Section 132 Search and Seizure: Notices and How to Reply

An income tax search under Section 132 is usually over in a few days. The notices that follow run for years: the assessment of the searched person, notices to other people whose papers were found, penalty, and recovery against the seized assets.

Which notice your client gets, and how you reply, depends first on the date the search was initiated. The law for search assessments has changed three times since 2021. This guide sets out each route, the time limits, and the points that win or lose these cases.

Step one: which regime applies?

Search initiated	How the searched years are assessed	Main sections
On or before 31/03/2021	Assessment under Section 153A for the searched person; Section 153C for any other person whose material was found	153A, 153B (time limits), 153C, 153D (approval)
01/04/2021 to 31/08/2024	Reassessment under Sections 147 and 148; the search itself is treated as information that income has escaped assessment, and under the law before 01/09/2024 the Section 148A show cause procedure did not apply to the searched person (Section 148A was substituted from 01/09/2024, so check the version that governs the notice date)	147, 148, 149
On or after 01/09/2024 (under the 1961 Act)	Block assessment under Chapter XIV-B: one consolidated assessment for the block period	158B to 158BI, 113
Search under Section 247 of the 2025 Act	Block assessment under the corresponding chapter of the 2025 Act	247, 295 and related sections

The Income-tax Act, 2025 came into force on 01/04/2026, and Section 536 keeps proceedings for earlier tax years under the 1961 Act. Under the 2025 Act, the search power is Section 247 (the Ministry of Finance told the Lok Sabha on 09/02/2026 that it is in line with Section 132 and confers no new power), and the block assessment provisions continue, with Section 295 covering undisclosed income of other persons (the old Section 158BD).

What Section 132 allows

Section 132(1) lets the authorised officer search where, in consequence of information in his possession, the competent authority has reason to believe that a person:

• 132(1)(a): did not produce books or documents when summoned under Section 131(1) or required by a notice under Section 142(1);
• 132(1)(b): would not produce them if summoned or required; or
• 132(1)(c): is in possession of money, bullion, jewellery or other valuable articles or things representing wholly or partly income or property that has not been, or would not be, disclosed.

The clauses that follow set out the powers: enter and search (clause (i)), break open locks where keys are not available (ii), search persons (iia), require access to electronic records (iib), seize books, money and valuables (iii; stock-in-trade of a business is not seized but noted in an inventory), place marks of identification on books and make extracts or copies (iv), and make a note or inventory of money and valuables (v).

Can the search itself be challenged?

Rarely with success. In DGIT (Inv.) v. Spacewood Furnishers Pvt. Ltd. (Supreme Court, 13/05/2015), the High Court had quashed a search authorisation. The Supreme Court set that aside and allowed the department's appeal. A court can ask whether the reasons recorded have a rational connection to the belief, but testing the sufficiency and adequacy of those reasons is an appellate exercise outside writ jurisdiction.

And illegality in the search does not, by itself, keep the evidence out. In Pooran Mal v. Director of Inspection (Supreme Court, 14/12/1973) the Court held that evidence obtained in an illegal search or seizure is not excluded merely for that reason, where relevance is the test of admissibility.

So the real defence is in the assessment that follows, not in the warrant.

The statement under Section 132(4)

During the search the officer records statements on oath under Section 132(4). The statement can be used as evidence in any proceeding under the Act. Section 132(4A) adds a presumption that books, documents, money or valuables found in a person's possession belong to that person and that their contents are true.

What matters when the assessment comes:

• An admission is strong evidence, but not conclusive. There is no fixed time limit for a retraction, but its weight depends on when it is made and the evidence behind it. A bare retraction filed months later, with no explanation, is usually rejected, especially when seized documents corroborate the statement.
• A statement alone is a weak base for an addition. Ask what seized material supports each figure in the statement. Additions that rest only on a general "surrender" with no link to a document are open to challenge.
• A third person's statement needs the right procedure and cross-examination. In Pr. CIT v. Sajan Kumar Jain (Delhi High Court, 12/02/2021), additions in a Section 153A assessment rested on a statement recorded in the search of a third party. The Court dismissed the department's appeals: the assessee had no opportunity to cross-examine, and on those facts, if the statement was to be treated as incriminating material relating to a person other than the one searched, the department had to proceed under Section 153C. See our guide on cross-examination rights.
• Penalty depends on the statement. For searches from 15/12/2016, Section 271AAB(1A) set a penalty of 30% of undisclosed income where the assessee admitted it in the Section 132(4) statement, specified and substantiated the manner in which it was derived, and by the specified date paid the tax with interest and filed the return declaring it; otherwise 60%. Section 271AAB does not apply to searches initiated on or after 01/09/2024, which fall under the block assessment penalty instead.

Searches up to 31/03/2021: Sections 153A and 153C

After a search, the Assessing Officer issues a notice under Section 153A for the six assessment years before the year of search, and, where the conditions are met (broadly, for searches from 01/04/2017, escaped income represented in the form of an asset amounting to Rs 50 lakh or more for those years), for up to ten assessment years. Assessments pending on the date of search abate.

The key rule now comes from Pr. CIT v. Abhisar Buildwell (P.) Ltd. (Supreme Court, 24/04/2023). The Court agreed with the Delhi High Court in Kabul Chawla and the Gujarat High Court in Saumya Construction, and concluded:

1. On a search, the AO assumes jurisdiction under Section 153A.
2. Pending assessments abate.
3. Where incriminating material is found, the AO can assess the total income even for completed (unabated) years, taking that material and other material into account.
4. Where no incriminating material is found, the AO cannot assess or reassess completed or unabated years on the basis of other material. Those years can be reopened only under Sections 147 and 148, subject to their conditions.

The department's appeals were dismissed. The Bombay High Court applied it in Pr. CIT v. Milan Kavin Parikh (25/11/2025), dismissing the department's appeal where it was admitted that no incriminating material had been found.

How to reply to a Section 153A notice:

• For each year, find out whether the assessment was pending (abated) or completed on the date of search.
• For each completed year, ask the AO to identify the incriminating material found in the search that relates to that year. If there is none, object to any addition under Abhisar Buildwell.
• Check the Section 153D approval for each year; it must be granted before the order, by the authority named in the section.
• Check the time limit under Section 153B, counted from the end of the financial year in which the last authorisation was executed.

Section 153C applies to a person other than the one searched, where the AO is satisfied that money, bullion, jewellery or other valuables seized belong to that other person, or that books or documents seized pertain to, or contain information relating to, that person. The material is then handed over to that person's AO, who must in turn be satisfied that it has a bearing on that person's total income for each year assessed. Ask for the satisfaction note and the seized material relied on, year by year. Our Section 153C case-law compilation collects recent Tribunal decisions on the satisfaction requirement.

Searches from 01/04/2021 to 31/08/2024: reassessment

For these searches Sections 153A and 153C do not apply; the searched years are assessed by reassessment under Sections 147 and 148. In the version of Section 148 in force for these searches, the search was deemed to be information that income had escaped assessment for the three assessment years before the year of search, and the Section 148A procedure was not required in the searched person's case. Older years need the usual conditions and time limits; check the version of Sections 148, 148A and 149 that applies to the notice date.

The defences shift to the reassessment rules: the time limits in Section 149, the sanction of the specified authority under Section 151, and the scope of the reassessment. Our Section 148 reassessment guide covers them.

Searches on or after 01/09/2024: block assessment

The Finance (No. 2) Act, 2024 brought back block assessment for searches initiated, or requisitions made, on or after 01/09/2024:

• Block period: the six previous years before the previous year in which the search was initiated, plus the period from the start of that previous year to the date the last authorisation was executed. Regular assessments pending for the block period abate; there is one consolidated assessment.
• Notice under Section 158BC: the AO requires a return for the block period within the time stated, not exceeding 60 days. Filing late attracts interest and loses the penalty protection described below.
• Tax: undisclosed income of the block period is taxed at 60% under Section 113, plus surcharge and health and education cess.
• Interest and penalty: no interest under Sections 234A, 234B or 234C and no penalty under Section 270A on the undisclosed income; instead, Section 158BFA provides interest of 1.5% a month for a late return and a penalty of 50% of the tax on undisclosed income determined by the AO. Section 158BFA also gives relief from this penalty on conditions, broadly: the return is filed in response to the notice, the tax on it is paid (with evidence) or seized money is offered for adjustment, and no appeal is filed against the income so returned. Where the AO determines more undisclosed income than was returned, the penalty applies to the excess. Read the conditions in full before advising.
• Time limit: 12 months from the end of the month in which the last authorisation was executed. The Finance Act, 2025 changed this to 12 months from the end of the quarter of the last authorisation.
• Other persons: where the AO is satisfied that undisclosed income belongs to another person, the same procedure applies to that person under Section 158BD (Section 295 of the 2025 Act).

How to reply to a Section 158BC notice: file the return within the time allowed (the penalty protection depends on it), declare what the seized material genuinely shows, and support everything you do not declare with a reconciliation to the seized papers. Disputes on the rest go to appeal; the Dispute Resolution Panel route under Section 144C does not apply to block assessments.

Checklist for any post-search notice

1. Note the date of initiation of the search and the date the last authorisation was executed (from the panchnama).
2. Get copies of the panchnama, the inventory and the seized material relied on, and the Section 132(4) statements.
3. Map each addition to the seized document or other evidence behind it. List the additions with no document or admissible evidence behind them.
4. For completed years, apply the incriminating material test (153A cases) or the reassessment conditions (2021 to 2024 searches).
5. Check every approval and satisfaction note (153D, 153C, 151) and every time limit (153B, 149, 158BE).
6. If a statement is to be retracted, do it early, in writing, with the evidence.
7. Keep the penalty in view from the first reply: what is declared, when, and with what explanation decides it.

For the time limits across income tax notices, see our limitation periods guide. For defending additions for unexplained credits after a search, see our Section 68 burden of proof guide.

Frequently asked questions

Can a statement under Section 132(4) be retracted?

Yes. There is no fixed time limit. Delay weakens a retraction, but even a later one is considered if it is explained and backed by evidence showing the statement was wrong. Where seized documents support the statement, a bare retraction is usually rejected.

Can additions be made in a Section 153A assessment without incriminating material?

Not for completed or unabated years. Under Abhisar Buildwell (Supreme Court, 2023), if no incriminating material was found for such a year, the AO cannot assess it on other material; the year can only be reopened under Sections 147 and 148.

Does Section 153A apply to a search in 2025?

No. Sections 153A and 153C apply to searches initiated on or before 31/03/2021. A search initiated under the 1961 Act on or after 01/09/2024 leads to a block assessment under Chapter XIV-B; a search under Section 247 of the 2025 Act follows that Act's block assessment provisions.

What is the time limit for a block assessment?

For the searched person, twelve months from the end of the month in which the last authorisation was executed, changed by the Finance Act, 2025 to twelve months from the end of the quarter. Other persons assessed under Section 158BD have their own starting point, and statutory exclusions can extend both.

---

Received a Section 153A, 153C, 148 or 158BC notice after a search? Upload it to TaxNoticeAI for a draft reply that maps each addition to the seized material and the right time limit. Every draft is for professional review before filing.