Section 10A of The Interest-tax Act, 1974
1[10A. Time limit for completion of assessments and re-assessments.--(1) No order of assessment shall be made under section 8 at any time after the expiry of two years from the end of the assessment year in which the interest was first assessable.
- (2)No order of assessment or re-assessment shall be made under section 10 after the expiry of two years from the end of the financial year in which the notice under that section was served.
- (3)Notwithstanding anything contained in sub-sections (1) and (2), and order of fresh assessment in pursuance of an order passed under section 15, section 16, section 19 or section 20, setting aside or cancelling an assessment may be made at any time before the expiry of two years from the end of the financial year in which the order under section 15 of section 16 is received by the Commissioner or, as the case may be, the order under section 19 or section 20 is passed by the Commissioner.
- (4)The provisions of sub-sections (1) and (2) shall not apply to the assessment or re-assessment made in consequence of, or to give effect to, any finding or direction contained in an order under section 15 or section 16 or section 19 or section 20 of this Act or section 256 or section 260 of the Income-tax Act as applicable to this Act by virtue of section 21 of this Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act and such assessment or re-assessment may, subject to the provisions of sub-section (3), be completed at any time. Explanation 1.--In computing the period of limitation for the purposes of this section--
- (i)the time taken in reopening the whole or any part of the proceeding; or
- (ii)the period during which the assessment proceeding is stayed by an order or injunction of any Court, shall be excluded. Explanation 2.--Where, by an order referred to in sub-section (4), any interest is excluded from the chargeable interest for an assessment year in respect of an assessee, then, an assessment of such interest for another assessment year shall, for the purposes of section 10 and this section, be deemed to be one made in consequence of, or to give effect to, any finding or direction contained in the said order.]
Summary
- An initial assessment order cannot be made more than two years after the end of the assessment year when the interest first became taxable.
- A reassessment order for escaped tax must be completed within two years from the end of the financial year when the reassessment notice was served.
- If an appeal order cancels an assessment and requires a fresh one, the new assessment must be finished within two years from the end of the financial year when the appeal order is received.
- These specific two-year limits do not apply if an assessment is simply being changed to follow a finding or direction from an appeals court, which can be done at any time.
- Any time taken to reopen proceedings, or any period where a court puts the assessment on hold, is not counted against these time limits.
Practical examples
FAQ
1. How long does the tax official have to complete a standard assessment?
They cannot make an order of assessment after the expiry of two years from the end of the assessment year in which the interest was first assessable.
2. What is the deadline for completing a reassessment for escaped tax?
It must be completed within two years from the end of the financial year in which the reassessment notice was served.
3. Does a court pausing the process reduce the time the tax official has?
No, the period during which the assessment proceeding is stayed by an order or injunction of any court is excluded from the time limit calculation.
Test yourself
Q1.Under Section 10A of The Interest-tax Act, 1974, what is the absolute deadline for completing a standard initial assessment under Section 8?
Q2.Under Section 10A of The Interest-tax Act, 1974, how is the time limit calculated for completing a reassessment order under Section 10?
Q3.Under Section 10A of The Interest-tax Act, 1974, what exception exists to the strict time limits if an assessment must simply give effect to a finding from an appeal under Section 15?
Q4.Under Section 10A of The Interest-tax Act, 1974, how does a court injunction staying the assessment process affect the time limit calculation?