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ITA Chapter 16

Inquiry before assessment

  1. For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 263 or in whose case the time allowed under section 263(1) for furnishing the return has expired, a notice requiring him, on a date to be specified therein,—
    1. where such person has not made a return within the time allowed under section 263(1) or before the end of the financial year succeeding the relevant tax year, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in such form and verified in such manner and setting forth such other particulars as may be prescribed;
    2. to produce, or cause to be produced, such accounts or documents as the Assessing Officer may require;
    3. to furnish in writing and verified in the manner as may be prescribed information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the Assessing Officer may require.
  2. For the purposes of sub-section (1),—
    1. the previous approval of the Joint Commissioner shall be obtained by the Assessing Officer before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts;
    2. the Assessing Officer shall not require the production of any accounts relating to a period more than three years prior to the relevant tax year.
  3. A notice under sub-section (1)(a) may also be served by the prescribed income-tax authority.
  4. For the purposes of obtaining full information in respect of the income or loss of any person, the Assessing Officer may make such inquiry as he considers necessary.
  5. If, at any stage of the proceedings before him, the Assessing Officer, having regard to—
    1. the nature and complexity of the accounts; or
    2. volume of the accounts; or
    3. doubts about the correctness of the accounts; or
    4. multiplicity of transactions in the accounts; or
    5. specialised nature of business activity of the assessee,
    and interests of the revenue, is of the opinion that it is necessary so to do, he may, after giving the assessee a reasonable opportunity of being heard, and with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, direct the assessee to get either or both of the following:—
    1. to get the accounts audited by an accountant, and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars, as may be prescribed, and such other particulars as the Assessing Officer may require;
    2. to get the inventory valued by a cost accountant, and to furnish a report of such inventory valuation in the prescribed form as duly signed and verified by such cost accountant and setting forth such particulars, as may be prescribed, and such other particulars as the Assessing Officer may require.
  6. The accountant or the cost accountant as referred to in sub-section (5) shall be nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner for the purposes of the said sub-section.
  7. The provisions of sub-section (5) shall have effect irrespective of whether or not accounts of the assessee have been audited under any other law for the time being in force or otherwise.
  8. Every report under sub-section (5) shall be furnished by the assessee to the Assessing Officer within such period as specified by the Assessing Officer.
  9. The Assessing Officer may, on his own motion, or on an application made in this behalf by the assessee and for any good and sufficient reason, subject to the provisions of sub-section (10), extend the period referred to in sub-section (8) by such further period or periods as he thinks fit.
  10. The aggregate of the period originally fixed under sub-section (8) and the period or periods so extended, as referred to in sub-section (9), shall not, in any case, exceed six months from the end of the month in which the direction under sub-section (5) is received by the assessee.
  11. The expenses of any audit or inventory valuation under sub-section (5) (including incidental expenses and remuneration of the accountant or the cost accountant) shall be—
    1. determined by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as per such guidelines issued in this behalf; and
    2. paid by the Central Government.
  12. The assessee shall, except where the assessment is made under section 271, be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under sub-section (4), or any audit or inventory valuation under sub-section (5) and proposed to be utilised for the purposes of the assessment.
  13. For the purposes of this section, “cost accountant” means a cost accountant as defined in section 2(1)(b) of the Cost and Works Accountants Act, 1959 (23 of 1959) and who holds a valid certificate of practice under section 6(1) of the said Act.

Estimation of value of assets by Valuation Officer

  1. The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including the fair market value, of any asset, property or investment and submit a copy of report to him.
  2. The Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee.
    1. For estimating the value, including the fair market value, of the asset, property, or investment, the Valuation Officer or any engineer, overseer, surveyor, or assessor authorized by such Valuation Officer, may, subject to any rules made in this regard and at such reasonable times, as may be prescribed,—
      1. enter any land within the limits of the area assigned to the Valuation Officer; or
      2. enter any land, building, or other place belonging to or occupied by any person in connection with whose assessment a reference has been made to the Valuation Officer; or
      3. inspect any asset, property, or investment in respect of which a reference has been made to the Valuation Officer.
    2. The Valuation Officer or any engineer, overseer, surveyor, or assessor, may require any person in charge of, or in occupation or possession of, such land, building, or other place or such asset, property, or investment to afford the necessary facility to:—
      1. survey or inspect such land, building, or other place or such asset, property, or investment;
      2. estimate its value; or
      3. inspect any books of account, document, or record relevant for the valuation of such asset, property, or investment and gather other particulars relating to it.
    3. The Valuation Officer, engineer, overseer, surveyor, or assessor shall enter any land, building or place referred to in clause (a)(ii), or inspect any asset, property, or investment referred to in clause (a)(iii), with the consent of the person in charge of, or in occupation or possession of, such land, building, place, or asset, property, or investment, after providing such person at least two days’ notice in writing of his intention to do so.
    4. If a person who, under this sub-section, is required to afford any facility to the Valuation Officer or the engineer, overseer, surveyor, or assessor, either refuses or evades to afford such facility, the Valuation Officer shall have all the powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters,—
      1. discovery and inspection;
      2. enforcing the attendance of any person, including any officer of a banking company, and examining him on oath;
      3. compelling the production of books of account and other documents; and
      4. issuing commissions.
  4. The Valuation Officer shall estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee.
  5. The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions.
  6. The Valuation Officer shall send the report of the estimate made under sub-section (4) or (5), to the Assessing Officer and the assessee.
  7. With a view to rectifying any mistake apparent from the record, the Valuation Officer may amend any report made by him, as per section 287.
  8. The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment.
  9. The Valuation Officer shall send the report referred to in sub-section (6) within six months from the end of the month in which the reference is made under sub-section (1).
  10. For the purposes of this Act,—
    1. the Central Government may appoint as many Valuation Officers, as necessary; and
    2. subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, a Principal Chief Commissioner, or a Chief Commissioner, or a Principal Commissioner or a Commissioner may appoint as many engineers, overseers, surveyors and assessors as may be necessary to assist the Valuation Officers in the performance of their functions.

Assessment

  1. Where a return has been made under section 263, or in response to a notice under section 268(1) such return shall be processed in the following manner:—
    1. the total income or loss shall be computed after making the adjustments towards the following:—
      1. any arithmetical error in the return; or
      2. an incorrect claim, if such incorrect claim is apparent from any information in the return; or
      3. any such inconsistency in the return, with respect to the information in the return of any preceding tax year, as may be prescribed; or
      4. disallowance of loss claimed, if return of the tax year for which set off of loss is claimed was furnished beyond the due date specified under section 263(1); or
      5. disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return; or
      6. disallowance of deduction claimed under any of the provisions of Chapter VIII-C, if the return is furnished beyond the due date specified under section 263(1);
    2. the tax, interest and fee, if any, shall be computed on the basis of the total income computed under clause (a);
    3. the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax, interest and fee, if any, computed under clause (b) by—
      1. any tax deducted at source;
      2. any tax collected at source;
      3. any advance tax paid;
      4. any rebate or relief allowable under Chapter IX;
      5. any tax paid on self-assessment; and
      6. any amount paid otherwise by way of tax, interest or fee;
    4. an intimation shall be sent to the assessee specifying the sum determined to be payable by, or refund due to, the assessee under clause (c); and
    5. the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee.
  2. Before making any adjustment under sub-section (1)(a),—
    1. a communication is to be given to the assessee of such adjustments either in writing or in electronic mode;
    2. the response received from the assessee in this regard, if any, shall be considered; and in a case where no response is received within thirty days of the issue of such communication, such adjustments shall be made and thereafter the intimation under sub-section (1)(d) shall be sent.
  3. For the purposes of sub-section (1), an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him.
  4. No intimation under sub-section (1) shall be sent after the expiry of nine months from the end of the financial year in which the return is made.
  5. For the purposes of sub-sections (1) to (4),—
    1. “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return,—
      1. of an item, which is inconsistent with another entry of the same or some other item in such return; or
      2. in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
      3. in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
    2. “the acknowledgement of the return” shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under sub-section (1)(c), and where no adjustment has been made under sub-section (1)(a).
  6. For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section.
  7. The scheme made under sub-section (6) shall, as soon as may be laid before each House of Parliament.
  8. Where a return has been furnished under section 263 or in response to a notice under section 268(1), the Assessing Officer or the prescribed income-tax authority, if, considers it necessary or expedient to ensure that the assessee—
    1. has not understated the income;
    2. has not computed excessive loss;
    3. has not under-paid the tax in any manner,
    shall serve on the assessee a notice requiring him, on a date to be specified therein,—
    1. either to attend the office of the Assessing Officer; or
    2. to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return.
  9. No notice under sub-section (8) shall be served on the assessee after the expiry of three months from the end of the financial year in which the return is furnished.
  10. On the day specified in the notice issued under sub-section (8), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer, subject to the provisions of sub-sections (11) and (13), shall—
    1. by an order in writing, make an assessment of the total income or loss of the assessee; and
    2. determine the sum payable by him or refund of any amount due to him on the basis of such assessment.
  11. In the case of entities referred to in sub-section (12), which are required to furnish the return of income under section 263(1)(a)(iv), no order under sub-section (10) making an assessment of the total income or loss of any such entity shall be made by the Assessing Officer, without giving effect to the provisions of section 11, unless—
    1. the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions mentioned in Schedule III (Table: Sl. No. 23, 24 or 25), by such entity, where in his view such contravention has taken place; and
    2. the approval granted to such entity has been withdrawn or notification issued in respect of such entity has been rescinded.
  12. For the purposes of sub-section (11), the entities shall be—
    1. a research association referred to in Schedule III (Table: Sl. No. 23);
    2. an association or institution referred to in Schedule III (Table: Sl. No. 24);
    3. an institution referred to in Schedule III (Table: Sl. No. 25).
  13. In the case of a registered non-profit organisation, where the Assessing Officer is satisfied that any such entity has committed any specified violation as mentioned in section 351(1), he shall—
    1. send a reference to the Principal Commissioner or Commissioner to withdraw the approval or registration; and
    2. no order under sub-section (10) making an assessment of the total income or loss of such registered non-profit organisation shall be made by him without giving effect to the order passed by the Principal Commissioner or Commissioner under section 351(2)(ii)(A) or (B).
  14. While making an assessment under sub-section (10), where the Assessing Officer is satisfied that the activities of the university, college or other institution referred to in section 45(3)(a) (herein referred to as entity) are not being carried out in accordance with all or any of the conditions subject to which such entity was approved, then—
    1. he may, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned entity, recommend to the Central Government to withdraw the approval; and
    2. the Central Government may by order, withdraw the approval and forward a copy of the order to the concerned entity and the Assessing Officer.
  15. Where a regular assessment under sub-section (10) or section 271 is made,—
    1. any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment;
    2. if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.

Best judgment assessment

  1. If any person—
    1. fails to furnish the return required under section 263(1) or (4) or (5) or (6); or
    2. fails to comply with all the terms of a notice issued under section 268(1) or fails to comply with a direction issued under section 268(5); or
    3. having made a return, fails to comply with all the terms of a notice issued under section 270(8),
    the Assessing Officer, after taking into account all relevant materials which he has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment.
  2. The Assessing Officer before making an assessment under sub-section (1) shall, subject to the provisions of sub-section (3), serve a notice on the assessee to show cause, on a date and time to be specified in the notice, as to why assessment should not be completed to the best of his judgment.
  3. It shall not be necessary to give the opportunity referred to in sub-section (2) in a case where a notice under section 268(1) has been issued prior to the making of an assessment under this section.

Power of Joint Commissioner to issue directions in certain cases

  1. A Joint Commissioner may, on his own motion or on a reference being made to him by the Assessing Officer or on the application of an assessee, call for and examine the record of any proceeding in which an assessment is pending and, if he considers that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may—
    1. issue such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment; and
    2. such directions shall be binding on the Assessing Officer.
  2. No directions which are prejudicial to the assessee shall be issued under sub-section (1) without giving an opportunity of being heard to the assessee.
  3. For the purposes of this section, no direction as to the lines on which an investigation connected with the assessment should be made, shall be deemed to be a direction prejudicial to the assessee.

Faceless Assessment

  1. Irrespective of anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under section 270(10) or 271 or 279, as the case may be, with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per such procedure, as may be prescribed in this behalf.
  2. The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.
  3. The Board may, for the purposes of faceless assessment, set up the following Centre and Units and specify their functions and jurisdiction:—
    1. a National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner including assigning the case selected for the purposes of faceless assessment under this section to a specific assessment unit, intimating the assessee that assessment in his case shall be completed in accordance with the provision of this section, serving a notice to the assessee under section 268(1) or 270(8), and forwarding any response of the assessee to the assessment unit;
    2. such assessment units, as it may deem necessary to conduct the faceless assessment, to perform the function of making assessment, which includes analysis of the material furnished by the assessee or any other person, identification of points or issues material for the determination of any liability (including refund) under this Act, seeking information or clarification on points or issues so identified, determination of any variation prejudicial to the assessee, and such other functions as may be required for the purposes of making faceless assessment;
    3. such verification units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of account, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification;
    4. such technical units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter under this Act or an agreement entered into under section 159, which may be required in a particular case or a class of cases, under this section;
    5. such review units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of review of any variation proposed by the assessment unit (wherever it is so considered necessary by the National Faceless Assessment Centre), which includes checking whether the relevant and material evidence has been brought on record, relevant points of fact and law have been duly incorporated, the issues requiring addition or disallowance have been incorporated and such other functions as may be required for the purposes of review.
  4. In accordance with the procedure as may be prescribed under sub-section (1),—
    1. the verification unit, the technical unit and the review unit shall facilitate the conduct of faceless assessment; and
    2. the assessment unit shall—
      1. make the assessment of the total income or loss by an order in writing after taking into account all relevant material which it has gathered and after giving the assessee an opportunity of being heard, and may also initiate penalty proceedings, if any;
      2. determine the sum payable by the assessee or refund of any amount due to him on the basis of such assessment.
  5. For the purposes of this section, the terms “assessment unit”, “verification unit”, “technical unit” and “review unit” shall refer to an Assessing Officer having powers so assigned by the Board.
  6. The assessment unit, verification unit, technical unit and the review unit shall have the following authorities:—
    1. Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may be;
    2. Deputy Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax Officer, as the case may be;
    3. such other income-tax authority, ministerial staff, executive or consultant, as may be considered necessary by the Board.
  7. All communications, save as otherwise provided in sub-section (8),—
    1. among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre;
    2. between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and
    3. between the National Faceless Assessment Centre and various units shall be exchanged exclusively by electronic mode.
  8. The provisions of sub-section (7) shall not apply to the enquiry or verification conducted by the verification unit in the circumstances as specified by the Board in this behalf.
  9. The Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of the National Faceless Assessment Centre shall, in accordance with the procedure laid down by the Board in this regard, if he considers appropriate that the provisions of section 268(5) may be invoked in the case,—
    1. forward any reference received from an assessment unit in this regard to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the assessment unit accordingly;
    2. transfer the case to the Assessing Officer having jurisdiction over such case as per sub-section (12).
  10. Where a reference has been received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under sub-section (9)(a), he shall direct the Assessing Officer, having jurisdiction over the case, to invoke the provisions of section 268(5).
  11. Where a reference has not been forwarded as per sub-section (9)(a) to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over the case, the assessment unit shall proceed to complete the assessment as per the procedure laid down in this section.
  12. Irrespective of anything contained in sub-section (1) or (2), the Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of National Faceless Assessment Centre may, at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board.
  13. For the purposes of this section,—
    1. “designated portal” means the web portal designated as such by the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre;
    2. “faceless assessment” means the assessment proceedings conducted electronically in “e-Proceeding” facility through registered account of the assessee in designated portal; and
    3. “registered account” of the assessee means the electronic filing account registered by the assessee in designated portal.

Reference to Principal Commissioner or Commissioner in certain cases

  1. The Assessing Officer may make a reference to the Principal Commissioner or Commissioner at any stage of the assessment or reassessment proceedings before him, if, having regard to the material and evidence available with him, he considers that it is necessary to—
    1. declare an arrangement as an impermissible avoidance arrangement; and
    2. determine the consequence of such an arrangement within the meaning of Chapter XI.
  2. The Principal Commissioner or Commissioner shall, on receipt of a reference under sub-section (1), if he is of the opinion that the provisions of Chapter XI are required to be invoked,—
    1. issue a notice to the assessee, setting out the reasons and basis of such opinion, for submitting objections, if any; and
    2. provide an opportunity of being heard to the assessee within such period, not exceeding sixty days, as specified in the said notice.
  3. If the assessee fails to furnish any objection to the notice within the time specified in such notice issued under sub-section (2), the Principal Commissioner or Commissioner shall issue such directions as he deems fit in respect of declaration of the arrangement to be an impermissible avoidance arrangement.
  4. In case the assessee objects to the proposed action, and the Principal Commissioner or Commissioner, after hearing the assessee in the matter, is not satisfied with the explanation of the assessee, then, he shall make a reference in the matter to the Approving Panel for the purpose of declaration of the arrangement as an impermissible avoidance arrangement.
  5. If the Principal Commissioner or Commissioner is satisfied, after having heard the assessee that the provisions of Chapter XI are not to be invoked, he shall by an order in writing, communicate the same to the Assessing Officer with a copy to the assessee.
  6. The Approving Panel, on receipt of a reference from the Principal Commissioner or Commissioner under sub-section (4), shall—
    1. issue such directions, as it deems fit, in respect of the declaration of the arrangement as an impermissible avoidance arrangement as per the provisions of Chapter XI; and
    2. specify the tax year or years to which such declaration of an arrangement as an impermissible avoidance arrangement shall apply.
  7. No direction under sub-section (6) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interests of the revenue, as the case may be.
  8. The Approving Panel may, before issuing any direction under sub-section (6),—
    1. if it is of the opinion that any further inquiry in the matter is necessary, direct the Principal Commissioner or Commissioner to make such inquiry or cause the inquiry to be made by any other income-tax authority and furnish a report containing the result of such inquiry to it; or
    2. call for and examine such records relating to the matter as it deems fit; or
    3. require the assessee to furnish such documents and evidence as it may direct.
  9. If the members of the Approving Panel differ in opinion on any point, such point shall be decided according to the opinion of the majority of the members.
  10. The Assessing Officer, on receipt of directions of the Principal Commissioner or Commissioner under sub-section (3) or of the Approving Panel under sub-section (6), shall proceed to complete the proceedings referred to in sub-section (1) as per such directions and the provisions of Chapter XI.
  11. If any direction issued under sub-section (6) specifies that declaration of the arrangement as impermissible avoidance arrangement is applicable for any tax year other than the tax year to which the proceedings referred to in sub-section (1) pertains, then,—
    1. the Assessing Officer while completing any assessment or reassessment proceedings relevant to such other tax year shall do so as per such directions and the provisions of Chapter XI; and
    2. it shall not be necessary for him to seek fresh direction on the issue for such other tax year.
  12. No order of assessment or reassessment shall be passed by the Assessing Officer without the prior approval of the Principal Commissioner or Commissioner, if any tax consequences have been determined in the order under the provisions of Chapter XI.
  13. The Approving Panel shall, subject to sub-sections (14) and (15), issue directions under sub-section (6) within six months from the end of the month in which the reference under sub-section (4) was received.
  14. In computing the period referred to in sub-section (13), the following shall be excluded:—
    1. the period commencing from the date on which the Approving Panel first directs the Principal Commissioner or Commissioner for getting the inquiries conducted through the authority competent under an agreement referred to in section 159 and ending with the date on which the information so requested is last received by the Approving Panel or one year, whichever is less;
    2. the period commencing on the date on which the proceeding of the Approving Panel is stayed by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the Approving Panel.
  15. If immediately after the exclusion of the period as per sub-section (14), the remaining period available to the Approving Panel for issue of directions is less than sixty days, such remaining period shall be extended to sixty days and the period of six months mentioned in sub-section (13) shall be deemed to have been extended accordingly.
  16. The directions issued by the Approving Panel under sub-section (6) shall be binding on—
    1. the assessee; and
    2. the Principal Commissioner or Commissioner and the income-tax authorities subordinate to him.
  17. No appeal under the Act shall lie against directions issued by the Approving Panel under sub-section (6), irrespective of anything contained in any other provision of the Act.
  18. The Central Government shall, for the purposes of this section, constitute one or more Approving Panels as may be necessary and each panel shall consist of three members including a Chairperson.
  19. The Chairperson of the Approving Panel shall be a person who is or has been a judge of a High Court, and—
    1. one member shall be a member of Indian Revenue Service not below the rank of Principal Chief Commissioner or Chief Commissioner of Income-tax; and
    2. one member shall be an academic or scholar having special knowledge of matters, such as direct taxes, business accounts and international trade practices.
  20. The term of the Approving Panel shall ordinarily be for one year and may be extended from time to time up to three years.
  21. The Chairperson and members of the Approving Panel shall meet, as and when required, to consider the references made to the panel and shall be paid such remuneration as may be prescribed.
  22. In addition to the powers conferred on the Approving Panel under this section, the powers which are vested in the Board for Advance Rulings under section 387 shall apply mutatis mutandis to the Approving Panel.
  23. The Board shall provide to the Approving Panel such officials as may be necessary for the efficient exercise of powers and discharge of functions of the Approving Panel under this Act.
  24. The Board may make rules for the purposes of the constitution and efficient functioning of the Approving Panel and expeditious disposal of the references received under sub-section (4).

Reference to Dispute Resolution Panel

  1. The Assessing Officer shall, irrespective of anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee, if he proposes to make any variation which is prejudicial to the interest of such assessee.
  2. On receipt of the draft order, the eligible assessee shall, within thirty days of its receipt by him,—
    1. file his acceptance of the variations to the Assessing Officer; or
    2. file his objections, if any, to such variation with,—
      1. the Dispute Resolution Panel; and
      2. the Assessing Officer.
  3. The Assessing Officer shall complete the assessment on the basis of the draft order, if—
    1. the assessee intimates to the Assessing Officer the acceptance of the variation; or
    2. no objection is received within the period specified in sub-section (2).
  4. The Assessing Officer shall, irrespective of anything contained in section 286, pass the assessment order under sub-section (3) within one month from the end of the month in which,—
    1. the acceptance is received; or
    2. the period of filing of objections under sub-section (2) expires.

    b. Irrespective of anything contained in section 286, where a draft of the proposed order of assessment under sub-section (1) is forwarded within the time period allowed under the said section, further time period available to the Assessing Officer to complete the assessment under sub-section (3) shall be governed by the provisions of this section.

  5. The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for guidance of the Assessing Officer to enable him to complete the assessment.
  6. The Dispute Resolution Panel shall issue the directions as referred to in sub-section (5), in writing, stating the points of determination, the decision thereon and the reason for such decision.
  7. The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),—
    1. make such further enquiry, as it thinks fit; or
    2. cause any further enquiry to be made by any income-tax authority and report the result of the same to such panel.
  8. The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order, so however, that it shall not set aside any proposed variation, or issue any direction under sub-section (5) for further enquiry and passing of the assessment order.
  9. For the purposes of sub-section (8), the power of the Dispute Resolution Panel to enhance the variation shall include the power to consider any matter arising out of the assessment proceedings relating to the draft order, irrespective of the fact that such matter was not raised by the eligible assessee.
  10. If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided as per the opinion of the majority of the members.
  11. Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer.
  12. No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee, and the Assessing Officer, on such directions which are prejudicial to the interest of the assessee, or the interest of the revenue, respectively.
  13. No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee.
  14. Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, irrespective of anything to the contrary contained in section 286, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.

    15. b. Irrespective of anything contained in section 286, where a draft of the proposed order of assessment under sub-section (1) is forwarded within the time period allowed under section 286, time period available for the Assessing Officer under this section to pass the assessment order upon receipt of the direction issued under sub-section (5), shall be governed by the provisions of this section.

  15. The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee.
  16. The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the Principal Commissioner or Commissioner as provided in section 274(12).
  17. For the purposes of this section, subject to the provisions of sub-section (18),—
    1. “Dispute Resolution Panel” means a collegium comprising of three Principal Commissioners or Commissioners of Income-tax constituted by the Board for this purpose;
    2. “eligible assessee” means,—
      1. any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under section 166(6);
      2. any non-resident (not being a company), or any foreign company.
  18. The eligible assessee referred to in sub-section (17) shall not include person referred to in section 292(1) or other person referred to in section 295.
  19. The provisions of this section shall not apply to any proceedings under Chapter XVI-B.

Method of accounting

  1. Income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall, subject to the provisions of sub-section (2), be computed as per either cash or mercantile system of accounting regularly employed by the assessee.
  2. The Central Government may notify income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income.
  3. The Assessing Officer may make an assessment in the manner provided in section 271, where—
    1. he is not satisfied about the correctness or completeness of the accounts of the assessee; or
    2. the method of accounting provided in sub-section (1) has not been regularly followed by the assessee; or
    3. income has not been computed as per the standards notified under sub-section (2).

Method of accounting in certain cases

  1. For the purposes of determining the income chargeable under the head “Profits and gains of business or profession”,—
    1. the valuation of inventory shall be made at lower of actual cost or net realisable value computed as per the income computation and disclosure standards notified under section 276(2);
    2. the valuation of purchase and sale of goods or services and valuation of inventory shall be adjusted to include any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation;
    3. the inventory being securities not listed on a recognised stock exchange, or listed but not quoted on a recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised as per the income computation and disclosure standards notified under section 276(2);
    4. the inventory being securities other than those referred to in clause (iii), shall be valued at lower of actual cost or net realisable value as per the income computation and disclosure standards notified under section 276(2).
  2. For the purposes of sub-section (1), the inventory being securities held by a scheduled bank or public financial institution shall be valued as per the income computation and disclosure standards notified under section 276(2) after taking into account the extant guidelines issued by the Reserve Bank of India in this regard.
  3. For the purposes of sub-sections (1) and (2), the comparison of actual cost and net realisable value of securities shall be made category-wise.
  4. For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law in force, shall include all such payment irrespective of any right arising as a consequence to such payment.
  5. For the purposes of this section, “public financial institution” shall have the same meaning as assigned to it in section 2(72) of the Companies Act, 2013 (18 of 2013).

Taxability of certain income

  1. Any interest received by an assessee on any compensation or on enhanced compensation, shall be deemed to be the income of the tax year in which it is received, irrespective of anything to the contrary contained in section 276.
  2. Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the tax year in which reasonable certainty of its realisation is achieved.
  3. The income referred to in section 2(49)(w) shall be treated as the income of the tax year in which it is received, if not charged to income-tax in any earlier tax year.

Income escaping assessment

  1. If, in the case of an assessee, any income chargeable to tax has escaped assessment for any tax year (herein and in sections 280 to 286 referred to as the relevant tax year), the Assessing Officer may, subject to the provisions of sections 280 to 286, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the relevant tax year.
  2. For the purposes of assessment or reassessment or recomputation under sub-section (1), the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 281 have not been complied with.
  3. The “Assessing Officer” for the purposes of sections 280 and 281 shall mean to be an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in section 273(3).

Issue of notice where income has escaped assessment

  1. Before making the assessment, reassessment or recomputation under section 279, the Assessing Officer shall, subject to the provisions of section 281, issue a notice to the assessee, along with a copy of the order passed under section 281(3);
    1. the notice referred to in clause (a) shall require the assessee to furnish, within such period as may be specified therein, a return of his income or income of any other person in respect of whom he is assessable under this Act during the relevant tax year; and
    2. the period specified in the notice referred to in clause (a) shall not be less than thirty days from the date of such notice but shall not exceed three months from the end of the month in which such notice is issued.
  2. The return of income required under sub-section (1) shall be furnished in such form, verified in such manner and setting forth such other particulars, as may be prescribed, and the provisions of this Act shall apply accordingly, as if such return were a return required to be furnished under section 263.
  3. Any return of income required to be furnished under sub-section (1), furnished after the expiry of the period specified in the notice under the said sub-section, shall not be deemed to be a return under section 263.
  4. No notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant tax year.
  5. No notice under this section shall be issued without prior approval of the specified authority, where the Assessing Officer has received—
    1. information under the scheme notified under section 260; or
    2. directions from the Approving Panel under section 274(6); or
    3. any finding or direction contained in an order passed by any authority, Tribunal or court in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law.
  6. For the purposes of this section and section 281, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means—
    1. any information in the case of the assessee for the relevant tax year as per the risk management strategy formulated by the Board from time to time;
    2. any audit objection to the effect that the assessment in the case of the assessee for the relevant tax year has not been made as per this Act;
    3. any information received under an agreement referred to in section 159 of this Act;
    4. any information made available to the Assessing Officer under the scheme notified under section 260;
    5. any information which requires action in consequence of the order of a Tribunal or a Court;
    6. any information in the case of the assessee emanating from the survey conducted under section 253, other than under sub-section (4) of the said section;
    7. any directions in the case of the assessee given by the Approving Panel under section 274(6);
    8. any finding or direction contained in an order passed by any authority, Tribunal or court in any proceeding under this Act by way of appeal, reference or revision, or by a Court in any proceeding under any other law.

Procedure before issuance of notice under section 280

  1. Where the Assessing Officer has information which suggests that income chargeable to tax has escaped assessment in the case of an assessee for the relevant tax year, he shall, before issuing any notice under section 280 provide an opportunity of being heard to such assessee by serving upon him a notice to show cause as to why notice under section 280 should not be issued.
  2. The notice to show cause referred to in sub-section (1) shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment in his case for the relevant tax year, and on receipt of such notice, the assessee may furnish his reply within such period, as specified therein.
  3. The Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 280.
  4. The provisions of this section shall not apply to income chargeable to tax escaping assessment for any tax year in the case of an assessee, where the Assessing Officer has received—
    1. information under the scheme notified under section 260; or
    2. directions issued by the Approving Panel under section 274(6); or
    3. any finding or direction contained in an order passed by any authority, Tribunal or court in any proceeding under this Act by way of appeal, reference or revision, or by a Court in any proceeding under any other law.

Time limit for notices under sections 280 and 281

  1. No notice under section 280 shall be issued for the relevant tax year,—
    1. if four years and three months have elapsed from the end of the relevant tax year, unless the case falls under clause (b);
    2. if four years and three months, but not more than six years and three months, have elapsed from the end of the relevant tax year, unless the Assessing Officer has in his possession books of account or other documents or evidence related to any asset or expenditure or transaction or entry which shows that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more.
  2. No notice to show cause under section 281 shall be issued for the relevant tax year,—
    1. if four years have elapsed from the end of the relevant tax year, unless the case falls under clause (b);
    2. if four years, but not more than six years, have elapsed from the end of the relevant tax year, unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts to or is likely to amount to fifty lakh rupees or more.
  3. No notice under section 280 or 281 shall be issued within one year from the end of any tax year.

Provision for cases where assessment is in pursuance of an order on appeal, etc.

  1. Irrespective of anything contained in section 282, the notice under section 280 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of, or to give effect to,—
    1. any finding or direction contained in an order passed by any authority, Tribunal or Court in any proceeding under this Act or any other law; or
    2. the directions issued by the Approving Panel under section 274(6).
  2. The provisions of sub-section (1) shall not apply in any case, where the assessment or reassessment or recomputation as is referred to in that sub-section relates to a tax year in respect of which an assessment or reassessment or recomputation could not have been made under this Act due to it being time-barred, at the time when,—
    1. the order, which was the subject-matter before any authority, Tribunal or Court, was made; or
    2. the proceedings relating to assessment or reassessment or recomputation under this Act (other than those proceedings which have culminated in an order), which was the subject-matter before the Court, was initiated; or
    3. the reference from the jurisdictional Principal Commissioner or Commissioner is made to the Approving Panel under section 274(4).
  3. For the purposes of sub-section (1), notice under section 280 shall be issued within three months from the end of the quarter in which the certified copy of the order of the authority or the Court, as the case may be, is received by the jurisdictional Principal Commissioner or Commissioner.

Sanction for issue of notice

  1. The specified authority for the purposes of sections 280 and 28146 shall be the Additional Commissioner or the Additional Director or the Joint Com- missioner or the Joint Director

Other provisions

  1. In an assessment, reassessment or recomputation made under section 279, the tax shall be chargeable at the rate or rates at which it would have been charged had the income not escaped assessment.
  2. The proceedings initiated under section 279 shall be dropped on a claim made by the assessee and on his showing to the effect that—
    1. the assessee had been assessed on an amount not lower than what he would be rightly liable for, even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made; and
    2. he has not impugned any part of the original assessment order for the relevant tax year under section 356 or 357 or 378.
  3. Where a claim has been made by an assessee under sub-section (2), he shall not be entitled to reopen matters concluded by an order under section 287 or 288 or 365(10) or 368 or 377.

Time limit for completion of assessment, reassessment and recomputation

  1. No order in respect of proceedings mentioned in column B of the Table below shall be made after expiry of the period specified in the corresponding entry in column D of the said Table and such period shall be calculated from the date as mentioned in column C thereof.
  2. Time limit for completion of any assessment or reassessment as provided in sub-section (1) [Table: Sl. Nos. 1 to 5], in a case where reference is made to the Transfer Pricing Officer for determining the arm’s length price under section 166(1), shall be extended by an additional period of twelve months.
    1. In terms of provisions of sub-section (1) [Table: Sl. Nos. 1 to 5] and this sub-section, the draft of the proposed order of assessment referred to in section 275 shall be made at any time up to the time limit of assessment, reassessment or recomputation referred to in the said Table and this sub-section.
  3. For the purposes of this section, in computing the time limit for completion, the following period shall be excluded,—
    1. the time taken in reopening the whole or any part of the proceeding on request of the assessee or in giving an opportunity to the assessee to be re-heard under section 244; or
    2. the period commencing on the date on which stay on assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by jurisdictional Principal Commissioner or Commissioner; or
    3. the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of Schedule III (Table: Sl. Nos. 23, 24, 25) or section 270(11)(i), and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those provisions is received by the Assessing Officer; or
    4. the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited or inventory valued under section 268(5) and—
      1. ending with the last date on which the assessee is required to furnish a report of such audit or inventory valuation under that section; or
      2. where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or
    5. the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under section 269(1) and ending with the date on which the report of the Valuation Officer is received by him; or
    6. the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under section 375(1) and ending with the date on which the order under section 375(3) is made by him; or
    7. the period commencing from the date on which an application is made before the Board for Advance Rulings under section 383(1) and ending with the date on which the order either rejecting the application or the advance ruling pronounced by it, is received by the jurisdictional Principal Commissioner or Commissioner under section 384(5) or (8), as the case may be; or
    8. the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 159 and ending with the date on which the information requested is last received by the jurisdictional Principal Commissioner or Commissioner, or one year, whichever is less; or
    9. the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the jurisdictional Principal Commissioner or Commissioner under section 274(1) and ending on the date on which a direction under sub-section (3) or (6) or an order under sub-section (5) of the said section is received by the Assessing Officer; or
    10. the period commencing from the date on which the Assessing Officer makes a reference to the jurisdictional Principal Commissioner or Commissioner under section 270(13) and ending with the date on which copy of the order under section 351(2)(ii)(A) or (B), is received by the Assessing Officer.
  4. Where immediately after exclusion of the period as mentioned in sub-section (3), the remaining period for completion available to the Assessing Officer, as specified in sub-section (1), for making an order of assessment, reassessment or recomputation, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid time limits for completion shall be deemed to have been extended accordingly.
  5. Where the period available to the Transfer Pricing Officer is extended to sixty days as per section 166(8) and the remaining period for completion available to the Assessing Officer under this section, for making an order of assessment, reassessment or recomputation, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid time limit for completion shall be deemed to have been extended accordingly.
  6. Where a proceeding before the Interim Board for Settlement abates under section 245HA of the Income-tax Act, 1961 (43 of 1961) and the remaining period of limitation available to the Assessing Officer under this section for making an order of assessment, reassessment or recomputation, after the exclusion of the period under section 245HA(4) of the Income-tax Act, 1961 (43 of 1961), is less than one year, such remaining period shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 282, 287, 288 and 296 and for the purposes of payment of interest under section 437, this sub-section shall also apply accordingly.
  7. In a case where the remaining time period for making an order of regular assessment or reassessment, after excluding the time period specified in sub-section (3)(j), ends before the end of the month, the remaining period shall be extended to the end of such month, and the specified time limit for completion shall be deemed to have been extended accordingly.
  8. For the purposes of this section and section 283, where by an order referred to in entry in sub-section (1) (Table: Sl. No. 8.A)—
    1. any income is excluded from the total income of the assessee for a tax year, then, an assessment of such income for another tax year shall be deemed as one made in consequence of or to give effect to any finding or direction contained in the said order; or
    2. any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall be deemed as one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed.

Rectification of mistake

  1. An income-tax authority referred to in section 236, for rectifying any mistake apparent from the record, may amend any—
    1. order passed by it under the provisions of this Act;
    2. intimation or deemed intimation under section 270(1);
    3. intimation under section 399.
  2. Irrespective of anything contained in any law in force, the authority concerned may amend any order or intimation under sub-section (1) in relation to any matter, other than the matter considered and decided in any proceeding by way of appeal or revision, relating to such order or intimation.
  3. Subject to the other provisions of this section, the authority concerned—
    1. may make an amendment under sub-section (1) of its own motion; and
    2. shall make such amendment for rectifying any such mistake which has been brought to its notice by—
      1. the assessee or the deductor or the collector; or
      2. the Assessing Officer, if the authority concerned is the Joint Commissioner (Appeals) or the Commissioner (Appeals).
  4. No amendment that enhances an assessment, reduces a refund or otherwise increases the liability of the assessee or the deductor or the collector, shall be made under this section by the authority concerned without giving to such assessee or deductor or collector, as the case may be—
    1. a notice of its intention of making such amendment; and
    2. a reasonable opportunity of being heard.
  5. The income-tax authority concerned shall pass an order in writing, if an amendment is made under this section.
  6. The Assessing Officer shall make refund which may be due to the assessee or the deductor or the collector, where an amendment reduces the assessment or otherwise reduces the liability of such assessee or the deductor or the collector.
  7. The Assessing Officer shall serve on the assessee or the deductor or the collector, a notice of demand in such form as may be prescribed specifying the sum payable—
    1. where an amendment enhances the assessment or reduces a refund already made or otherwise increases the liability of such assessee or the deductor or the collector; and
    2. such notice shall be deemed to be issued under section 289 and the provisions of this Act shall apply accordingly.
  8. No amendment under this section, except as provided in section 288, shall be made after four years from the end of the financial year in which the order or intimation sought to be amended was passed.
  9. Subject to sub-section (8), an income-tax authority referred to in sub-section (1) shall pass an order for making the amendment or refusing to allow the claim within six months from the end of the month in which the application for amendment under this section is received by it from the assessee or the deductor or the collector.

Other amendments

  1. The Assessing Officer may carry out such actions as are specified in column B of the Table below for reasons mentioned therein, subject to the conditions as specified in column C, within four years referred to in section 287(8) which shall be reckoned from the time as specified in column D, and the provisions of section 287 shall, so far as may be, apply to such amendment.
  2. Where the arm’s length price is determined in relation to an international transaction or a specified domestic transaction under section 166(6) for any tax year and the Transfer Pricing Officer has declared that an option exercised by the assessee is valid under section 166(9) in respect of such transaction for two consecutive tax years immediately following such tax year, the Assessing Officer shall proceed to recompute the total income of the assessee for the said two consecutive tax years, by amending the order of assessment or any intimation or deemed intimation under section 270(1), as the case may be—
    1. in conformity with the arm’s length price so determined by the Transfer Pricing Officer under section 166(12) in respect of such transaction; and
    2. taking into account the directions issued under section 275(5), if any, for such tax year,
    within three months from the end of the month in which the assessment is completed in the case of the assessee for such tax year, and the provisions of sections 165(7) and (8) shall apply thereto.
  3. Where the order of assessment or any intimation or deemed intimation under section 270(1), as referred to in sub-section (1), for the said two consecutive tax years is not made within the said three months, such recomputation shall be made within three months from the end of the month in which such order of assessment or any intimation or deemed intimation under section 270(1), as the case may be, is made.

Notice of demand

  1. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in such form, as may be prescribed, specifying the sum so payable.
  2. Where any sum is determined to be payable by the assessee or the deductor or the collector under section 270 or 399, the intimation under the said sections shall be deemed to be a notice of demand for the purposes of this section.
  3. Where the income of the assessee of any tax year includes income of the nature specified in section 17(1)(d) and such specified security or sweat equity shares referred to in the said section are allotted or transferred directly or indirectly by the current employer, being an eligible start-up referred to in section 140, the tax or interest on such income included in the notice of demand referred to in sub-section (1) shall be payable by the assessee within fourteen days—
    1. after the expiry of sixty months from the end of the relevant tax year; or
    2. from the date of the sale of such specified security or sweat equity share by the assessee; or
    3. from the date of the assessee ceasing to be the employee of the employer who allotted or transferred him such specified security or sweat equity share,
    whichever is the earliest.

Modification and revision of notice in certain cases

  1. Where—
    1. any tax, interest, penalty, fine or any other sum in respect of which a notice of demand has been issued earlier under section 289; and
    2. such tax, interest, penalty, fine or any other sum is reduced as a result of an order of the Adjudicating Authority as defined in section 5(1) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016),

    the Assessing Officer shall serve on the assessee a modified notice of demand specifying the sum payable, if any, and such notice shall be treated as a notice under section 289 and the provisions of this Act shall accordingly apply in relation to such notice.

  2. The modified notice of demand as referred to in sub-section (1) shall be revised where the order referred to in sub-section (1)(b) is modified by the National Company Law Appellate Tribunal or the Supreme Court.

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