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CA Final · Direct Tax Laws & International Taxation · Taxation of Digital Transactions

A search was initiated on Kabir in the tax year 2026-27, and the last authorisation was executed on 20 August 2026. Under section 301 of the Income-tax Act, 2025, which describes the block period, and does a virtual digital asset found unexplained qualify as undisclosed income?

The block period is the six tax years preceding the search year plus 1 April 2026 to 20 August 2026, the date the last authorisation was executed. A virtual digital asset representing income or property not disclosed is expressly included in undisclosed income under section 301.

  1. ASeven tax years preceding the search; virtual digital assets are excluded
  2. BSix tax years preceding the year of search plus 1 April 2026 to 20 August 2026; a virtual digital asset can be undisclosed incomeCorrect
  3. COnly the tax year 2026-27; virtual digital assets are excluded
  4. DSix tax years preceding the year of search only; virtual digital assets are included

Explanation

Section 301(a) defines the block period as six tax years preceding the year of search plus the period from 1 April of the search year to the date of execution of the last authorisation. Section 301(e) expressly includes a virtual digital asset representing undisclosed income or property. Hence the second option is correct.

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