Time limit for completion of assessments and reassessments [Section 153] :
(1) No order of assessment shall be made under section 143 or 144 at any time after the expiry of 2 years from the end of the assessment year in which the income was first assessable [Section 153(1)].
(2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of 1 year from the end of the financial year in which the notice under section 148 was served [Section 153(2)].
(3) Sub-section (2A) of this section lays down certain time limits in cases where fresh assessment has to be made.
Accordingly, an order of fresh assessment in pursuance of an order under section 250 or 254 or 263 or 264, setting aside or canceling an assessment, may be made at any time before the expiry of 1 year from the end of the financial year in which the order under section 250 or 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, or the order under section 263 or 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. This is notwithstanding anything contained in sub-sections (1), (1A), (1B) and (2) of section 153.
Where immediately after the exclusion of the time mentioned in the explanation, the period of limitation available to the Assessing Officer for making orders under sections 153(1), (1A), (1B), (2), (2A), (4) is less than 60 days, the remaining period shall be extended to 60 days and the aforesaid period of limitation shall be deemed to be extended accordingly.
The following shall be the time limit for assessment or reassessment under section 153 w.e.f. 1.7.2012:
| Proceeding under section | Time limit for completion of assessment or reassessment | Applicability of new time limit |
| 143(3) or 144 | 2 years from the end of the assessment year in which the income was first assessable | In case income is first assessable in the A.Y. 2010-11 or any subsequent assessment year |
| 147 | 1 year from the end of the financial year in which the notice under section 148 was served | Where notice under section 148 is served on or after 01.04.2011. |
| Fresh assessment under section 143(3)/144/147 where the original assessment has been set aside, cancelled and referred back to the Assessing Officer by an order under section 254/263/264 | 1 year from the end of the financial year in which the said order under section 254 is received by the CIT or the order under section 263 or section 264 is passed by the CIT | Where order under section 254 is received by the CIT or order under section 263 or section 264 is passed by the CIT on or after 01.04.2011. |
(4) No time limit – The provisions of sub-sections (1), (1A), (1B) and (2) shall not apply to the following classes of assessments, reassessments and recomputations:
(i) Where the assessment or reassessment is made on the assessee or any other person in consequence of or to give effect to any finding or direction contained in any order under sections 250, 254, 260, 262, 263 or 264 (in appeal, reference, revision) or an order by a Court in a proceeding otherwise than by way of appeal or reference under this Act.
(ii) where in the case of a firm an assessment is made on a partner of the firm in the case of a firm an assessment of the escaped income is made on the firm under section 147 [Sub – section (3)].
(5) Section 153A(2) provides for revival of abated assessments/reassessments, where the assessment order or reassessment order has been annulled in any appeal or legal proceeding. The time limit for completion of such assessment or reassessment shall be one year from the end of the month in which the abated assessment revives or within the period already specified in section 153 or in sub-section (1) of section 153B, whichever is later [Sub-section (4)].
(6) Exclusion of period – In computing the period of limitation for the purposes of section 153 the following time periods shall be excluded.
(a) The time taken in reopening the whole or any part of the proceedings in giving an opportunity to the assessee to be reheard when there is a change in the incumbency of the office under section 129.
(b) Any time during which the assessment proceeding is stayed by an order of a court.
(c) the period commencing from the date on which the Assessing Officer, under clause (i) of the proviso to section 143(3), intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) of section 10 or sub-clause (iv) or (v) or (vi) or (via) of section 10(23C), and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer.
(d) Time taken for completion of audit of the accounts of the assessee under section 142(2A). The following time period should be excluded –
| the period commencing from | the period ending with | |
| In a case where such direction is not challenged before a court | In a case where such direction is challenged before a court | |
| the date on which the Assessing Officer directs the assessee to get his accounts audited under section 142(2A). | the last date on which the assessee is required to furnish a report of such audit under section 142(2A). | the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner. |
(e) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under section 142A(1) and ending on the date on which the report of the Valuation Officer is received by the Assessing Officer.
(f) Where a declaration under section 158A is made by an assessee commencing from the date on which the Assessing Officer received the declaration and ending with the date on which an order under section 158A(3) is made by the Assessing Officer. However the period cannot exceed 60 days.
(g) In a case where an application for settlement of case has been rejected or is not allowed to be proceeded with, the period commencing from the date on which such application is made and ending with the date on which the order of the Settlement Commission is received by the Principal Commissioner or Commissioner.
(h) The period commencing from the date on which an application is made before the Authority for Advance Rulings under section 245Q(1) and ending with the date on which the advance ruling pronounced by it or the order rejecting the application is received by the Principal Commissioner or Commissioner under section 245R(7)/(3).
(i) The period beginning with the date on which a reference or the first of the references for exchange of information is made by an authority competent under an agreement referred to in sections 90 and 90A and ending with the date on which the information so requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less, is excluded for computing the above time limits. This is for the purpose of excluding the time taken in obtaining information from the tax authorities in jurisdictions situated outside India (under an agreement referred to in section 90 or section 90A) from the prescribed time limit for completion of assessments/reassessments under section 153.
Explanation 1 to section 153 provides for exclusion of certain periods as specified therein in computing the period of limitation for the purposes of section 153. If after exclusion of such time period, the period of limitation available to the Assessing Officer is less than 60 days, such remaining period shall be extended to 60 days and the period of limitation shall be deemed to be extended accordingly.
(7) In a case where a proceeding before the Settlement Commission abates under 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under section 245HA(4), be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have extended to one year: and for the purpose of determining the period of limitation under sections 149, 153B, 154, 155, 158BE and 231 and for the purpose of payment of interest under section 243 or section 244 or, as the case may be, section 244A, this provision shall also apply.
(8) Where by an order in appeal reference or revision any income is excluded from the total income of the assessee for any assessment year, the assessment of such income for another assessment year shall, for the purpose of sections 150 and 153 be deemed to be one made in consequence of or to give effect to any finding or direction contained in the appellate order.
(9) Where by an order in appeal, reference or revision, any income is excluded from the total income of one person and held to be the income of another person then an assessment of such income on such other person shall, for the purpose of section 150 and 153 be deemed to be one made in consequence of or to give effect to any finding or direction contained in the appellate order. The other person must be given an opportunity of being heard before the order of assessment is passed.