Time Limits for Assessments
Introduction
The Income-tax Act prescribes specific time limits for completing Summary Assessments, Scrutiny Assessments, Best Judgment Assessments, and Reassessments. If an assessment is not completed within the prescribed time, it becomes time-barred.
Summary Assessment (Section 143(1))
- Returns are processed electronically by the Centralized Processing Centre (CPC), Bengaluru.
- The intimation must be issued within 9 months from the end of the financial year in which the return is filed.
- If no tax is payable or refundable and no intimation is issued, the return acknowledgement is deemed as intimation.
Scrutiny Assessment (Section 143(3))
- Notice issuance: The AO must issue a notice within 3 months from the end of the financial year in which the return is furnished.
- Completion deadlines:
|
Assessment Year |
Time Limit |
|
2022-23 onwards |
12 months from the end of the assessment year |
|
2021-22 |
9 months from the end of the assessment year |
|
2020-21 |
18 months from the end of the assessment year |
|
2019-20 |
12 months from the end of the assessment year |
|
2018-19 |
18 months from the end of the assessment year |
|
Up to 2017-18 |
21 months from the end of the assessment year |
- If the AO seeks cancellation of registration/exemption of an entity, the time from intimation to the final order is excluded from the limitation period.
- Updated returns or returns filed under condonation (Section 119(2)(b)) can be assessed within 12 months from the end of the financial year in which they are furnished.
Best Judgment Assessment (Section 144)
- Conducted when an assessee fails to file a return, does not comply with notices, or maintains incomplete books of accounts.
- Completion deadlines are the same as those for Scrutiny Assessments.
Reassessment (Income Escaping Assessment – Section 147)
- The AO can reassess income if he has information suggesting income has escaped assessment.
- Notice issuance deadlines (Section 148& 148A):
|
Escaped Income |
Show-Cause Notice (148A) Deadline |
Reassessment Notice (148) Deadline |
|
Less than ₹50 lakh |
3 years from the end of the relevant assessment year |
3 years & 3 months from the end of the relevant assessment year |
|
₹50 lakh or more |
5 years from the end of the relevant assessment year |
5 years & 3 months from the end of the relevant assessment year |
- Completion deadline: 12 months from the end of the financial year in which the reassessment notice was served.
Time Extensions for Special Cases
- Search Cases:
o If a search is conducted under Section 132 or 132A, the time limit extends by 12 months if assessments were pending at the time of the search.
- Transfer Pricing Cases:
o If a reference is made to the Transfer Pricing Officer (TPO), the time limit extends by 12 months.
Time Limits for Special Assessments & Orders
|
Scenario |
Time Limit |
|
Fresh assessment after appeal or revision |
Within 12 months from the end of the financial year in which the order was received/passed |
|
Appeal effect orders (ITAT, HC, SC) |
Within 3 months from the end of the month from receipt of order |
|
Modify assessment as per TPO order |
Within 2 months from the end of the month in which order of the TPO is received. |
|
To give effect to finding/direction |
Within 12 months from the end of the month in which the order is received/passed |
|
Assessment of partners after firm’s assessment |
Within 12 months from the end of the month in which assessment order is passed in case of the firm. |
|
Cases revived after abatement in search cases |
One year from the end month of revival or period under Section 158BE, whichever is later |
Exclusions from Time Limits
Certain periods are excluded when computing assessment deadlines which includes:
- Time taken in reopening proceedings or rehearing, due to change in AO’s jurisdiction.
- Period of stay granted by court, till receipt of order vacating such stay by PCIT/CIT.
- Time taken in special audit or inventory valuation.
- Where the assessee approaches the Authority or Board for Advance Rulings, the limitation period shall exclude the time from the date of application to the date on which the rejection order or advance ruling is received by the Principal CIT or CIT.
- “Where a reference is made by the competent authority for exchange of information, the period excluded from limitation shall be from the date of such reference (or first reference) till the earlier of
o The date of last receipt of information by the Principal CIT/CIT, or
o One year.