Section 270 — Assessment | ITA 2025

Section 270 — - ASSESSMENT

Section 270 is the substantive equivalent of 1961 s. 143 -- THE MOST FREQUENTLY-INVOKED ASSESSMENT PROVISION in the Act, governing every taxpayer's return-processing under the central CPC system at Bangalore and AO scrutiny / NFAC pathways. The provision is one of the most consequential procedural sections (~9.3K bytes) covering: (1) auto-processing of returns under sub-s. (1) with six categories of adjustments [arithmetical / incorrect-claim / cross-year inconsistency / late-loss / audit-report-disallowance / Chapter-VIII-C-deduction-late-filing]; (2) communication to assessee with 30-day response window before adjustment; (3) loss-only-intimation; (4) 9-month outer-limit for sub-s. (1) intimation; (5)-(10) scrutiny assessment / regular-assessment / faceless-assessment integration. POST FA 2020 IDENTIFIES TWO ASSESSMENT ARMS: (a) AUTO-PROCESSING under CPC-Bangalore (sub-ss. 1-5) -- desk-based summary; (b) SCRUTINY ASSESSMENT under NFAC / Faceless Assessment Scheme (sub-ss. 6-10) -- comprehensive examination, e-proceedings only post FA 2020.

Statutory text — Income-tax Act, 2025

Marginal note -- Assessment

(1) Where a return has been made under section 263, or in response to a notice under section 268(1) such return shall be processed in the following manner:—

(a) the total income or loss shall be computed after making the adjustments towards the following:—

(i) any arithmetical error in the return; or

(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; or

(iii) any such inconsistency in the return, with respect to the information in the return of any preceding tax year, as may be prescribed; or

(iv) disallowance of loss claimed, if return of the tax year for which set off of loss is claimed was furnished beyond the due date specified under section 263(1); or

(v) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return; or

(vi) disallowance of deduction claimed 55[***] under any of the provi- sions of Chapter VIII-C, if the return is furnished beyond the due date specified under section 263(1);

(b) the tax, interest and fee, if any, shall be computed on the basis of the total income computed under clause (a);

(c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax, interest and fee, if any, computed under clause (b) by—

(i) any tax deducted at source;

(ii) any tax collected at source;

(iii) any advance tax paid;

(iv) any rebate or relief allowable under Chapter IX;

(v) any tax paid on self-assessment; and

(vi) any amount paid otherwise by way of tax, interest or fee;

(d) an intimation shall be sent to the assessee specifying the sum determined to be payable by, or refund due to, the assessee under clause (c); and

(e) the amount of refund due to the assessee in pursuance of the determi- nation under clause (c) shall be granted to the assessee.

(2) Before making any adjustment under sub-section (1)(a),—

(a) a communication is to be given to the assessee of such adjustments either in writing or in electronic mode;

(b) the response received from the assessee in this regard, if any, shall be considered; and in a case where no response is received within thirty days of the issue of such communication, such adjustments shall be made and thereafter the intimation under sub-section (1)(d) shall be sent.

55. Words “under section 144 or” omitted by the Finance Act, 2026, w.e.f. 1-4-2026.

(3) For the purposes of sub-section (1), an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him.

(4) No intimation under sub-section (1) shall be sent after the expiry of nine months from the end of the financial year in which the return is made.

(5) For the purposes of sub-sections (1) to (4),—

(a) “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return,—

(i) of an item, which is inconsistent with another entry of the same or some other item in such return; or

(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or

(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

(b) “the acknowledgement of the return” shall be deemed to be the intima- tion in a case where no sum is payable by, or refundable to, the assessee under sub-section (1)(c), and where no adjustment has been made under sub-section (1)(a).

(6) For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section.

(7) The scheme made under sub-section (6) shall, as soon as may be laid before each House of Parliament.

(8) Where a return has been furnished under section 263 or in response to a notice under section 268(1), the Assessing Officer or the prescribed income-tax authority, if, considers it necessary or expedient to ensure that the assessee—

(a) has not understated the income;

(b) has not computed excessive loss;

(c) has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein,—

(i) either to attend the office of the Assessing Officer; or

(ii) to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return.

(9) No notice under sub-section (8) shall be served on the assessee after the expiry of three months from the end of the financial year in which the return is furnished.

(10) On the day specified in the notice issued under sub-section (8), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer, subject to the provisions of sub-sections (11) and (13), shall—

(a) by an order in writing, make an assessment of the total income or loss of the assessee; and

(b) determine the sum payable by him or refund of any amount due to him on the basis of such assessment.

(11) In the case of entities referred to in sub-section (12), which are required to furnish the return of income under section 263(1)(a)(iv), no order under sub-sec- tion (10) making an assessment of the total income or loss of any such entity shall be made by the Assessing Officer, without giving effect to the provisions of section 11, unless—

(i) the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions mentioned in Schedule III (Table: Sl. No. 23, 24 or 25), by such entity, where in his view such contravention has taken place; and

(ii) the approval granted to such entity has been withdrawn or notification issued in respect of such entity has been rescinded.

(12) For the purposes of sub-section (11), the entities shall be—

(a) a research association referred to in Schedule III (Table: Sl. No. 23);

(b) an association or institution referred to in Schedule III (Table: Sl. No. 24);

(c) an institution referred to in Schedule III (Table: Sl. No. 25).

(13) In the case of a registered non-profit organisation, where the Assessing Officer is satisfied that any such entity has committed any specified violation as mentioned in section 351(1), he shall—

(a) send a reference to the Principal Commissioner or Commissioner to withdraw the approval or registration; and

(b) no order under sub-section (10) making an assessment of the total income or loss of such registered non-profit organisation shall be made by him without giving effect to the order passed by the Principal Commissioner or Commissioner under section 351(2)(ii)(A) or (B).

(14) While making an assessment under sub-section (10), where the Assessing Officer is satisfied that the activities of the university, college or other institution referred to in section 45(3)(a) (herein referred to as entity) are not being carried out in accordance with all or any of the conditions subject to which such entity was approved, then—

(a) he may, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned entity, recommend to the Central Government to withdraw the approval; and

(b) the Central Government may by order, withdraw the approval and forward a copy of the order to the concerned entity and the Assessing Officer.

(15) Where a regular assessment under sub-section (10) or section 271 is made,—

(a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment;

(b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. Best judgment assessment.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 270	INCOME-TAX ACT, 1961 -- s. 143
Sub-s. (1) -- auto-processing of return with 6 adjustment categories	1961 s. 143(1)
Sub-s. (1)(a)(i)-(vi) -- arithmetical / incorrect-claim / inconsistency / late-loss / audit-report / Chapter VIII-C late	1961 s. 143(1)(a) clauses
Sub-s. (2) -- 30-day response before adjustment (FA 2016)	1961 s. 143(1)(a) Proviso [FA 2016]
Sub-s. (3) -- intimation for loss-only return	1961 s. 143(1) Proviso
Sub-s. (4) -- 9-month outer-limit for intimation (FA 2024 reduced from 12 months)	1961 s. 143(1) Proviso [FA 2024]
Sub-s. (5) -- definitions for sub-ss. (1)-(4)	1961 s. 143(1) Explanation
Sub-s. (6) -- s. 143(2) scrutiny notice / NFAC	1961 s. 143(2)
Sub-s. (10) -- assessment order under s. 143(3) / Faceless	1961 s. 143(3) read with s. 144B

STATUTORY ARCHITECTURE -- TWO-ARM ASSESSMENT FRAMEWORK

ARM 1 -- AUTO-PROCESSING (sub-ss. 1-5): every return filed under s. 263 (or in response to s. 268(1) inquiry notice) goes through CPC-Bangalore auto-processing. Six categories of permissible adjustments under sub-s. (1)(a)(i)-(vi): (i) ARITHMETICAL ERROR -- incorrect addition / subtraction / multiplication etc.; (ii) INCORRECT CLAIM apparent from any information in the return -- e.g., 80C deduction claimed for non-eligible items; (iii) CROSS-YEAR INCONSISTENCY -- inconsistency with information from preceding year's return as may be prescribed (Rule 12 / equivalent under 2026 Rules); (iv) LATE-LOSS DISALLOWANCE -- loss-set-off claimed where loss-year's return was filed beyond s. 263(1) due date; (v) AUDIT REPORT DISALLOWANCE -- expenditure / income increase indicated in audit report (Form 3CD) but not in return; (vi) CHAPTER VIII-C DEDUCTION DISALLOWANCE -- deduction claimed under any of ss. 122-148 if return filed beyond s. 263(1) due date. (Note: words 'under section 144 or' omitted by FA 2026 effective 1-Apr-2026.) PROCEDURAL SAFEGUARD (sub-s. 2): before any sub-s. (1)(a) adjustment, COMMUNICATION must be given to assessee in writing / electronic mode; 30-DAY response window; non-response treated as concurrence. FA 2016 introduced this critical safeguard. OUTCOME (sub-s. 1(d)): INTIMATION to assessee specifying tax payable / refund due. REFUND PROCESSING (sub-s. 1(e)): refund granted on auto-processing. TIMING LIMIT (sub-s. 4): 9 MONTHS from end of FY in which return filed (FA 2024 reduced from 12 months). After this, no sub-s. (1) intimation can be issued.

ARM 2 -- SCRUTINY ASSESSMENT (sub-ss. 6-10)

Sub-s. (6) authorises AO / NFAC to issue NOTICE under sub-s. (6) (1961 s. 143(2)) calling for documents / examining the return for completeness / correctness. SCRUTINY SELECTION via: (i) Computer-Assisted-Scrutiny-Selection (CASS) -- algorithm-based; (ii) Manual selection by AO based on parameters (high-value transactions / mismatches / etc.). TIMELINE: notice must be served WITHIN 3 MONTHS from end of relevant FY in which return filed (FA 2021 reduced from 6 months). FACELESS FRAMEWORK (post FA 2020 / s. 273): under National Faceless Assessment Centre (NFAC) Bengaluru: (a) Notice issued to taxpayer through e-portal; (b) Response submitted online; (c) Cases assigned dynamically to Assessment Units (AUs) located across India; (d) Verification Units (VUs) handle inquiries; (e) Technical Units (TUs) provide technical assistance; (f) Review Units (RUs) review draft assessments; (g) Final order via DRAFT-ASSESSMENT-ORDER process (sub-s. 10 read with s. 274 PCIT reference / s. 275 DRP). SUB-S. (10) ASSESSMENT ORDER: AO determines total income / total loss / tax payable / refund due. Assessee may seek personal hearing under FA 2022 amendment (face-to-face video conference). ALTERNATIVE: BEST-JUDGMENT ASSESSMENT under s. 271 (1961 s. 144) where return not filed / non-response to notices / books not produced.

CASE LAW -- LEADING DECISIONS

(i) ACIT v. Hotel Blue Moon (SC, 2010, 321 ITR 362) -- pre-FA 2016 sub-s. (1) intimation: auto-processing by CPC valid; AO cannot adjust beyond enumerated categories. (ii) CIT v. Industrial Engineering Projects (Del HC) -- 30-day response window; AO must consider response before adjustment. (iii) CIT v. Sri Krishna Bhandar Trust -- intimation under s. 143(1) is appealable u/s 246A (now s. 357 of 2025 Act) -- can be challenged before CIT(A). (iv) Faceless Scheme litigation (post-2020): natural-justice principles -- show-cause / personal-hearing / opportunity-to-respond mandatorily required. (v) PCIT v. Sahara India Mutual Benefit (Del HC) -- scrutiny notice timeliness (3-month limit); time-limit strictly enforced. (vi) FA 2024 / FA 2026 amendments and CBDT Notifications -- governing latest faceless mechanics.

PLANNING NOTES (TWELVE AREAS)

(i) RETURN PRECISION -- minimise auto-processing adjustments; cross-check arithmetical / Form 26AS / AIS / TIS information before filing. (ii) AUDIT REPORT (FORM 3CD) RECONCILIATION -- expenditure / income in Form 3CD must be in return; mismatch triggers sub-s. (1)(a)(v). (iii) PRIOR-YEAR INCONSISTENCY -- review preceding-year return for Schedule mismatches; especially significant for business loss / depreciation c/f. (iv) LATE-LOSS RETURN -- file LOSS RETURN by ORIGINAL due date (sub-s. 263(1)) for c/f eligibility; belated loss-return disqualifies under sub-s. (1)(a)(iv). (v) CHAPTER VIII-C TIMING -- claim Chapter VIII-C deductions only in returns filed by due date; late filing disqualifies under sub-s. (1)(a)(vi). (vi) 30-DAY RESPONSE -- monitor e-filing portal for sub-s. (2) communications; non-response = adjustment. (vii) 9-MONTH WATCH -- intimation must come within 9 months; beyond that period, sub-s. (1) cannot be invoked. (viii) SCRUTINY NOTICE 3-MONTH WINDOW -- if no scrutiny notice within 3 months of FY-end, assessee CAN treat return as accepted. (ix) FACELESS SUBMISSIONS -- comprehensive documentation; all records uploaded; no piecemeal submission. (x) PERSONAL HEARING REQUEST -- exercise right under FA 2022; especially in complex cases; preserves due-process protection. (xi) DRAFT ASSESSMENT REVIEW -- review draft order carefully before finalisation; assessee has limited window to object. (xii) APPEAL FROM s. 270 -- CIT(A) appeal (s. 357) within 30 days of order; orders both under sub-s. (1) and sub-ss. (6)-(10) appealable.

CROSS-REFERENCES

Section 263 -- Return of income.
Section 268 -- Inquiry before assessment.
Section 271 -- Best judgment assessment.
Section 273 -- Faceless Assessment.
Section 274 -- PCIT reference.
Section 275 -- DRP reference.
Section 286 -- Time limit for completion of assessment.
Section 287 -- Rectification.
Section 357 -- Appeals to CIT(A).
Income-tax Rules, 2026 -- Form 3CD audit report / Schedule formats.
CPC-Bangalore notification -- auto-processing.
NFAC Notification 2020 -- faceless assessment scheme.

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