Time limits for completion of assessment, reassessment and recomputation [Section 153]

Effective from: 1st June, 2016

 

(i) The time limit for completion of assessment proceedings is 2 years from the end of the assessment year in which the income was first assessable. Further, no order of assessment, reassessment or recomputation could be made under section 147 after the expiry of one year from the end of the financial year in which notice under section 148 was served.

Since digitisation of processes within the Department has enhanced its efficiency in handling workload, the time limit has been accordingly reduced, so that the assessment proceedings are finalised more expeditiously.

(ii) In order to simplify the provisions of section 153 by retaining only those provisions that are relevant to the current provisions of the Act, section 153 has been substituted with effect from 1st June, 2016 to provide for the new time limits for completion of assessment in the following cases:

Senction	Proceeding	New Time limit for completion of assessment or reassessment
153(1)	Order of assessment u/s 143 or 144	21 months from the end of the assessment year in which the income was first assessable
153(2)	Order of assessment, reassessment or recomputation u/s 147	9 months from the end of the financial year in which the notice u/s 148 was served
153(3)	Fresh assessment u/s 143/144/147 where the original assessment has been set aside, cancelled and referred back to the Assessing Officer by an order u/s 254/263/264	9 months from the end of the financial year in which the said order u/s 254 is received by the PCC/CC/PC/CIT4 or the order u/s 263 or u/s 264 is passed by the PC/CIT
153(4	Where a reference is made to the TPO u/s 92CA(1) during the course of proceeding for assessment or reassessment:   Completion of assessment u/s 143 or u/s 144.   Completion of assessment/ reassessment/re-computation u/s 147   Completion of fresh assessment in pursuance of an order u/s 254 (received by the PCC or CC/PC or CIT) or an order passed by the PC or CIT u/s 263 or u/s 264.	An additional time period of 12 months is available for completion of assessment / reassessment in such cases:   33 months from the end of the assessment year in which the income was first assessable.   21 months from the end of the financial year in which notice u/s 148 is served.     21 months from the end of the financial year in which such order u/s 254 is received by the PCC or CC/PC or CIT or such order u/s 263 or 264 is passed by the PC or CIT, as the case may be.
153(5)	Effect to be given by the Assessing Officer, to an order u/s 250/254/260/262/263/264, wholly or partly, otherwise than by making a fresh assessment or reassessment	3 months from the end of the month in which the order u/s 250/254/260/262 is received by the PCC/CC/PC/CIT or the order u/s 263/264 is passed by the PC/CIT.   Note – Additional period of 6 months may be allowed to the A.O. to give effect to order if the PC/CIT is satisfied, on an application from the A.O., that the order could not be given effect to within 3 months due to reasons beyond the control of the A.O.   However, in respect of cases pending as on 1st June 2016, the time limit for passing such order is extended to 31.3.2017. This is provided under section 153(7).
153(6)(i)	Where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order u/s 250 /254  /260/262/263/264 or in an order of any court in a proceeding otherwise than by way of appeal or reference	12 months from the end of the month in which the order is received or passed by the PC or CIT.   Note – However, for cases pending as on 1.6.2016, the time limit for taking requisite action by the AO in respect of the assessee would be 31.3.2017. This is provided under section 153(7).
153(6)(ii)	Where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147	12 months from the end of the month in which the assessment order in the case of the firm is passed.   Note – However, for cases pending as on 1.6.2016, the time limit for taking requisite action would be 31.3.2017. This is provided under section 153(7).
153(8)	The order of assessment or reassessment, relating to any assessment year, which stands revived under section 153A(2)	1 year from the end of the month of such revival or within the period specified in section 153 or section 153B(1), whichever is later.   Note – This is notwithstanding anything contained in the foregoing provisions of section 153, section 153A(2) or section 153B(1).

 

Note – The provisions of section 153, as they stood immediately before their amendment by the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before 1st June, 2016.

(iii) Exclusion of period [Explanation 1 to section 153] – In computing the period of limitation for the purposes of section 153 the following time periods shall be excluded:

	Case	Exclusion of Period
		Commencing from		Ending with
(1)	Contravention of the provisions of section 10(21)/(22B)/(23A)/ (23B)/(23C)(iv)/(v)/ (vi)/(via)	the date on which the A.O. intimates the Central Government or the prescribed authority, the said contravention as required under clause (i) of the proviso to section 143(3)	the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, is received by the A.O.
(2)	Direction to get accounts audited under section 142(2A)	the date on which the A.O. directs the assessee to get his accounts audited under section 142(2A	the last date on which the assessee is required to furnish a report of such audit                       (or) the date on which the order setting aside such direction is received by the PC/CIT, if such direction is challenged before a Court.
(3)	Reference to the Valuation Officer under section 142A(1)	the date on which the Assessing Officer makes a reference to the Valuation Officer	the date on which the report of the Valuation Officer is received by the Assessing Officer
(4)	Where the assessee furnishes declaration claiming that any question of law arising in his case for an assessment year which is pending before the A.O. or any appellate authority is identical with a question of law arising in his case for another A.Y. which is pending before the High Court or Supreme Court.	the date on which the Assessing Officer received the declaration under section 158A(1)	the date on which the order under section 158A(3) is made by him  Note – However, such period cannot exceed 60 days.
(5)	Where an application made before the Incometax Settlement Commission is rejected by it or is not allowed to be proceeded with by it	the date on which an application is made before the Settlement Commission under section 245C	the date on which the order u/s 245D(1) is received by the PC or CIT u/s 245D(2)
(6)	Where an application is made before the AAR u/s 245Q(1)	the date on which an application is made before the AAR u/s 245Q(1)	the date on which the order rejecting the application is received by the PC/CIT u/s 245R(3)                     (or) the date on which the advance ruling pronounced by it is received by the PC/CIT u/s 245R(7)
(7)	Where reference(s) for exchange of information is made by a competent authority	the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A	the date on which the information requested is last received by the PC/CIT                (or) a period of one year, whichever is less
(8)	the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or
(9)	the period during which the assessment proceeding is stayed by an order or injunction of any court.

 

(iv) However, where immediately after the exclusion of the aforesaid period, the period of limitation referred to in section 153(1)/(2)/(3)/(8) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than 60 days, such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be deemed to be extended accordingly.

(v) Further, where the period available to the Transfer Pricing Officer is extended to 60 days in accordance with the proviso to section 92CA(3A) and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than 60 days, such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be deemed to be accordingly extended.

(vi) (a) Where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, after the exclusion of the period under section 245HA(4), would be not less than one year; and

(b) where such period of limitation is less than 1 year, it shall be deemed to have been extended to 1 year;

(c) This would apply for the purposes of determining the period of limitation under sections 149, 153B, 154, 155 and 158BE and for the purposes of payment of interest under section 244A.

(vii) For the purposes of this section, ,—

	Case	Consequence
(a)	Where, by an order referred to in section 153(6)(i), any income is excluded from the total income of the assessee for an assessment year	An assessment of such income for another assessment year shall, for the purposes of sections 150 and 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order
(b)	Where, by an order referred to in section 153(6)(i), any income is excluded from the total income of one person and held to be the income of another person	An assessment of such income on such other person shall, for the purposes of section 150 and section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed.