Section 293 Income Tax Act 2025: How Is Undisclosed Income Computed?

Section 293 sets out the computation of total undisclosed income for a block period following a search or requisition. It distinguishes income already assessed, returned or recorded in ordinary books from income liable to be determined in block assessment.

What does Section 293 provide?

Under Section 293(1), the total undisclosed income of the block period is the aggregate of (a) undisclosed income declared in the return furnished under Section 294 and (b) undisclosed income determined by the Assessing Officer under Section 293(4). This is the statutory starting point for the computation; exclusions and other specific rules must also be considered.

Which income is excluded under Section 293(2)?

The section is designed to avoid treating qualifying income already assessed, disclosed or recorded in the ordinary course as undisclosed merely because a search occurred.

Previously assessed income - Section 293(2)(a)

Income determined or assessed under the specified provisions of the 2025 Act or the 1961 Act before initiation of search or requisition is excluded for the relevant tax years in the block period.

Previously returned income - Section 293(2)(b)

Income declared in returns or in response to the specified notices before the search or requisition, and not already covered by clause (a), is excluded.

Income recorded in ordinary books - Section 293(2)(c)

Subject to the statutory timing and record-keeping conditions, income computed from books of account and documents maintained in the normal course is excluded for three situations: a completed tax year for which the return due date has not expired; the period from 1 April of the search year to the day before search or requisition; and the period from the search or requisition date through execution of the last authorisation. The date on which entries were made is material.

Specified income - Section 293(2)(d)

The provision also excludes the income referred to in Section 207(8), Section 216 and the specified entry in Section 393(1) of the 2025 Act, and corresponding provisions expressly named from the 1961 Act.

How does the Assessing Officer determine undisclosed income?

Section 293(3) allows the Assessing Officer to recompute income claimed under Section 293(2)(c) if any part is considered undisclosed. Under Section 293(4), undisclosed income is computed on the basis of evidence found from search, survey or requisition, together with other material or information available to or coming to the Assessing Officer during proceedings under Part B.

A taxpayer should reconcile seized records, regular books, previously filed returns, bank records and supporting documents. The existence and timing of contemporaneous records can be important when establishing that income was already disclosed or ordinarily recorded.

Special computation rules under Section 293

Transfer pricing - Section 293(5)

Income relating to an international transaction or specified domestic transaction under Section 166 for the defined portion of the tax year in which the last search authorisation was executed is excluded from block undisclosed income and considered under the Act's other assessment provisions, where the conditions in subsection (5) are met.

Firms and other deeming provisions - Section 293(6)

For a firm, the specified computation is made before deduction of remuneration or similar payments to a partner who is not a working partner. Sections 102 to 105 relating to unexplained amounts, and Section 166 concerning transfer pricing, apply to the extent prescribed by subsection (6).

Tax and brought-forward losses - Sections 293(7) to (9)

Section 293(7) links the charge on block undisclosed income to Section 292(7). Under Section 293(8), losses brought forward from a tax year preceding the first year of the block period and unabsorbed depreciation under Section 33(11) cannot be set off against undisclosed income determined in block assessment. Section 293(9) preserves the possibility of carrying those amounts forward for eligible later set-off, subject to the remaining statutory period and conditions.

Relevant statutory terms

Practical illustration

Suppose a search reveals unrecorded receipts of Rs. 24 lakh. The taxpayer had also already disclosed Rs. 10 lakh of other income in a return filed before the search. If the Rs. 10 lakh qualifies for exclusion under Section 293(2), it is not added merely because it falls within the block period. The Rs. 24 lakh must be examined against the evidence and other applicable rules before the undisclosed income is finally determined. This is an illustrative example, not an automatic assessment formula.

Frequently asked questions

Does all income earned during the block period become undisclosed income?

No. Section 293(2) provides specific exclusions for previously assessed, returned and qualifying ordinarily recorded income.

Can the Assessing Officer rely on material other than seized documents?

Yes. Section 293(4) includes other information available to or coming to the Assessing Officer during the relevant proceedings.

Can brought-forward losses reduce block undisclosed income?

Not where the prohibition in Section 293(8) applies. Later carry-forward treatment is addressed separately by Section 293(9).

Which older provision is comparable?

Section 158BB of the Income-tax Act, 1961 is broadly comparable, but the operative wording and amendments applicable to the case must be checked.

Official law and related provisions

Updated: 11 November 2026. This article is general legal information; verify amendments and procedural rules relevant to the particular search or requisition.