Section 282 Time limit for notices u/ss 280 and 281.

Income-tax Act, 2025

At a Glance

These texts reproduce Clause/Section 282 of the Income Tax Bill/Act, 2025, setting time limits for issuance of notices u/ss 280 and 281 (notices and show-cause notices in cases of income escaping assessment). The provisions delineate outer limits (four years; up to six years in specified circumstances) and a one-year minimum waiting period. The rule affects taxpayers, assessing officers and the Department; effective/decision date: Not stated in the document.

Background & Scope

Statutory hooks: references within the text are to sections 280 and 281 of the same enactment (Procedure for assessment). The provision governs temporal jurisdiction to issue notices where income is alleged to have escaped assessment. Definitions: the text does not supply definitions (for example, of "relevant tax year", "books of account", "other documents", "income chargeable to tax which has escaped assessment" or "Assessing Officer"). Not stated in the document. Scope: applies to notices u/ss 280 (notice to assess) and 281 (notice to show cause) for the relevant tax year; sets both outer and inner temporal cut-offs and an exception where certain evidentiary thresholds are met or information indicates escaped income likely aggregating to fifty lakh rupees or more.

Statutory Provision Mode

Text & Scope

Clause/Section 282 provides a three-part temporal scheme.

• Clause (1) - Notices u/s 280 (presumably a notice initiating proceedings for assessment of escaped income): barred after four years and three months from the end of the relevant tax year, unless a narrower exception in (1)(b) applies. A secondary window permits issuance between four years and three months and six years and three months only where the Assessing Officer possesses books of account or other documents/evidence related to an asset, expenditure, transaction or entry which shows that income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more.
• Clause (2) - Notices u/s 281 (notice to show cause): barred if four years have elapsed from the end of the relevant tax year, unless the case falls under (2)(b). An extended window up to six years is allowed where, as per information with the Assessing Officer, the income chargeable to tax which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more.
• Clause (3) - A minimum waiting period: no notice u/s 280 or 281 shall be issued within one year from the end of any tax year.

Interpretation

Legislative intent and interpretive principles indicated by the text: The provision seeks to balance finality for taxpayers with the Department's interest in pursuing substantial cases of escaped income. The four-year rule (and four-year rule with three months for section 280) provides a general limitation period; the extension to six years is conditional on the presence of evidence or information indicating significant escaped income (threshold: fifty lakh rupees). The separate one-year bar suggests a cooling-off or administrative window during which notices cannot be issued, possibly to allow other processes (filing, assessment) to conclude; however, the document does not explain the policy reasons. Not stated in the document.

Exceptions/Provisos

The text contains two express exceptions/provisos:

• For section 280 - the extension up to six years applies only where the Assessing Officer "has in his possession" (in the Act text) books of account or other documents or evidence related to an asset/expenditure/transaction/entry showing escaped income likely amounting to Rs. 50,00,000 or more.
• For section 281 - the extension up to six years applies where, "as per the information with the Assessing Officer", the escaped income amounts to or is likely to amount to Rs. 50,00,000 or more. The text does not require possession of the documents; it requires information indicating the quantum.

Illustrations

• Example 1: A tax year ending 31 March 2025. Under clause (2)(a), a notice u/s 281 cannot be issued after 31 March 2029 (four years). However, if on 1 April 2028 the Assessing Officer has information that escaped income of Rs. 60 lakh is likely, a notice can still be issued up to 31 March 2031 (six years). These dates are illustrative arithmetic consistent with the text; the document does not provide calendar examples. Not stated in the document.
• Example 2: For section 280, the four years and three months cut-off: for the same year ending 31 March 2025, the ordinary bar would apply after 30 June 2029; but between 1 July 2029 and 30 June 2031 a notice may be issued only if the AO has in his possession books/documents showing escaped income of at least Rs. 50 lakh. The document does not define the nature of acceptable documents. Not stated in the document.

Interplay

Interaction with other provisions: the text refers to sections 280 and 281. The clause differentiates tests for extension between those two sections: possession of documentary evidence is expressly required for section 280 extension, whereas for section 281 an information-based standard suffices. The provision does not reference any Rules, Notifications or Circulars. Not stated in the document: any linkage to penalty provisions, prosecution timelines, or assessment/revision provisions; nor any transitional or retrospective application rules.

Practical Implications

• Compliance and risk areas: Taxpayers should note that general finality arises at four years (or four years and three months for section 280), but the Department can reopen or issue notices up to six years where the threshold of Rs. 50 lakh is met. The divergence in the evidentiary standard between section 280 and 281 is material: possession of documentary evidence is required for section 280; for section 281, information in the AO's possession may suffice. This affects where and when taxpayers must preserve books and documents and when to expect notices.
• Record-keeping/evidence points: Given the statutory reliance on "books of account or other documents or evidence" (for section 280) and "information with the Assessing Officer" (for section 281), stakeholders should preserve contemporaneous records that establish the nature, quantum and timing of assets, expenditures and transactions. The text, however, does not specify formats, retention periods beyond the statutory timelines, or proof standards for "possession" or "information". Not stated in the document.

Key Takeaways

• Clause/Section 282 establishes a general four-year limitation for notices u/ss 280 and 281, with differing technical adjustments.
• Section 280 is subject to a four-years-and-three-months outer limit; extension up to six years and three months requires the AO to have "in his possession" books/documents/evidence showing escaped income of Rs. 50 lakh or more.
• Section 281 has a four-year cut-off; extension up to six years is permissible where, per the information with the AO, escaped income is or is likely to be Rs. 50 lakh or more.
• A mandatory minimum: no notice u/s 280 or 281 can be issued within one year from the end of any tax year.
• The text does not define key terms, explain thresholds' rationale, describe evidentiary standards, or state effective date or transitional rules. Not stated in the document.

Differences between the Two Versions and Practical Impact

Concluding Observations

The enacted Section 282 and the Bill's Clause 282 are substantively congruent. The main drafting divergence is the Act's insertion of "in his possession" for the section 280 exception; this may be significant in practice as it highlights an evidentiary/possession requirement for the extended six-year window u/s 280. Otherwise, the provision sets a two-tier limitation approach (general four-year rule; extendable to six years in substantial cases of escaped income) and a one-year minimum bar, with a monetary threshold of fifty lakh rupees. The text omits definitions, evidentiary standards, procedural rules for proving "possession" or "information", effective date, and transitional provisions. Not stated in the document.

Full Text:

Section 282 Time limit for notices u/ss 280 and 281.