Section 279 Income escaping assessment.

Income-tax Act, 2025

At a Glance

The document under commentary is Clause 279 of the Income Tax Bill, 2025 - (Old Version), titled "Income escaping assessment." It sets out the Assessing Officer's power to assess or reassess income and to recompute losses, depreciation or other allowances where income chargeable to tax has escaped assessment. The provision matters to taxpayers and the tax department because it governs reassessment powers and procedural exceptions; the effective date or decision date is Not stated in the document.

Background & Scope

Statutory hooks: Clause 279 is placed in the Part concerning Procedure for assessment of the Income Tax Bill, 2025, and is cross-related to sections 280, 281 and 284 (as per the text). The clause covers situations where "any income chargeable to tax has escaped assessment" for a tax year (defined in the clause as "the relevant tax year"). The text provides no definitional elaboration for "income escaping assessment" beyond the phrase itself. Not stated in the document: legislative intent beyond the power to assess/reassess; Not stated in the document: definitions of "assessee," "Assessing Officer," or procedural timelines.

Statutory Provision Mode

Text & Scope

Coverage: Clause 279 applies where, in the case of an assessee, any income chargeable to tax has escaped assessment for a tax year (the "relevant tax year"). The Assessing Officer (AO) is empowered, subject to the provisions of sections 280 to 286, to:

• assess or reassess income for the relevant tax year; and
• recompute the loss or the depreciation allowance or any other allowance or deduction for that year.

Subsection (2) expands the AO's power during proceedings under this clause to assess or reassess (a) the income which has escaped assessment and (b) income in respect of other issues that come to his notice subsequently, "irrespective of the fact that the provisions of sections 280, 281 and 284 were not complied with." The clause explicitly situates these powers within the framework of sections 280-286.

Interpretation

Interpretive cues: The provision is permissive ("may"), conferring discretionary powers on the AO rather than mandating reassessment. The clause ties the exercise of powers to procedural boundaries by reference to sections 280-286, suggesting that the AO's reassessment powers should be read and exercised in light of the procedural regime set out in that range of sections. The explicit statement that the AO may proceed "irrespective" of non-compliance with specified sections indicates a legislative intent to allow the AO to disregard certain procedural defaults when new issues or escaped incomes are detected during proceedings under this clause. Not stated in the document: any limiting language on the AO's discretion beyond the cross-reference to sections 280-286 (e.g., time limits, mandatory reasons, or proof thresholds).

Exceptions/Provisos

The sole textual carve-out is that the AO's power is "subject to the provisions of sections 280 to 286," which implies that other procedural or substantive constraints in that span apply. Separately, subsection (2) provides an express exception to reliance on compliance with sections 280, 281 and 284, by allowing the AO to proceed "irrespective" of non-compliance with those sections. Not stated in the document: any express exceptions protecting taxpayers (e.g., requirement of material evidence or threshold of discovery) beyond those cross-references.

Illustrations

• Example 1: An assessee files a return for tax year X but omits income from a particular rent receipt. During assessment proceedings under Clause 279, the AO discovers the omission. The AO may assess or reassess that omitted income and recompute related depreciation or deductions for tax year X. (This follows directly from subsection (1) and (2)(a).)
• Example 2: During reassessment for tax year Y relating to omitted business income, the AO notices a separate unassessed capital gain (an "other issue") that came to light in the course of those proceedings. The AO may assess or reassess that separate income even if sections 280, 281 and 284 were not complied with. (Derived from subsection (2)(b).)
• Example 3: Not stated in the document: any timing example (e.g., time limit for reassessment) or procedural steps for notice and opportunity to be heard.

Interplay

The clause expressly references sections 280 to 286, and subsection (2) specifically mentions sections 280, 281 and 284. The textual interplay suggests that reassessment powers under Clause 279 must be exercised in the broader procedural regime set by sections 280-286, but that the AO is empowered to ignore non-compliance with certain sections when new issues are discovered during proceedings. Not stated in the document: how conflicts between Clause 279 and the detailed provisions of sections 280-286 are to be resolved, or whether any particular section within 280-286 takes precedence.

Differences between the two provisions and practical impact

Document 1 (Section 279 of the Income-tax Act, 2025) and Document 2 (Clause 279 of the Income Tax Bill, 2025 - Old Version) contain materially similar core grants of power but differ in structure and specificity:

• Structure and wording: The Act version (Document 1) presents two subsections: (1) empowers the Assessing Officer (AO) to assess/reassess or recompute loss/depreciation/other allowances where income has escaped assessment; (2) permits the AO to assess or reassess any issue which has escaped assessment and which comes to his notice subsequently, irrespective of non-compliance with section 281. The Bill old version (Document 2) contains more detailed subparagraphing: subsection (1) separately lists (a) assess or reassess income and (b) recompute loss/depreciation/other allowances; subsection (2) explicitly lists (a) the income which has escaped assessment and (b) income in respect of other issues that come to his notice, and refers to non-compliance with sections 280, 281 and 284.
  • Practical impact: The Bill's older text is more granular and expressly cross-references three other sections (280, 281, 284) as potentially not complied with; the Act text narrows the non-compliance cross-reference to section 281 only. That narrowing in the Act reduces the list of procedural safeguards/requirements whose non-compliance can be disregarded for subsequent assessments. Practically, taxpayers may lose an argument based on non-compliance with sections 280 or 284 under the enacted wording as compared to the Bill's older draft; conversely, the Act clarifies fewer exceptions, which may limit AO discretion to ignore procedural non-compliance beyond section 281.
• Scope of subsections addressing "other issues": The Bill expressly permits reassessment of "income in respect of other issues which come to his notice subsequently" and frames it with three referenced sections; the Act likewise permits reassessing "income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently" but only mentions section 281 non-compliance.
  • Practical impact: The Act's language ("any issue" vs Bill's "other issues") is substantively similar, but the narrower cross-reference to non-compliance potentially limits the AO's ability to proceed where procedural steps u/ss 280 or 284 were not completed. This change could increase litigation around the scope and applicability of procedural non-compliance as a bar to reassessment.
• Placement and phrasing of proviso regarding section references: The Bill frames the non-compliance exception as "irrespective of the fact that the provisions of sections 280, 281 and 284 were not complied with." The Act places the equivalent exception but only cites section 281 and embeds it within a slightly different sentence construction.
  • Practical impact: By singling out section 281, the Act may be read to preserve the substantive effect of compliance with sections 280 and 284; taxpayers may seek to rely on non-compliance with sections 280/284 as a defense. The AO's procedural options may be marginally constrained compared with the Bill's older version.

Practical Implications

• Compliance and risk areas: Taxpayers face potential reassessment not only for the specific escaped income but also for "other issues" that the AO may discover in the course of proceedings. The AO's discretion to proceed "irrespective" of non-compliance with sections 280, 281 and 284 increases the risk of additional assessments arising from procedural lapses. Taxpayers must therefore be vigilant in initial disclosures and supporting documentation to reduce the scope for reassessment under this clause.
• Record-keeping/evidence: Given the AO's power to reassess and to recompute losses and allowances, taxpayers should maintain contemporaneous records supporting claimed losses, depreciation schedules and other deductions for the relevant tax years. While the clause does not specify forms or timelines, documentation that substantiates the original return entries will be relevant if AO initiates reassessment proceedings.

Key Takeaways

• Clause 279 empowers the Assessing Officer to assess/reassess escaped income and to recompute losses, depreciation, and other allowances for the relevant tax year.
• The AO's powers are framed "subject to the provisions of sections 280 to 286," indicating procedural linkage to that range of sections.
• Subsection (2) allows reassessment of other issues that come to the AO's notice during proceedings, expressly permitting action "irrespective of the fact that the provisions of sections 280, 281 and 284 were not complied with."
• The provision is permissive ("may"), conferring discretion rather than a mandatory duty on the AO.
• Key omissions in the text: specific timelines, notice requirements, standards of proof, and definitions for terms such as "income escaping assessment" are Not stated in the document.
• Practical consequence: taxpayers should ensure robust record-keeping because reassessment may encompass additional issues discovered during proceedings, even where certain procedural sections were not complied with.
• Comparative note (Bill old version): the older draft explicitly referenced non-compliance with three sections (280, 281 and 284), which may be broader than the enacted Act's narrower reference (section 281 only). This may affect the scope of permissible reassessments tied to procedural non-compliance. (This comparative point is derived from the two provided documents.)

Full Text:

Section 279 Income escaping assessment.