
4. Fill and Verification:
   • Prepare and complete the utility for Form ITR-B covering the block period (01/04/2019 to 20/11/2025).
   • Submit and verify the return using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Important Reminder:

• Deadline: You must file this within 60 days of receiving the notice.
• No Revisions Allowed: Under Section 158BC, a revised return cannot be filed once Form ITR-B is submitted. Ensure all numbers and disclosures are verified with a tax professional before final submission.

So everything needs to be done online only ?

Yes, the process is fully online.

Under the Income Tax Department’s e-Proceedings framework, physical visits to the Income Tax Office or submitting paper documents are no longer required (nor generally accepted) for filing returns or responding to notices under Section 158BC / 158BD.

• Form Submission: Form ITR-B must be completed and submitted directly through the e-Filing portal.
• Supporting Documents & Explanations: If the Assessing Officer (AO) asks for clarifications, written replies, or documentary evidence (e.g., bank statements, invoices, sale deeds), these are uploaded as PDF attachments (up to 5 MB per file) directly under Pending Actions > e-Proceedings.
• Verification: The return is verified digitally using an Electronic Verification Code (EVC) via Aadhaar/Net Banking, or a Digital Signature Certificate (DSC). No paper acknowledgement needs to be posted.

When a Physical Visit/Hearing Might Happen

While filing and responding are strictly electronic, physical or video interactions are rare exceptions:

1. Summons or Personal Attendance Notice: If the Officer specifically issues a separate summons under Section 131 requiring personal attendance or original document production (though even many of these are handled via Video Conferencing).
2. Complex Evidence Audits: If physical examination of original seized books/documents is required at the tax office by your legal representative.

Summary: You or your authorized representative (e.g., a CA or tax advocate) will manage the entire response—from drafting replies and filling Form ITR-B to submitting supporting documents—strictly through the incometax.gov.in portal.

What should we do ?

Handling a block assessment notice under Section 158BC / 158BD requires a structured sequence of technical actions.

Because no revised return is allowed under Section 158BC once submitted, filing Form ITR-B is the last step in the sequence—not the first.

Here is the exact step-by-step roadmap of what you should do:

Step 1: Compare Previously Filed ITRs & Financial Data

• Extract Past Returns: Download all original ITR acknowledgments, computation sheets, Form 26AS, and AIS/TIS for each financial year in the block period (FY 2019–20 through FY 2025–26).
• Verify Reported Income: Confirm exactly what income, turnover, gains, and bank accounts were disclosed in those original filings.

Step 2: Review Bank Statements & Prepare Reconciliations

• Consolidate All Accounts: Gather complete bank statements for all bank accounts held during the entire block period.
• Identify Unexplained Credits: Match every deposit, transfer, and transaction against your declared sources of income (salary, business revenue, investments, property transactions).
• Prepare a Year-Wise Reconciliation Sheet: Create a line-by-line reconciliation comparing:
  1. Gross bank credits vs. Income disclosed in past ITRs.
  2. Expenses claimed vs. Actual bank debits.

Step 3: Reconstruct / Prepare Books of Account

• Build Financial Books: If formal books of account (Ledgers, Cash Book, Profit & Loss, Balance Sheet) were not maintained or audited for any year in the block period, re-construct them using bank statements, invoices, receipts, and contract notes.
• Isolate Undisclosed Income: Clearly segregate disclosed income (already reported in past returns) from undisclosed income (unaccounted deposits, unrecorded cash transactions, or unverified investments).

Step 4: File Form ITR-B (Final Step)

• Consolidate Results: Populate Form ITR-B with the combined income details across the block period.
• Submit Online: File the return on the e-filing portal strictly within the 60-day window.

Recommended Action Summary