A return is filed, taxes are paid and the year appears closed. Several years later, a notice arrives proposing to reopen that year because income is believed to have escaped assessment. For many taxpayers this is the first time they realise that filing a return does not end the life of a tax year; it starts a period during which the return can be revisited.
This article explains the reassessment provisions in Sections 147 to 151 of the Income-tax Act, 1961 and their counterparts in Sections 279 to 284 of the Income-tax Act, 2025, the time limits including the extended window for escaped income of ₹50 lakh or more, the usual triggers, the procedure the Assessing Officer must follow, and how taxpayers can prepare. It is intended for individuals, businesses and finance teams.
Key points at a glance
- Reassessment requires information suggesting that income has escaped assessment, followed by a show cause procedure before the notice is issued.
- Under the Income-tax Act, 2025, the provisions are Section 279 (income escaping assessment), Section 280 (notice), Section 281 (show cause procedure), Section 282 (time limits) and Section 284 (sanction).
- Under Section 282, the general limit for the notice is four years and three months from the end of the tax year; it extends to six years and three months where escaped income is, or is likely to be, ₹50 lakh or more.
- Years up to Tax Year 2025-26 (assessment years up to 2026-27) continue to be reopened under the 1961 Act, with broadly equivalent limits measured from the end of the assessment year.
- Most reopenings today are data-driven: AIS/SFT mismatches, third-party information and risk management flags.
What is reassessment under income tax?
Reassessment allows the Assessing Officer to assess or reassess income for a past year where income chargeable to tax has escaped assessment. It applies whether or not the original return was scrutinised. Once a year is reopened, the officer may also assess other escaped income that comes to notice during the proceedings.
The procedure has two stages. First, the officer issues a show cause notice with the information relied on, and considers the taxpayer's reply. Second, if the officer concludes that the case is fit for reopening, an order is passed and the reassessment notice is issued, requiring a return for that year.
Reassessment under the Income-tax Act, 2025: section mapping
| Subject | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Income escaping assessment | Section 147 | Section 279 |
| Reassessment notice | Section 148 | Section 280 |
| Show cause procedure before notice | Section 148A | Section 281 |
| Time limits | Section 149 | Section 282 |
| Sanction of specified authority | Section 151 | Section 284 |
The savings provisions in Section 536 of the 2025 Act preserve the operation of the 1961 Act for earlier years. In practice, a year up to Tax Year 2025-26 is reopened under the 1961 Act, while Tax Year 2026-27 onwards falls under the new Act.
How far back can a reassessment notice go?
Under the Income-tax Act, 2025 (Section 282)
- Show cause notice (Section 281): not after four years from the end of the tax year, or up to six years where escaped income is, or is likely to be, ₹50 lakh or more.
- Reassessment notice (Section 280): not after four years and three months from the end of the tax year, or up to six years and three months where the ₹50 lakh condition is met.
- No notice under either section is to be issued within one year from the end of the tax year.
Under the Income-tax Act, 1961
Since the Finance (No. 2) Act, 2024, the general limit is three years from the end of the assessment year, and five years where escaped income is ₹50 lakh or more, with a short additional period for the final notice. Because an assessment year ends one year after the relevant financial year, the two Acts produce broadly similar windows. The earlier ten-year window introduced in 2021 no longer applies to new notices.
Worked timeline
| Tax year | End of tax year | General limit for Section 280 notice | Limit where escaped income is ₹50 lakh or more |
|---|---|---|---|
| 2026-27 | 31 March 2027 | 30 June 2031 | 30 June 2033 |
| 2027-28 | 31 March 2028 | 30 June 2032 | 30 June 2034 |
This is why a transaction from six years ago can still be the subject of a notice, particularly where the amount involved is large.
What triggers a reassessment notice?
Reopening must be based on "information" as defined in the Act. It includes information flagged under the risk management strategy of the CBDT, audit objections, information from tax treaty partners, and findings in surveys, searches or orders of courts and tribunals. Common triggers include:
- mismatch between income reported and data in the Annual Information Statement (AIS), such as interest, dividends, securities or property transactions;
- high-value transactions reported in statements of financial transactions, including large cash deposits, property purchases and investments;
- information from other taxpayers' proceedings, for example accommodation entry providers naming beneficiaries;
- capital gains or property transactions not reflected in the return;
- foreign assets or income reported under information exchange arrangements.
Practical point: The show cause stage is the most important opportunity to prevent a reopening. A reply that reconciles the flagged transaction with the return, backed by documents, can lead the officer to drop the proceedings. A generic reply often results in an order to reopen.
What have the courts held?
In Union of India v. Ashish Agarwal (2022), the Supreme Court dealt with notices issued under the old procedure after the 2021 amendments and treated them as show cause notices under Section 148A, requiring the new procedure to be followed. In Union of India v. Rajeev Bansal (2024), the Supreme Court examined the interplay of the time limits with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and held that notices issued beyond the permissible time, after accounting for the relaxation, are invalid. The judgments confirm that time limits and procedure are strictly enforced, and a notice outside them can be challenged.
How to respond to a reassessment show cause notice
- Check the tax year and compute whether the notice is within the applicable time limit, including whether the ₹50 lakh condition is actually supported.
- Verify that the information relied on has been provided; request it if not.
- Reconcile the flagged transaction with the return, books and bank statements.
- File a reasoned reply with documents within the time allowed, addressing each item of information.
- Check whether the notice has the sanction of the correct specified authority.
- If the year is reopened, file the return within the time specified in the notice, as a return filed later is not treated as a valid return.
- Preserve jurisdictional objections, such as limitation or absence of information, for appeal or writ proceedings.
Records to keep, and for how long
Given the six-year-and-three-month window for larger amounts, supporting documents for significant transactions should be retained for at least seven years after the end of the tax year, and longer where appeals are pending. This includes bank statements, purchase and sale deeds, contract notes, loan confirmations, gift documents and reconciliations of AIS data with the return.
Frequently Asked Questions on Income Tax Reassessment
How many years back can the income tax department reopen an assessment?
Under Section 282 of the Income-tax Act, 2025, the notice can generally be issued up to four years and three months from the end of the tax year, and up to six years and three months where escaped income is ₹50 lakh or more.
What is the new section for Section 148 under the Income-tax Act, 2025?
Section 148 corresponds to Section 280, Section 148A to Section 281, Section 147 to Section 279 and Section 149 to Section 282 of the Income-tax Act, 2025.
Can a reassessment notice be issued without prior information?
No. The Assessing Officer must have information suggesting that income has escaped assessment, and must first give the taxpayer an opportunity to respond through a show cause notice.
Which law applies to reopening of years before 1 April 2026?
Years up to Tax Year 2025-26 continue to be governed by the reassessment provisions of the 1961 Act, preserved by the savings provisions of the 2025 Act.
Is the ₹50 lakh threshold per year?
Yes. The extended period applies where the income escaping assessment for that year amounts to, or is likely to amount to, ₹50 lakh or more, as represented by an asset, expenditure or entry.
What should be done on receiving a reassessment show cause notice?
Check limitation and the information relied on, reconcile the transaction with records, and file a documented reply within the time allowed, since this stage can prevent reopening.
Conclusion
Filing a return is the start of a record that can be examined for several years. With reassessment now in Sections 279 to 284 of the Income-tax Act, 2025, the windows are defined by reference to the tax year, and extend to over six years for larger amounts. Data analytics mean that small inconsistencies can surface long after the event.
At that stage, the outcome depends less on intention and more on what can be substantiated. Clean reconciliation of AIS data with the return, and documents retained for the full period, are the most effective preparation.
This article is intended for general information and knowledge sharing only and does not constitute professional advice or solicitation of any kind. Provisions are summarised as of September 2026. Readers should refer to the relevant provisions, regulations and judicial pronouncements for their specific facts.