Section 153 of ITA, 1961 : Section 153: Time Limit For Completion Of Assessments, Reassessments And Recomputation

Explanation using Example

Imagine Mr. Sharma filed his income tax return for the assessment year 2019-20. The Income Tax Department has until the end of March 2021 (12 months from the end of the assessment year, as per the amended provisions of Section 153) to complete the assessment under Section 143 or Section 144. However, if the department needs to reassess Mr. Sharma's income due to some omitted income, they would issue a notice under Section 148. After the notice is served, they have 12 months from the end of the financial year in which the notice is served to complete the reassessment.

Now, if during the reassessment, the department refers a matter related to transfer pricing to a Transfer Pricing Officer, this would extend the timeline for completion of the reassessment by an additional 12 months as per subsection (4).

Furthermore, if the Income Tax Appellate Tribunal orders the assessment to be redone, the department has nine months from the end of the financial year in which the order is received to complete this fresh assessment, which can be extended to 12 months if the order is received after April 1, 2019.

If Mr. Sharma's case involves giving effect to an appeal effect, the department must do so within three months from the end of the month in which the appellate order is received, unless there are delays beyond their control, in which case a six-month extension can be granted.