What did the income tax department say about sending tax notices
Here are the time limits and types of assessments related to various income tax notices you might receive if found in violation of different tax regulations.:
- Section 143 (1)- Summary Assessment: “For completion of the assessment it must be done within 9 months from the end of the financial year in which the return is furnished,” said the tax department. This means that for the income earned in financial year 2023-24 for which the ITR is furnished in 2024-25, the deadline for receiving this notice will be 31 December 2025.”
“A summary assessment intimation notice under section 143(1) is issued to a taxpayer when the tax department has finished processing the submitted income tax return (ITR). In this intimation notice, you can check the tax calculations submitted by you through the ITR and the calculations accepted by the tax department. If you have any tax refund due then the amount of this refund will be mentioned in this intimation notice,” says Mihir Tanna, Associate Director- direct tax, S.K Patodia & Associates LLP, a CA firm.
- Section 143(3)-Scrutiny Assessment: “This notice is to be served within 3 months from the end of the financial year in which return is furnished. For completion of assessment under this section it is to be done within 12 months from the end of the Assessment Year in which income was first assessable. For the purpose of completion of assessment in case of an updated return, the time limit of 12 months shall be counted from the end of the financial year in which the updated return is furnished,” said the Income Tax Department. In the above case, the deadline for sending notice will be June 30, 2025 and the deadline for completing the assessment will be March 31, 2026.
A Scrutiny Assessment notice under section 143(3) is issued if the tax department has found any evidence a suspicious reporting in your submitted ITR. “As per the guidelines framed by the tax department every year (such as high risk categories), a certain percentage of the tax returns filed are picked up for scrutiny assessment. For greater efficiency and accountability, the scrutiny assessment is conducted in a faceless manner. The taxpayer receives a notice on email and the same is also visible in his e-filing account under the tab ‘e-proceedings’. The assessee is required to submit responses to the notices issued by the officer with his explanations and necessary documentary evidence. If the tax officer does not agree with any aspect of the computation filed by the assessee, he is required to issue a show-cause notice to the assessee. Finally, the assessment concludes with passing of assessment order under section 143(3) wherein return of income may be accepted or there may be additions to the income or denial of deductions claimed etc,” says Mumbai-based chartered accountant Janhavi Pandit.
- Section 144- Best Judgement Assessment: “This notice is issued within 12 months from the end of the Assessment Year in which the income was first assessable,” said the tax department. In above case, the deadline for this notice will March 31, 2026.
This notice is issued when the tax department does not find your answer or reply to queries sent under section 143(3) scrutiny assessment notice as satisfactory. “If you could not answer the queries raised by the tax department to their satisfaction, the tax department will pass an best judgement assessment order where your tax liability is assessed based on the evidence and to the best of the ability of the tax department,” says Tanna.
- Section 147- Reassessment: The time limit to issue this notice is divided into two parts:
- Applicable till 31-08-2024: Notice to be issued within 3 or 10 years from the end of the relevant assessment year in which the income has escaped assessment. For cases with escaped tax amount up to Rs 50 lakh the deadline is 3 years and for cases above Rs 50 lakh the deadline is 10 years.
- Applicable from 01-09-2024: Section 148 notice to be issued within 3 years and 3 months or within 5 years and 3 months from the end of the relevant assessment year in which income has escaped assessment. Section 148A notice to be issued within 3 years or within 5 years from the end of the relevant assessment year in which income has escaped assessment.
The tax department said: “The re-assessment must be completed within 12 months from the end of the financial year in which notice for reassessment was served.”
“A re-assessment notice under section 147 is issued when the tax assessing officer (AO) has reason to below that you have any income which should have been offered for tax but has escaped assessment. This notice can only be sent when the tax department has evidence against you. A section 148A notice is also to be issued by the tax department offering you a chance to explain the circumstances and case and why a proceeding should not be initiated against you,” says Tanna.
Income Tax Notice Timeline
Source: Income Tax Department
- Fresh Assessment: The tax department said that the fresh assessment of any submitted ITR is to be completed within 12 months from the end of the financial year in which the order was received or passed.
“A fresh assessment order can be issued due to various reasons. For example: if after the processing of the ITR, the tax officer finds any relevant information which warrants a fresh assessment, he may do so. Another case is when CIT (Appeals) or ITAT orders the income tax department to do a fresh assessment for any particular ITR,” says Tanna.
- Giving effect to appeal results: The tax department has said the impact on appeal results must be given within three months from the end of the month the order was received or passed.
“Usually when an appeal’s judgement is passed the tax department on a suo moto basis has to give its effect. In the past we have filed a letter with the jurisdictional AO attaching a copy of the favourable order and requesting him to give its effect to the taxpayer,” says Tanna.
- For giving effect to any finding or direction: The tax department said that the time limit by which effect to any finding or direction has to be given is within 12 months from the end of the month in which such order is received or passed.
“A higher time limit is given for this effect as it relates to any specific finding or direction. For example, the CIT (Appeals) may ask the tax department to produce a particular evidence for a proceeding, so the tax department needs to find this specifically asked for evidence and produce it before CIT (Appeals),” says Tanna.
- For the assessment of partners if the assessment is made on the firm: The tax department said that the assessment must be completed within 12 months from the end of the month in which the assessment order is passed in the case of the firm.
“This relates to firms and their partners. It says that if due to the assessment made on the partnership firm, an assessment is required to be made on the partner’s personal income tax then the time limit to do so is 12 months from the end of the month in which assessment order is passed on the firm. For example: if a partnership firm claims deduction for partner’s salary and interest on capital paid, then the partner must offer the exact amount received as salary and interest for tax. If there is a mismatch between the claim made by the firm in its ITR and the partner in his own ITR then the tax department will disallow the deduction and send a tax notice,” says Tanna.
