Reassessment: Income Escaping Assessment, Sections 279 to 286

An assessment is not always final. Where income has escaped assessment, the Assessing Officer may reopen it, but only within strict procedure and time limits designed to protect the assessee from endless uncertainty. The law was rewritten in 2021 and again in 2024, and the Income-tax Act, 2025 carries the current scheme into sections 279 to 286. This note covers the procedure, the time limits and the leading cases.

1. From Reason to Believe to Information

• Old regime (to 31 March 2021). The officer could reopen if he had reason to believe that income had escaped assessment, within four or six years, and with longer periods in some cases.
• GKN Driveshafts v ITO (2003). The assessee is entitled to the reasons recorded, may file objections, and the officer must decide them by a speaking order before proceeding.
• Kelvinator (2010). A mere change of opinion on the same material is not a ground for reopening; there must be tangible material.
• 2021 regime. Reopening became based on information suggesting that income has escaped assessment, with a mandatory show cause procedure before the notice.

2. The Current Procedure

Figure 1: Sections 279 to 284 of the 2025 Act

• Section 279 (old s.147). Income chargeable to tax that has escaped assessment may be assessed or reassessed.
• Section 281 (old s.148A). Before issuing a notice, the officer gives the assessee an opportunity to show cause, with the information relied on, and passes an order deciding whether it is a fit case.
• Section 280 (old s.148). The reassessment notice, issued with the order and the prior approval of the specified authority (s.284, old s.151)
• Search cases. Since 1 September 2024, searches and requisitions are dealt with under the separate block assessment provisions (ss.292 to 299 of the 2025 Act), not reassessment.

3. Time Limits

Figure 2: Section 282 (old s.149), as amended from 1 September 2024

The Finance (No. 2) Act, 2024 replaced the earlier limits of three and ten years. A reassessment notice can now issue within 3 years and 3 months from the end of the relevant year, or within 5 years and 3 months where the income escaping assessment is Rs 50 lakh or more. The show cause notice must issue within 3 or 5 years respectively, and the extra three months allow time for the procedure. The sanctioning authority was also made uniform.

4. The Transition Litigation

Figure 3: Leading cases

• Union of India v Ashish Agarwal (2022). About 90,000 reassessment notices issued under the old provisions between April and June 2021, after the new regime took effect, were not quashed but treated as show cause notices under the new procedure.
• Union of India v Rajeev Bansal (2024). A three judge bench led by Chief Justice D.Y. Chandrachud held that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time to issue reassessment notices falling due during the pandemic, and that notices issued beyond the time surviving under the Act read with that law are time barred.

5. Frequently Asked Questions

What is the time limit for reopening an assessment where escaped income is Rs 50 lakh or more?

Five years and three months from the end of the relevant year, under the amendment effective from 1 September 2024. Where the escaped income is below Rs 50 lakh, the limit is three years and three months.

Can an assessment be reopened because the officer now takes a different view of the same facts?

No. Kelvinator (2010) held that a mere change of opinion is not a ground for reopening; there must be fresh tangible material or information.

6. Related Topics

• Topic 20: Return of Income and Assessment. The original assessment.
• Topic 22: Search, Seizure and Survey. Block assessment.
• Topic 24: Appeals and Revision. Challenging reassessment.