Section 153B of the Income Tax Act is an important provision that deals with the time limit for the completion of assessments, re-assessments, and re-computations. This section lays down the time limits within which the tax authorities are required to complete these processes, failing which they are barred from doing so.
Let’s take a closer look at the provisions of this section and how it impacts taxpayers.
Assessments
The time limit for completion of assessments under section 153B is as follows:
- For assessments about the assessment year (AY) 2017-18 or earlier: The assessment has to be completed within two years from the end of the relevant AY.
- For assessments about the AY 2018-19 or later: The assessment has to be completed within one year from the end of the relevant AY.
Re-assessments
The time limit for completion of re-assessments under section 153B is as follows:
- For re-assessments about the AY 2017-18 or earlier: The re-assessment has to be completed within one year from the end of the financial year (FY) in which the notice for re-assessment was issued.
- For re-assessments about the AY 2018-19 or later: The re-assessment has to be completed within nine months from the end of the FY in which the notice for re-assessment was issued.
Re-computations
The time limit for completion of re-computations under section 153B is as follows:
- For re-computations about the AY 2017-18 or earlier: The re-computation has to be completed within one year from the end of the FY in which the application for re-computation was made.
- For re-computations about the AY 2018-19 or later: The re-computation has to be completed within one year from the end of the FY in which the application for re-computation was made.
Implications for taxpayers
The time limits prescribed under section 153B are important as they provide a sense of certainty to taxpayers regarding the completion of assessments, re-assessments, and re-computations. The tax authorities are required to complete these processes within the prescribed time limits failing which they are barred from doing so.
This means that if the tax authorities fail to complete an assessment, re-assessment, or re-computation within the prescribed time limits, the taxpayer can breathe easy and is not required to submit any further information or documents about that process.
Section 153B was introduced in the Income Tax Act in 2016, to provide clarity and certainty to taxpayers regarding the time limits for the completion of assessments, re-assessments, and re-computations. This section lays down specific time limits within which these processes must be completed, failing which the tax authorities are barred from completing them.
The time limits prescribed under Section 153B apply to all types of assessments, re-assessments, and re-computations, including those initiated based on information received from the taxpayer, third-party information, or information obtained during a search and seizure operation.
Let’s take a closer look at the time limits prescribed under Section 153B:
Assessments: The tax authorities must complete assessments within one year from the end of the relevant assessment year for the AY 2018-19 and later years. For assessments about the AY 2017-18 and earlier years, the tax authorities have two years from the end of the relevant assessment year to complete the assessment.
Re-assessments: The time limit for completion of re-assessments is one year from the end of the financial year in which the notice for re-assessment was issued for AY 2017-18 and earlier years. For AY 2018-19 and later years, the time limit is nine months from the end of the financial year in which the notice for re-assessment was issued.
Re-computations: The time limit for completion of re-computations is one year from the end of the financial year in which the application for re-computation was made for AY 2017-18 and earlier years. For AY 2018-19 and later years, the time limit is one year from the end of the financial year in which the application for re-computation was made.
It’s important to note that these time limits are mandatory, and the tax authorities are not allowed to extend them under any circumstances. If the tax authorities fail to complete the assessment, re-assessment, or re-computation within the prescribed time limit, they are barred from doing so.
This means that taxpayers can breathe a sigh of relief if the tax authorities fail to complete any of these processes within the prescribed time limit. However, taxpayers must ensure that they comply with all the requirements and provide all the relevant information and documents within the prescribed time limit to avoid any adverse consequences.
In conclusion
Section 153B of the Income Tax Act is a crucial provision that provides clarity and certainty to taxpayers regarding the time limits for the completion of assessments, re-assessments, and re-computations. Taxpayers must be aware of these time limits and ensure that they comply with all the requirements to avoid any adverse consequences.
Other Related Blogs: Section 144B Income Tax Act
Frequently Asked Questions (FAQs)
Q.1 What is Section 153B of the Income Tax Act?
Section 153B of the Income Tax Act provides for the time limits for completing assessments, re-assessments, and re-computations. The section was introduced in 2016 to provide clarity and certainty to taxpayers regarding the time limits for these processes.
Q.2 What is the time limit for completing assessments under Section 153B?
For assessments about AY 2018-19 and later years, the tax authorities must complete the assessment within one year from the end of the relevant assessment year. For assessments about AY 2017-18 and earlier years, the tax authorities have two years from the end of the relevant assessment year to complete the assessment.
Q.3 What is the time limit for completing re-assessments under Section 153B?
For AY 2017-18 and earlier years, the time limit for completing re-assessments is one year from the end of the financial year in which the notice for re-assessment was issued. For AY 2018-19 and later years, the time limit is nine months from the end of the financial year in which the notice for re-assessment was issued.
Q.4 What is the time limit for completing re-computations under Section 153B?
For AY 2017-18 and earlier years, the time limit for completing re-computations is one year from the end of the financial year in which the application for re-computation was made. For AY 2018-19 and later years, the time limit is one year from the end of the financial year in which the application for re-computation was made.
Q.5 Are this time limits mandatory?
Yes, these time limits are mandatory, and the tax authorities are not allowed to extend them under any circumstances. If the tax authorities fail to complete the assessment, re-assessment, or re-computation within the prescribed time limit, they are barred from doing so.
Q.6 What happens if the tax authorities fail to complete the process within the prescribed time limit?
If the tax authorities fail to complete the process within the prescribed time limit, they are barred from doing so. This means that the taxpayer is not liable to pay any additional tax, interest, or penalty that may have arisen due to the assessment, re-assessment, or re-computation.
Q.7 Can the taxpayer request an extension of the time limit?
No, the taxpayer cannot request an extension of the time limit. These time limits are mandatory and cannot be extended under any circumstances.
Q.8 Is there any penalty for non-compliance with these time limits?
No, there is no penalty for non-compliance with these time limits. However, taxpayers must ensure that they comply with all the requirements and provide all the relevant information and documents within the prescribed time limit to avoid any adverse consequences.
