Notice under Section 153(3)

Understanding the Time Limit

The time limit for the completion of a fresh assessment under Section 153(3) can be summarised as follows:

1. Order under Section 254:
   • The fresh assessment must be completed within nine months from the end of the financial year in which the relevant tax authority receives the order under Section 254 (from the Income Tax Appellate Tribunal).
2. Order under Section 263 or 264:
   • The fresh assessment must be completed within nine months from the end of the financial year in which the order under Section 263 (revision by the Principal Commissioner or Commissioner) or Section 264 (revision on application by the assessee) is passed by the relevant authority.

Example:

• Order under Section 254:
  • If the ITAT passes an order on 15th May 2023 and it is received by the Commissioner on 25th May 2023, the fresh assessment must be completed by 31st December 2024 (i.e., nine months from the end of the financial year 2023-24).
• Order under Section 263 or 264:
  • If the Commissioner passes an order under Section 263 or 264 on 15th May 2023, the fresh assessment must be completed by 31st December 2024 (i.e., nine months from the end of the financial year 2023-24).

Purpose:

Section 153(3) sets a time limit for the completion of fresh assessments to ensure the process is completed on time. This provision ensures timely reassessment, providing certainty to the taxpayer and the revenue authorities.

Legal Implication:

Please complete the reassessment within the stipulated time frame to ensure the assessment is considered time-barred. Consequently, further proceedings regarding that assessment year may become invalid, and the taxpayer may not be liable for the reassessed tax demand.

Legal Recourse:

1. Filing Objections: If a taxpayer receives a notice under Section 153(3), they can file objections with the Assessing Officer (AO) challenging the validity or basis of the reassessment.
2. Appeal: If the reassessment order does not favour the taxpayer, they can appeal to the Commissioner of Income Tax (Appeals) [CIT(A)].
3. ITAT: If the CIT(A) order is still not favourable, the taxpayer can further appeal to the ITAT.
4. High Court and Supreme Court: For significant questions of law, the taxpayer can approach the High Court and, if necessary, the Supreme Court.

What to Do If Notice Is Received:

1. Review the Notice: Carefully review the notice to understand the reasons for reassessment and the documents or information required.
2. Consult a Tax Professional: Seek advice from a qualified tax consultant or chartered accountant to understand the implications and prepare a response.
3. Prepare Documentation: Gather all relevant documents, records, and evidence to support your case.
4. File a Response: Respond to the notice within the stipulated time frame, providing all required information and documentation.
5. Attend Hearings: If required, attend any hearings scheduled by the AO and present your case clearly and accurately.
6. Keep Records: Maintain copies of all correspondences, submissions, and notices for future reference.

Conclusion

Receiving a notice under Section 153(3) indicates that a previous assessment has been set aside or cancelled, necessitating a fresh evaluation. Understanding such a notice’s time limits, purpose, and legal implications is crucial. Taxpayers can effectively navigate the reassessment process by taking appropriate steps and seeking professional advice.