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

Case: Rohan Mehta, a resident individual, holds crypto-assets through a trading account. A search is initiated on him in the tax year 2026-27 and the last authorisation is executed on 20 August 2026. Under the Income-tax Act, 2025, what is the block period for assessing undisclosed income, which includes virtual digital assets?

The block period is the six tax years preceding the tax year of search, plus the period from 1 April of the search year up to the date the last authorisation is executed. Virtual digital assets found are covered within undisclosed income for this block period.

  1. ASix tax years preceding the tax year of search, plus the period from 1 April of the search year to the date of execution of the last authorisationCorrect
  2. BTen tax years preceding the tax year of search only
  3. CSix tax years preceding the tax year of search only, excluding the part of the search year
  4. DThe search year alone, from 1 April to 31 March

Explanation

Section 301 defines block period as the six tax years preceding the year of search plus the period from 1 April of the search year to the date the last authorisation is executed. Option C omits the stub period of the search year. Virtual digital assets are expressly included in undisclosed income.

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