Definition
Reopening of assessment.
Reopening of completed assessment on discovery of new information.
Statutory Definition
Income Tax Act.
Etymology & Origin
From the prefix 're-' (again) + 'assessment'. It refers to the exceptional process of disturbing the finality of a completed assessment.
Full Legal Analysis
Reassessment is the legal mechanism allowing tax authorities to reopen a completed assessment and levy tax if they have reason to believe that income chargeable to tax has escaped assessment for a particular year.
Because reassessment disturbs the finality of closed matters, the law imposes strict jurisdictional preconditions on the assessing officer. They must have tangible new material or information; a mere 'change of opinion' on the same facts already examined during the original scrutiny assessment is illegal.
The rules governing reassessment were radically overhauled by the Finance Act, 2021, reducing the standard time limit for reopening from six years to three years, except in cases of serious tax evasion (involving ₹50 lakhs or more), where it can be reopened up to ten years.
A landmark Supreme Court ruling establishing that an Assessing Officer cannot reopen an assessment based on a mere 'change of opinion'. There must be tangible new material to establish that income has escaped assessment.
For a tax advocate, challenging the jurisdiction of a Section 148 notice—by demanding the 'reasons recorded' for reopening and filing preliminary objections—is the most crucial step in defending against a reassessment.
This Term in Indian Statutes
Income Tax Act, 1961, 1961
"If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may... assess or reassess such income."
The jurisdictional provision enabling the reopening of past assessments.
