Section 279 — Income Escaping Assessment | ITA 2025

Section 279 — - INCOME ESCAPING ASSESSMENT

Section 279 is the substantive equivalent of 1961 s. 147 -- the foundational provision authorising RE-OPENING OF ASSESSMENT for years where INCOME has ESCAPED ASSESSMENT. POST FA 2021 WATERSHED: the provision was substantially restructured replacing 'reason to believe' standard with 'INFORMATION SUGGESTING INCOME HAS ESCAPED ASSESSMENT' standard, with mandatory pre-notice procedure under s. 281 (1961 s. 148A). The new framework provides STRONGER PROCEDURAL SAFEGUARDS to assessee but allows broader reopening based on 'information' (DGIT-Inv specified information / tax-evasion-petitioned / etc.). Time-limits under s. 282 (1961 s. 149) progressively reduced for non-abnormal cases. Critical for tax-controversy practice -- many high-value assessments reopened under the FA 2021 framework.

Statutory text — Income-tax Act, 2025

Marginal note -- Income escaping assessment

(1) If, in the case of an assessee, any income chargeable to tax has escaped assessment for any tax year (herein and in sections 280 to 286 referred to as the relevant tax year), the Assessing Officer may, subject to the provisions of sections 280 to 286, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the relevant tax year.

(2) For the purposes of assessment or reassessment or recomputation under sub-sec- tion (1), the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 281 have not been complied with. [(3) The “Assessing Officer” for the purposes of sections 280 and 281 shall mean to 58 be an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in section 273(3).] Issue of notice where income has escaped assessment.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 279	INCOME-TAX ACT, 1961 -- s. 147 [FA 2021]
Sub-s. (1) -- 'information suggesting' standard	1961 s. 147 [FA 2021 substituted]
Pre-notice procedure mandatory (s. 281)	1961 s. 148A [FA 2021]
Time-limit (s. 282) -- 3 / 5 / 10 years	1961 s. 149 [FA 2021/2022 reduced]
Sanction by senior authorities (s. 284)	1961 s. 151

FA 2021 WATERSHED REFORM

PRE-FA 2021: 'reason to believe' standard; AO subjective; broad reopening but heavy litigation on 'reason' validity. POST FA 2021: 'INFORMATION SUGGESTING INCOME HAS ESCAPED ASSESSMENT' -- specific information based standard. INFORMATION CATEGORIES: (a) Information from DGIT (Inv) -- intelligence-based; (b) Information from CBDT-prescribed sources; (c) Annual Information Statement (AIS) / Form 26AS / TIS-derived; (d) Cross-border information exchange (CRS / FATCA / DTAA Article 26); (e) Survey / search-derived (s. 247 / 253); (f) Audit objections raised by C&AG; (g) Court / tribunal observations / judicial findings.

PROCEDURAL FRAMEWORK

FA 2021 introduced MANDATORY 4-STEP PROCESS: (I) AO has information suggesting escape (s. 279); (II) PRE-NOTICE INQUIRY under s. 281 (1961 s. 148A): show-cause + assessee response; AO order whether to issue notice; (III) NOTICE under s. 280 (1961 s. 148): if AO concludes information valid, issues reassessment notice; (IV) REASSESSMENT under s. 270 procedure: scrutiny / faceless framework. TIME-LIMITS (s. 282 / 1961 s. 149): (a) 3 YEARS from end of relevant tax year -- normal cases; (b) 5 YEARS -- where escape > INR 50 lakh; (c) 10 YEARS -- search-cases / exceptional escape (FA 2024 reduced from 11 years post FA 2021). SANCTION (s. 284 / 1961 s. 151): senior authority approval (PCIT/CIT level for typical; PCCIT/CCIT for >5-year cases) MANDATORY before notice.

PRACTITIONER NOTES

(i) PRE-NOTICE PROCEDURE COMPLIANCE -- s. 281 mandatory; non-compliance renders subsequent notice void. (ii) RESPONSE QUALITY -- comprehensive response to s. 281 show-cause critical; documentary evidence; explain alleged escape. (iii) SANCTION VALIDATION -- check authority level approving notice (PCIT/CIT/PCCIT); incorrect-level sanction = invalid notice. (iv) TIME-LIMIT DEFENCE -- s. 282 limits strict; barred-by-time defence powerful. (v) ESCAPE QUANTUM CHECK -- INR 50 lakh threshold for 5-year window crucial. (vi) WRIT JURISDICTION -- early-stage challenge to s. 281 / 280 notices via writ at HC; before reassessment proceeds. (vii) NATURAL JUSTICE -- show-cause adequate / personal hearing / specific allegations; lacuna creates challenge basis.

CROSS-REFERENCES

Section 280 -- Notice for escaped assessment.
Section 281 -- Pre-notice procedure (FA 2021).
Section 282 -- Time-limit for notice.
Section 283 -- Other provisions on escaped assessment.
Section 284 -- Sanction for notice.
Section 270 -- Assessment (reassessment via).
Section 286 -- Time-limit for reassessment completion.
Section 247 -- Search and seizure (10-year window trigger).
Constitutional Article 226 -- writ jurisdiction.

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