Reassessment under Income Tax Act 2025: Income Escaping Assessment and Time Limits

Reassessment is the power of the Assessing Officer to assess again income that "escaped assessment" for a tax year. Under the Income Tax Act 2025 it sits in sections 279 to 286. The Officer must generally first send a show-cause notice (section 281), then pass an approved order, and only then issue the section 280 notice. That notice can generally go out within 4 years and 3 months of the end of the tax year, extendable to 6 years and 3 months only where escaped income is likely to be Rs 50 lakh or more (section 282).

This guide covers who can be reassessed, the step-by-step procedure, every time limit, and what a taxpayer can do. All figures are from the Act as amended by the Finance Act, 2026 (effective 1 April 2026) and the Income-tax Rules, 2026. Last reviewed against that text on 10 November 2026.

What does "income escaping assessment" mean?

Under section 279(1), if any income chargeable to tax has escaped assessment for a tax year (the "relevant tax year"), the Assessing Officer may assess or reassess that income. The Officer may also recompute a loss, a depreciation allowance, or any other allowance or deduction for that year. All of this is subject to sections 280 to 286.

Under section 279(2), once a reassessment is open, the Officer may also assess any other issue that has escaped assessment and comes to notice during those proceedings. This applies even if the show-cause step of section 281 was not followed for that second issue.

Section 279(3) says that for sections 280 and 281 the Assessing Officer must be an officer other than the National Faceless Assessment Centre or an assessment unit referred to in section 273(3). The reassessment itself can be faceless where the Board has specified such cases, following the procedure in rule 176.

What is the procedure before a reassessment notice is issued?

Section 281 is the safeguard. Before issuing any section 280 notice, the Officer must serve a notice to show cause on why a section 280 notice should not be issued (section 281(1)). The show-cause notice must carry the information that suggests income has escaped (section 281(2)). The taxpayer may reply within the period stated in it.

The Officer then looks at the material on record and the reply, and passes an order with the prior approval of the specified authority deciding whether or not it is a fit case to issue a section 280 notice (section 281(3)). A copy of this order goes with the section 280 notice (section 280(1)(a)).

What counts as "information" that income has escaped?

No section 280 notice can be issued unless the Officer has information suggesting that income has escaped (section 280(4)). Section 280(6) lists what counts as information:

• information about the taxpayer for that tax year as per the risk management strategy framed by the Board;
• an audit objection that the assessment was not made as per the Act;
• information received under an agreement with another country referred to in section 159;
• information made available under the faceless information scheme notified under section 260;
• information requiring action because of an order of a Tribunal or a Court;
• information from a survey under section 253 (other than under section 253(4));
• directions of the Approving Panel under section 274(6);
• a finding or direction in an order passed in an appeal, reference or revision under the Act, or by a Court under any other law.

Who approves the notice?

The specified authority for sections 280 and 281 is the Additional Commissioner, Additional Director, Joint Commissioner or Joint Director (section 284). Their approval is needed for the section 281(3) order. Section 280(5) also requires their prior approval for a section 280 notice where the Officer has received information under the section 260 scheme, Approving Panel directions under section 274(6), or a finding or direction in an appellate, Tribunal or Court order.

In those same three situations, the show-cause step does not apply at all (section 281(4)). The Officer can move straight to the section 280 notice, with prior approval.

What is in the section 280 notice and how long do you get to file?

The notice requires you to furnish a return of income for the relevant tax year within the period specified in it (section 280(1)(b)). That period must be at least 30 days from the date of the notice and cannot go beyond three months from the end of the month in which the notice is issued (section 280(1)(c), as substituted by the Finance Act, 2026; earlier the 30-day floor was not in the text).

The return must be in the prescribed form and verified as prescribed, and the Act applies as if it were a return under section 263 (section 280(2)). For tax year 2026-27 onwards the return forms are set by rule 164, which covers returns furnished under section 280. A return filed after the period in the notice is not treated as a return under section 263 (section 280(3)).

What are the time limits for reassessment notices?

Step	Normal limit	Extended limit (Rs 50 lakh or more)	Section
Show-cause notice (section 281)	Before 4 years from the end of the tax year	Up to 6 years, if the escaped income as per the Officer's information is or is likely to be Rs 50 lakh or more	282(2)
Notice under section 280	Before 4 years 3 months from the end of the tax year	Up to 6 years 3 months, if the Officer holds books of account, documents or evidence of an asset, expenditure, transaction or entry showing escaped income is or is likely to be Rs 50 lakh or more	282(1)
Earliest date	No notice under section 280 or 281 within one year from the end of any tax year		282(3)

The two tests are not worded the same. For the show-cause notice, the Rs 50 lakh test rests on "the information with the Assessing Officer". For the section 280 notice, the Officer must have books of account, documents or evidence in possession that show the amount.

Is there any case with no time limit?

Yes. Under section 283(1), a section 280 notice may be issued at any time to give effect to a finding or direction in an order of any authority, Tribunal or Court, or to Approving Panel directions under section 274(6). Two limits apply. First, it cannot be used for a tax year that was already time-barred when the order was made, the Court proceeding was initiated, or the reference to the Approving Panel was made (section 283(2)). Second, the notice must be issued within three months from the end of the quarter in which the certified copy of the order is received by the jurisdictional Principal Commissioner or Commissioner (section 283(3), substituted by the Finance Act, 2026).

How long does the Officer have to pass the reassessment order?

Under section 286(1), Table Sl. No. 4, the reassessment order under section 279 must be made within one year from the end of the financial year in which the section 280 notice was served. Other entries in the same Table fix the time for different situations, for example one year for fresh orders after an appeal or revision order (Sl. No. 5) and one year from the end of the month for an assessment on a partner after a firm's assessment (Sl. No. 7).

Some adjustments apply. Where a reference is made to a Transfer Pricing Officer, the limit for Sl. Nos. 1 to 5 is extended by 12 months (section 286(2)(a)). Certain periods are excluded when counting, such as a court stay, a Valuation Officer reference, an information-exchange reference or an Advance Rulings application (section 286(3)). If less than 60 days remain after exclusions, the period is extended to 60 days (section 286(4)).

Can you work out the notice dates? Worked examples

These examples use tax year 2026-27, which ends on 31 March 2027. They assume the escaped income, and the Officer's information or evidence, are as stated. Check the facts of a real case.

Example 1: the standard 4-year route

Step	Working	Date
End of tax year	Tax year 2026-27	31 March 2027
Earliest notice	31 Mar 2027 + 1 year (section 282(3))	31 March 2028
Last date for show-cause notice	31 Mar 2027 + 4 years	31 March 2031
Last date for section 280 notice	31 Mar 2027 + 4 years 3 months	30 June 2031

Suppose the Officer serves the show-cause notice on 10 January 2031 (before the 31 March 2031 cutoff), passes the section 281(3) order on 20 February 2031 and serves the section 280 notice on 25 February 2031. The notice is in time (before 30 June 2031). The return period must run at least 30 days (to 27 March 2031) and cannot go beyond three months from the end of February 2031, which is 31 May 2031. The notice was served in financial year 2030-31, so the reassessment order is due by 31 March 2032 (section 286, Sl. No. 4).

Example 2: the Rs 50 lakh extension

Step	Working	Date
Normal show-cause cutoff	31 Mar 2027 + 4 years	31 March 2031
Extended show-cause cutoff	31 Mar 2027 + 6 years	31 March 2033
Extended section 280 cutoff	31 Mar 2027 + 6 years 3 months	30 June 2033

Take a show-cause notice served on 5 May 2032. The Officer's information shows unrecorded sales of Rs 62,00,000. That is above Rs 50 lakh, so the notice is in time (before 31 March 2033). If the escaped income were Rs 38,00,000, the same notice would be out of time because the normal cutoff passed on 31 March 2031.

Example 3: notice after a Tribunal order

The certified copy of a Tribunal order is received by the Principal Commissioner on 10 August 2027. The quarter in which it was received (July to September, taken here as a calendar quarter) ends on 30 September 2027. Three months from that date is 31 December 2027, which is the last date for the section 280 notice under section 283(3). This is allowed irrespective of section 282, but only if the tax year was not already time-barred on the date of the order.

What do real cases look like?

Ravi, a salaried employee. Ravi earns salary and also let out a shop for several years, but did not report the rent. The department receives matching information under its risk management strategy. The Officer sends Ravi a show-cause notice with that information. Ravi replies with proof that the shop was sold earlier in the year and no rent accrued. The Officer weighs the reply, and if the approved order says it is not a fit case, no section 280 notice follows. This is the point of the show-cause step.

Meena, a trader. Meena's original assessment was done on a total income of Rs 14,00,000. A section 280 notice later alleges Rs 2,00,000 escaped. Meena shows that the amount she was already assessed on was not lower than what she would be rightly liable for even with that income included, and she has not challenged any part of the original assessment order. Section 285(2) says the proceedings shall be dropped on such a claim. If she makes that claim, she cannot reopen matters already concluded by orders under the sections listed in section 285(3).

Does this apply to tax years before 2026-27?

No. Under section 536(2)(c), the repealed Income-tax Act, 1961 continues to apply to pending proceedings and to proceedings started on or after 1 April 2026 (including notices, assessment and reassessment) for any tax year beginning before 1 April 2026, and they follow the procedure of that old Act. So sections 279 to 286 matter in practice for tax year 2026-27 onwards. If you receive a reassessment notice for an earlier year, check which Act it was issued under.

What should you do on receiving a show-cause or section 280 notice?

1. Note the date of service and the reply or return period stated in the notice (at least 30 days for the return, section 280(1)(c)).
2. Check that a show-cause notice came first, unless one of the section 281(4) exceptions applies, and that the section 281(3) order is attached.
3. Check the notice is within the section 282 limits for that tax year.
4. Reply to the show-cause notice, and file the return in the prescribed form before the period ends.
5. Where it fits your facts, consider a claim under section 285(2) that the proceedings be dropped.

At what rate is reassessed income taxed?

Tax in a reassessment is charged at the rate or rates at which it would have been charged had the income not escaped assessment (section 285(1)). The rates of the relevant tax year apply, not a penalty rate. Interest and penalty provisions are separate and not covered here.

Quick reference

Item	Rule	Source
Show-cause before section 280 notice	Required, with the information attached	Section 281(1), (2)
Approval	Additional or Joint Commissioner or Director	Sections 281(3), 284
Return period in notice	At least 30 days, at most 3 months from end of month of notice	Section 280(1)(c)
Show-cause limit	4 years; 6 years if Rs 50 lakh or more	Section 282(2)
Notice limit	4 years 3 months; 6 years 3 months if Rs 50 lakh or more	Section 282(1)
Notice after appeal or Tribunal direction	Notice within 3 months from end of quarter of receipt	Section 283(3)
Reassessment order	1 year from end of the financial year of service of notice	Section 286(1), Sl. No. 4

What are the common mistakes?

• Ignoring the show-cause notice. It is the one chance to give a reply before the Officer decides on a section 280 notice. Reply within the period stated in it.
• Counting limits from the wrong date. The 4-year and 6-year periods run from the end of the tax year, not from the date of filing.
• Missing the return period. A return filed after the period in the notice is not a return under section 263 (section 280(3)).
• Assuming the Rs 50 lakh test is the same for both steps. One looks at the Officer's information, the other at books, documents or evidence in possession.
• Discarding records too early. Where an assessment has been reopened under section 279 within the period in section 282, books and documents kept at that time must be maintained until the reopened assessment is final (rule 46(10), and rule 187(6) for registered non-profit organisations).
• Not asking for the section 281(3) order. It has to accompany the section 280 notice. Check that it is there and that approval is recorded.

How do CA firms keep track of reassessment dates?

A reassessment matter has several dates running together: the show-cause reply date, the return date in the notice, and the order deadline. Finexo's practice management software lets a CA firm log each notice against a client and track due dates and replies in one place. It does not decide limitation or file replies for you.

Where is this in the Act?

• Section 279: power to assess or reassess income that escaped assessment.
• Section 280: notice, return period, meaning of information.
• Section 281: show-cause procedure and order.
• Section 282: time limits for notices.
• Section 283: notices following orders on appeal and similar.
• Section 284: specified authority.
• Section 285: rate, and dropping of proceedings.
• Section 286: time limit for completing the assessment.
• Rules 164, 176, 46(10), 187(6): return form, faceless procedure, record keeping.

Related reading: TDS on rent under the Income Tax Act 2025.

This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026) and the Income-tax Rules, 2026. It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.