By Legum Pacific Editorial ·
A common situation
Suppose the Income-tax Department sends a letter years after your tax return. It says some income may have escaped assessment and it wants to reopen your past return. You find the notice confusing. The law sets out when the department can do this, what notices it must give, and strict time limits.
What does the law say?
Section 279 allows the Assessing Officer (AO) to assess, reassess or recompute a tax year if any income chargeable to tax has escaped assessment. The AO can deal with any issue that appears to have escaped assessment even if certain prior steps in section 281 are not completed, subject to the other sections that follow.
Section 280 requires the AO, before making an assessment, reassessment or recomputation under section 279, to issue a notice to the assessee. The notice must be accompanied by a copy of the order passed under section 281(3). The notice will require the assessee to furnish, within a specified period, a return of income for the relevant tax year. That period cannot exceed three months from the end of the month in which the notice is issued.
The return required under section 280 must be in the prescribed form and verified as required. The law treats such a return as if it were a return furnished under section 263 for the purposes of the Act. A return given after the period in the notice is not deemed to be a return under section 263.
Section 280 also says that no notice under it shall be issued unless the AO has information which suggests that income chargeable to tax has escaped assessment. Where the AO has received certain types of information (for example under a notified scheme, directions of an Approving Panel, or an order of an authority, tribunal or court), a prior approval of the specified authority is required before issuing a notice under section 280.
Section 281 (show cause notice) requires the AO, before issuing any notice under section 280, to serve a notice to show cause (notice asking why a reopening notice should not be issued). That show cause notice must be accompanied by the information which suggests that income has escaped assessment. The assessee may reply within the period stated. The AO must, with prior approval of the specified authority and after taking the assessee’s reply into account, pass an order deciding whether it is a fit case to issue the section 280 notice.
Section 282 sets the main time limits for issuing notices. No notice under section 280 may be issued if four years and three months have elapsed from the end of the relevant tax year, unless the case falls into the longer-period exception. If between four years and three months, and six years and three months have passed, a notice may be issued only if the AO has books of account or other documents or evidence showing that the escaped income is likely to amount to fifty lakh rupees or more. For show cause notices under section 281, the basic cut-off is four years, with the same 50 lakh exception applying where the period is between four and six years. The law also provides that no notice under section 280 or 281 shall be issued within one year from the end of any tax year.
Section 283 creates an important exception. Irrespective of the time limits in section 282, a notice under section 280 may be issued at any time to make an assessment, reassessment or recomputation that is necessary to give effect to a finding or direction in an order passed by any authority, tribunal or court, or to give effect to directions of the Approving Panel under section 274(6). However, this power does not apply where the assessment could not have been made at the time the order was originally passed or when the reference to the Approving Panel was made.
Section 284 identifies the specified authority whose prior approval is required. That authority is the Additional Commissioner, Additional Director, Joint Commissioner or Joint Director.
Section 285 explains the tax and certain consequences. Where an assessment or reassessment is made under section 279, tax is charged at the rate(s) that would have applied had the income not escaped assessment. Proceedings under section 279 must be dropped if the assessee claims and proves (a) he was already assessed on an amount not lower than what he would rightly owe even after taking the escaped income into account, and (b) he has not challenged any part of the original assessment order under the listed appeal or revision sections. Where such a claim succeeds, the assessee cannot reopen matters already concluded by specified orders.
Section 286 sets the time for completing these reopened proceedings. For an assessment, reassessment or recomputation under section 279, the time limit for completion is one year calculated from the end of the financial year in which the notice under section 280 was served. If the case is referred to the Transfer Pricing Officer under section 166(1), the time limit is extended by twelve months. The law also lists several periods that must be excluded when computing these time limits, for example the time taken when the assessee asks to reopen a proceeding or is given a re-hearing, periods of court-ordered stay, time allowed for certain audits or valuations, references to Valuation Officer, a short period for specified declarations, and time while an application for advance rulings is pending.
Laws referred to
- Income-tax Act, 1961 — sections 278 to 286 (as published in Gazette notification: https://egazette.gov.in/WriteReadData/2025/265620.pdf)
Official sources
This guide explains what the law itself says. Court rulings interpreting these provisions can also affect how they apply in a particular case. It states the position under the official texts listed above, as at 26 October 2026.
Source: Official text (egazette.gov.in) (opens in a new tab)