Income Tax Department Enables Online Filing of ITR‑B for Section 158BC Taxpayers via e‑Proceeding Tab
📌 By Aaerm Law Associates — July 5, 2025
🧭 Overview
On July 4, 2025, the Income Tax Department announced a significant enhancement to its e‑filing portal: taxpayers who have received notices under Section 158BC can now submit Form ITR‑B online directly through the “e‑Proceeding” tab. This marks a major advancement in India’s ongoing digital tax transformation.
📘 What is ITR‑B & Who Must File
- Form ITR‑B is a specialized return for declaring undisclosed income discovered during search or seizure operations, as mandated under Section 158BC of the Income‑Tax Act.
- Applicable to cases when a search under Section 132 or requisition under Section 132A has occurred on or after September 1, 2024.
- The form covers a “block assessment period”—typically six assessment years preceding the year of the search, and possibly an additional partial year.
💻 Portal Update: e‑Proceeding Tab Integration
- As of July 4, 2025, taxpayers can upload Form ITR‑B, supplemented with necessary documentation, via the e‑Proceeding section on the Income Tax e‑filing portal.
- This digital update supports India’s vision for a faceless, paperless, and transparent tax administration, eliminating reliance on manual or offline submissions.
⏳ Deadline & Verification
- Taxpayers must file ITR‑B within 60 days of receiving a notice under Section 158BC, as per notification timelines.
- Returns must be submitted electronically, either with a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC)—depending on taxpayer category. Companies, political parties, and audited entities must use DSC; others may use EVC.
🗂️ Structure & Disclosure Requirements
Form ITR‑B mandates comprehensive reporting broken into multiple sections:
- General Information – PAN, name, address, search dates, block period
- Income Computation – Disclosure under salary, business, capital gains, etc.
- Undisclosed Income – Year-wise, source-wise breakdown across the block period
- Assets & Transactions – Valuation of cash, bullion, jewellery, virtual digital assets, specified international and domestic transactions
- Tax Liability – 60% flat rate on undisclosed income, plus surcharge, cess, and interest under Section 158BFA
- Credits & Payments – Claims for TDS, TCS, total prepaid taxes (excluding self-assessment tax)
- Verification & Declaration – Signed digitally or via EVC
🔍 Claims & Compliance
- Tax credits like TDS and advance tax against undisclosed income are permitted, pending assessment officer’s verification.
- Income from specified domestic or international transactions within the block period must be assessed separately and is excluded from ITR‑B disclosures.
⚠️ Compliance Gaps & Challenges
- A compliance gap emerged because the form became mandatory from Sept 1, 2024, but portal integration was delayed until July 2025, creating ambiguity for affected taxpayers.
- CBDT has not yet clarified relief mechanisms for those who received Section 158BC notices before the portal update but lacked access to ITR‑B.
🌟 Why This Matters
1. Seamless Digital Tax Funnel
- Incorporating e‑Proceeding reflects a shift toward a complete digital ecosystem, replacing physical forms and manual submissions with a faceless process.
2. Enhanced Transparency & Accountability
- Structured disclosures and third-party documentation (e.g., virtual assets, bullion) aim to bolster traceability and minimize underreporting.
3. Deterrence Through Higher Scrutiny
- A consistent 60% tax rate with applicable interest and surcharge underlines the seriousness of penalties for failing to comply.
4. Legal Certainty for Affected Taxpayers
- Portal enablement retrofits the law’s retrospective clause, but leaves open questions about grace for those who lacked timely online access.
✅ How to Comply Successfully
- Log into the e‑filing portal, and check under e‑Proceeding > Your Notices for any Section 158BC communication.
- Prepare Form ITR‑B with detailed disclosures: income, assets, and tax payments
- Choose DSC or EVC as per your taxpayer category
- Upload the digitally verified ITR‑B and supporting documents via the portal
- Submit within 60 days of notice issuance—it’s a hard deadline
- Follow up on e‑Proceeding for any notices or assessment responses
📝 Conclusion: A Leap Toward Digital Compliance
This update signifies a landmark moment for India’s income-tax digitization, especially for taxpayers impacted by search or seizure notices under Section 158BC. By enabling online filing of Form ITR‑B via the e‑Proceeding portal, the Income Tax Department aligns with global best practices and simplifies compliance protocols.
While structural clarity is needed to address the post-notification lag, this move offers a more transparent, accessible, and accountable system—ensuring taxpayers can meet obligations efficiently. Tax professionals and advisors should promptly alert affected clients to use the portal, avoid penalties, and maintain full compliance.
