Understanding the time limits prescribed under the Income-tax Act for issuing various notices and completing assessments is crucial for both taxpayers and tax professionals. The following sections provide a detailed breakdown of timelines applicable to different types of income tax assessments under key sections of the Act.
Section 143(1) – Summary Assessment
- Notice Requirement: No notice required.
- Time Limit for Completion: The assessment under this section must be completed within 9 months from the end of the financial year in which the return is furnished.
Section 143(3) – Scrutiny Assessment
- Notice Requirement: Notice must be served within 3 months from the end of the financial year in which the return is furnished.
- Time Limit for Completion: The assessment must be completed within 12 months from the end of the assessment year in which the income was first assessable.
Note: The time limit was increased from 9 months to 12 months by the Finance Act, 2023 (effective from 01-04-2023).
Section 144 – Best Judgment Assessment
- Notice Requirement: No specific notice period prescribed.
- Time Limit for Completion: Assessment must be completed within 12 months from the end of the assessment year in which the income was first assessable.
Note: Time extended from 9 months to 12 months w.e.f. 01-04-2023.
Section 147 – Reassessment
For Notices Issued Till 31-08-2024
- Notice Issuance Timeline:
- Within 3 years or 10 years from the end of the relevant assessment year (depending on the circumstances).
For Notices Issued From 01-09-2024
- Section 148 Notice:
- To be issued within 3 years and 3 months or 5 years and 3 months from the end of the relevant assessment year.
- Section 148A Notice:
- To be issued within 3 years or 5 years from the end of the relevant assessment year.
- Time Limit for Completion: The reassessment must be completed within 12 months from the end of the financial year in which the notice for reassessment was served.
Fresh Assessment (No Specific Section)
- Notice Requirement: Not applicable.
- Time Limit: Within 12 months from the end of the financial year in which the order was received or passed.
Giving Effect to Appeal Orders
- Notice Requirement: Not applicable.
- Time Limit: Within 3 months from the end of the month in which the appellate order was received or passed.
Giving Effect to Any Finding or Direction
- Notice Requirement: Not applicable.
- Time Limit: Within 12 months from the end of the month in which such an order is received or passed.
Assessment of Partners (If Firm is Assessed)
- Notice Requirement: Not applicable.
- Time Limit: Within 12 months from the end of the month in which the firm’s assessment order is passed.
Time Limit for Updated Return Assessments
For updated returns filed under Section 139(8A), the 12-month time limit for completion of the assessment is counted from the end of the financial year in which the updated return is furnished.
Summary Table of Time Limits
| Section | Nature of Assessment | Time Limit to Issue Notice | Time Limit to Complete Assessment |
|---|---|---|---|
| Section 143(1) | Summary Assessment | Not applicable | 9 months from FY end of return filing |
| Section 143(3) | Scrutiny Assessment | Within 3 months from FY end of return filing | 12 months from end of assessment year |
| Section 144 | Best Judgment Assessment | Not applicable | 12 months from end of assessment year |
| Section 147 | Reassessment (till 31-08-2024) | Within 3 or 10 years from AY end | 12 months from FY end in which notice was served |
| Reassessment (from 01-09-2024) | Within 3Y3M or 5Y3M for Sec. 148; 3Y or 5Y for 148A | 12 months from FY end in which notice was served | |
| Fresh Assessment | Re-assessment ordered or remanded case | Not applicable | 12 months from FY end of order received or passed |
| Appeals | Giving effect to appellate order | Not applicable | 3 months from month end of order received or passed |
| Findings | Giving effect to finding or direction | Not applicable | 12 months from month end of order received or passed |
| Firm/Partner | Partner assessment if firm assessed | Not applicable | 12 months from month end of firm’s order |
| Updated Return | Return filed under Section 139(8A) | Not applicable | 12 months from FY end of updated return filing |
Conclusion
Understanding these statutory deadlines for issuing notices and completing assessments ensures both taxpayers and professionals stay compliant and avoid unnecessary litigations. The government’s move to streamline and extend certain timelines reflects its commitment to a more efficient and transparent tax administration. It is essential for taxpayers to monitor these timelines and respond to notices promptly to safeguard their rights and avoid penalties.