In a significant move aimed at strengthening tax compliance and streamlining assessments related to undisclosed income, the Income Tax Department has notified a new return form—Form ITR-B. This specialized return form is applicable to taxpayers on whom a search or requisition operation has been initiated on or after September 1, 2024.
What is Form ITR-B?
Form ITR-B is a unique income tax return form that must be filed by individuals or entities where search or requisition operations (under Sections 132 or 132A of the Income Tax Act) have been conducted. The purpose of this form is to report undisclosed income that has been identified during these operations.
Unlike regular income tax return forms, which relate to a single assessment year, Form ITR-B deals with a “block assessment period”. This period typically covers several assessment years—reflecting the time span during which the taxpayer is suspected of having concealed income.
Why Was Form ITR-B Introduced?
The introduction of ITR-B aligns with amendments made to Chapter XIV-B of the Income Tax Act, which governs assessments in search and seizure cases. These amendments shift the focus of assessment from “total income” to “undisclosed income”, making the process more targeted and specific to findings from such operations.
This change is a part of the government’s broader efforts to tighten the tax net, reduce black money, and ensure better compliance.
Who Should File Form ITR-B?
This form is mandatory for:
- Any person (individual, company, HUF, firm, etc.) against whom a search or requisition action has been initiated on or after September 1, 2024.
- Taxpayers who have received a notice under Section 158BC of the Income Tax Act.
Deadline for Filing
The ITR-B form must be filed within 60 days from the date of receiving the notice under Section 158BC. This makes timely action crucial for affected taxpayers to avoid penalties and further legal implications.
Key Highlights of Form ITR-B
- Covers multiple years: Focuses on a “block period” instead of a single year.
- Exclusive to search/requisition cases: It cannot be used for normal return filings.
- Focus on undisclosed income: It helps the department identify income not declared earlier.
- Filing mandate: Required to be submitted only after a search/requisition notice.
What Taxpayers Need to Do
- Review the Notice Carefully: Understand the scope and reason behind the notice received under Section 158BC.
- Collect Relevant Records: Maintain proper documentation, especially for assets, cash, jewellery, or transactions that may have surfaced during the search.
- Declare Accurately: Ensure that all undisclosed income and assets are declared truthfully in Form ITR-B.
- Consult a Tax Expert: Given the legal and financial implications, professional guidance is recommended for accurate filing and representation.
- Meet the Deadline: File the return within the stipulated 60-day period to remain compliant and avoid any penalties.
Form ITR-B marks a major step in formalizing the process of assessing and taxing undisclosed income. It reflects the government’s intent to enhance transparency and ensure that tax evasion is promptly addressed. For taxpayers involved in search or requisition cases, staying informed and compliant with this new requirement is not just essential—it’s critical.
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