A client once walked into my office holding a notice he’d received almost two years after his original return had been processed, utterly convinced the department had made some clerical mistake. It hadn’t. He was staring at a reassessment notice, and by the time he’d read it twice, he’d already burned through four of the thirty days he had to respond. That’s usually how this begins — not with a dispute over tax positions, but with plain confusion about what the notice even is and how much time is actually left.

Reassessment, or “reopening of assessment” as most people still call it, remains one of the most misunderstood corners of income tax law. It picked up a fresh set of section numbers when the Income-tax Act, 2025 came into force on 1 April 2026, and anyone still thinking purely in terms of Sections 147, 148 and 148A needs to recalibrate fast — though the underlying logic hasn’t changed nearly as much as the numbering has.

What Reassessment Actually Means

Under Section 279 of the Income-tax Act, 2025 (carrying forward the old Section 147), the Assessing Officer gets the power to bring back to tax any income that has “escaped assessment.” That phrase does a lot of work. It covers income you never reported, a deduction you claimed but weren’t entitled to, an exemption wrongly allowed, or even information that surfaces later — a search at someone else’s premises, a TDS mismatch, a tip-off routed from another department — that suggests your original assessment missed something.

What it does not cover is a mere change of opinion. If the Assessing Officer looked at a claim during the original assessment, asked questions about it, and accepted it, a different officer can’t reopen the case later simply because he reads the same facts differently. This principle survived the transition into the new Act intact, and it’s still one of your strongest defences in a reassessment dispute — courts have protected it for decades and there’s nothing to suggest that’s about to change.

The Process Before a Reassessment Notice Is Even Issued

This is where the 2025 Act actually tightened things up on paper, even if the broad structure will look familiar to anyone who dealt with reassessments after the 2021 amendment to the old Act.

Step One — The Show-Cause Stage Under Section 281

Before issuing a formal reassessment notice, the Assessing Officer has to give you a chance to explain why one shouldn’t be issued at all. This is Section 281 of the new Act, corresponding to the old Section 148A. You’ll typically get a show-cause notice setting out the information or material the department is relying on, with a window — usually not less than seven days, extendable on request — to respond. I tell every client the same thing at this stage: this reply matters more than most people realise, because a well-argued response here can stop the reassessment before it even starts. Once the formal notice goes out, you’re fighting a different battle altogether.

There are situations where this step gets skipped — for instance, where the information comes from a search, survey or requisition on the taxpayer or a related party. If that’s the stated basis of your notice, it’s worth checking carefully whether the department has correctly invoked that exception, because in my experience it’s sometimes stretched further than it should be.

Step Two — Approval From a Senior Officer

No reassessment notice goes out without sanction from a specified senior authority under Section 284 (old Section 151). This isn’t meant to be a rubber stamp — the sanctioning officer is supposed to actually examine whether the case for reopening holds up — though in practice, I’ve seen approvals that read like they were signed without a second look. If the sanction order itself looks mechanical, that’s a ground worth raising; courts have struck down reassessments before on exactly this point.

Step Three — The Actual Notice Under Section 280

Only after the first two steps does the Assessing Officer issue the notice under Section 280 (old Section 148), calling on you to file a return for the relevant tax year — even if you’ve already filed one — so the reassessment proceeding can formally begin. This notice has to be accompanied by the order disposing of your show-cause reply, and if that order went against you, it has to record reasons for saying so.

How Far Back Can They Go — Time Limits Under Section 282

This is the question every client asks first, and understandably so. Under Section 282 (old Section 149), the general rule is that a reassessment notice can’t be issued after three years and three months from the end of the relevant tax year. That window stretches to five years and three months only where the escaped income is Rs 50 lakh or more and is represented by an asset, expenditure in relation to a transaction, or certain specified entries — a threshold meant to reserve the longer limitation period for genuinely significant cases, not routine additions.

A practical example: say the department wants to reopen your assessment for Tax Year 2023-24 (the erstwhile AY 2024-25). The ordinary three-year-three-month window closes in June 2027. Unless the escaped income crosses the Rs 50 lakh threshold and fits the asset/expenditure/entry test, any notice issued after that date simply won’t survive a challenge — and I’ve gotten reassessments quashed on exactly this ground more than once, where the department either miscounted the limitation period or stretched the facts to justify the longer window.

Completing the Reassessment — Section 286

Once the notice is validly issued and you’ve filed, or been deemed to have filed, your return in response, the actual reassessment has to be completed within the time limit under Section 286 (old Section 153) — generally twelve months from the end of the tax year in which the notice was issued, though this can extend in specific circumstances such as a reference to a Transfer Pricing Officer. If the department runs past this deadline, the reassessment order itself becomes void, and that’s a date worth tracking on a calendar from day one rather than discovering as an afterthought during appeal.

What About Cases That Straddle the Two Acts

Here’s the part genuinely causing confusion right now, in the second half of 2026. Section 536(2)(c) of the 2025 Act makes it clear that any reassessment proceeding already pending when the new Act came into force on 1 April 2026 continues to be governed by the old 1961 Act provisions until it’s disposed of. So if you received a Section 148A notice in, say, February 2026 and it’s still working its way through the process, don’t assume the new section numbers apply to your case — they probably don’t, and quoting the wrong Act in your submissions can genuinely weaken your reply. Fresh notices issued on or after 1 April 2026, for tax years falling due under the new Act, are governed by Sections 279 to 286 as described above. This exact kind of transition-period confusion is something we work through in real detail in the Income Tax Litigation Mastery course, because getting the applicable law wrong at the first response stage is a mistake that’s genuinely hard to undo later.

How I’d Actually Respond to One of These Notices

• Don’t ignore the show-cause notice under Section 281 hoping it’ll quietly go away. A non-response is treated as acceptance of the department’s case, and you lose your best shot at stopping the reopening early.
• Ask for the “reasons to believe” or the underlying information, if it isn’t already attached in full. You’re entitled to see exactly what the department relied on before you’re expected to respond to it.
• Check the limitation period yourself. Don’t take the department’s word for which tax year or threshold applies — I’ve seen notices issued a few weeks past the valid window, and that’s worth catching early rather than waiting for appeal.
• If the notice is based on information from a third-party source — a bank, a registrar, another assessee’s search — ask for the underlying document, not just the department’s summary of it.
• File your response in writing, even if you’ve discussed the matter over a call or in person with the officer. Oral assurances don’t survive scrutiny later.

Common Mistakes I See Clients Make

The most frequent one, by far, is treating the Section 281 show-cause stage as optional paperwork and saving the real fight for later. The second is assuming that because the original assessment is years old, the department simply can’t act anymore — limitation periods matter, but they don’t save you automatically, and you need to actually check the dates rather than assume. The third is panicking and offering to settle before even checking whether the reopening itself is valid; quite a few reassessments collapse on jurisdictional grounds long before anyone gets to the merits of the addition.

FROM THE INCOME TAX LITIGATION MASTERY COURSE If you want the actual drafting approach behind a reassessment reply — not just the sections, but formats and templates that hold up with Assessing Officers and in appeal — this is covered in depth in Income Tax Litigation Mastery (1961 + 2025 Act). Explore the Income Tax Litigation Mastery course

 

Frequently Asked Questions

What is the difference between Section 147 and Section 148 of the Income Tax Act (now Sections 279 and 280)?

Section 279 (old 147) is the source of the Assessing Officer’s power to reassess income that has escaped assessment. Section 280 (old 148) is the actual notice issued once that power is validly invoked, calling on you to file a return for reassessment.

Can I challenge a reassessment notice without going to court?

Yes — your first and often most effective opportunity is your reply to the show-cause notice under Section 281 (old 148A), before the formal notice is even issued. A strong reply here can get the proposed reopening dropped entirely, without any litigation.

What happens if I don’t respond to a reassessment notice at all?

The Assessing Officer can proceed with a best-judgment assessment based on whatever information is available, usually adding back the entire disputed amount with no benefit of doubt in your favour. It’s one of the costliest mistakes a taxpayer can make.

Does the Income-tax Act, 2025 change the reassessment time limits?

The core limitation structure — three years three months ordinarily, five years three months for escaped income of Rs 50 lakh or more tied to an asset, expenditure or specified entry — carries forward into Section 282 of the 2025 Act. Always check which Act governs your proceeding based on when it was actually initiated, not just the current calendar date.

My reassessment notice came for a year that was already assessed under the old Act — which law applies now?

If the proceeding was already pending as on 1 April 2026, Section 536(2)(c) of the 2025 Act keeps it governed by the old 1961 Act provisions until it’s disposed of. Fresh notices issued after that date, for tax years falling under the new Act, follow the new section numbers described in this article.

A quick caveat, in the spirit of not overstating certainty where it isn’t warranted: the mapping used in this article — Sections 279, 280, 281, 282, 284 and 286 corresponding to old Sections 147, 148, 148A, 149, 151 and 153 — is cross-checked against two independent sources at the time of writing. The Income-tax Rules, 2026 are themselves still being finalised in places, so if you’re relying on this for an actual ongoing matter, it’s worth double-checking the specific section against the current notified text before you file anything formal.