Section 286 — Time limit for completion of assessment, reassessment and recomputation. Successor to s.153 of the 1961 Act.
Section 286 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
Sub-section (1) carries an eleven-entry Table: no order in a proceeding in column B may be made after the period in column D, calculated from the date in column C. Entries 1 to 3 give one year for an assessment order under section 270(10) or 271 — from the end of the financial year succeeding the relevant tax year, from the end of the financial year in which an updated return under section 263(6) was furnished, and from the end of the financial year in which a return furnished in consequence of an order under section 239(3)(b) was filed. Entry 4 gives one year from the end of the financial year in which notice under section 280 was served, for an order under section 279; entry 5, one year for a fresh assessment or fresh order under section 166 in pursuance of an order under section 359, 363, 377 or 378 setting aside or cancelling an assessment. Entries 6 and 7 give one year from the end of the month in which an assessment stands revived under section 292, and in which the firm's assessment order under section 279 is passed for a consequential assessment on a partner. Entries 8 and 9 give one year from the end of the month in which the relevant order is received or passed, for assessments giving effect to a finding or direction in an order under section 359, 363, 365(10), 368, 377 or 378 or of a court, and for orders giving effect where verification or a hearing is involved. Entry 10 gives six months, extendable to nine with the approval of the authorities under section 2(62) and (64), for other orders giving effect; entry 11 gives two months from the end of the month in which an order under section 166 read with section 377 is received.
Sub-section (2), substituted by Act No. 4 of 2026 with effect from 1 April 2026, extends the limitation for Table entries 1 to 5 by twelve months where a reference is made to the Transfer Pricing Officer under section 166(1) — the earlier text extended the limitation under sub-section (1) generally — and adds a new clause (b) allowing the draft order referred to in section 275 to be made at any time up to that limitation.
Sub-section (3) excludes ten periods: reopening at the assessee's request or re-hearing under section 244; a court stay until the certified copy of the vacating order is received; the gap between intimation of a contravention of Schedule III (Table: Sl. Nos. 23, 24, 25) or section 270(11)(i) and receipt of the withdrawal order; a direction under section 268(5); a reference to the Valuation Officer under section 269(1); a period not exceeding sixty days on a declaration under section 375(1); an application under section 383(1); a reference for exchange of information under an agreement referred to in section 159, or one year, whichever is less; a reference under section 274(1); and a reference under section 270(13) until the order under section 351(2)(ii)(A) or (B) is received.
Sub-sections (4) to (7) are the floors: a remaining period of less than sixty days after those exclusions, or after the Transfer Pricing Officer's period is extended under section 166(8), becomes sixty days; where an Interim Board for Settlement proceeding abates under section 245HA of the Income-tax Act, 1961 and less than one year remains after the section 245HA(4) exclusion, the period becomes one year, which also governs sections 282, 287, 288 and 296 and interest under section 437; and where the remaining time after the sub-section (3)(j) exclusion ends before the end of a month, it runs to the end of that month. Sub-section (8) deems an assessment of income excluded from one tax year, or from one person and held to be another's, to be one giving effect to a finding or direction in the order concerned — in the second case only if that other person was heard before the order was passed.
Limitation is what makes an assessment final, so the section fixes an outer date for every kind of assessment order and every order giving effect to an appellate or revisional direction. The exclusions stop the clock for delays the Assessing Officer does not control, and the floors stop those exclusions leaving him an unusable remnant of time. Sub-section (8) closes the gap that would let income excluded in one year or from one person escape assessment elsewhere.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Ordinary assessment under section 270(10) or 271 | One year | From the end of the financial year succeeding the relevant tax year for which the assessment is made | Sub-section (1), Table Sl. No. 1 |
| Assessment where an updated return is filed | One year | From the end of the financial year in which the updated return under section 263(6) was furnished | Sub-section (1), Table Sl. No. 2 |
| Assessment, reassessment or recomputation under section 279 | One year | From the end of the financial year in which notice under section 280 was served | Sub-section (1), Table Sl. No. 4 |
| Fresh assessment after an order setting aside or cancelling | One year | From the end of the financial year in which the order under section 359 or 363 is received by, or the order under section 377 or 378 is passed by, the jurisdictional Principal Commissioner or Commissioner | Sub-section (1), Table Sl. No. 5 |
| Revived assessment or reassessment | One year | From the end of the month in which the assessment or reassessment stands revived as per section 292 | Sub-section (1), Table Sl. No. 6 |
| Assessment in a partner's hands | One year | From the end of the month in which the assessment order in the case of the firm under section 279 is passed | Sub-section (1), Table Sl. No. 7 |
| Order giving effect, simple cases | Six months, extendable to nine months | Extension requires the approval of the authorities as per section 2(62) and (64); from the end of the month in which the appellate or revisional order is received or passed | Sub-section (1), Table Sl. No. 10 |
| Modification to give effect to an order under section 166 read with section 377 | Two months | From the end of the month in which the order under section 166 is received by the Assessing Officer | Sub-section (1), Table Sl. No. 11 |
| Extension where a transfer pricing reference is made | An additional twelve months | Only for Table Sl. Nos. 1 to 5, where a reference is made to the Transfer Pricing Officer under section 166(1); substituted by Act No. 4 of 2026 w.e.f. 1-4-2026, the earlier text not being confined to those entries | Sub-section (2)(a) |
| Cap on the exclusion for a section 375(1) declaration | Not exceeding sixty days | From the date the declaration under section 375(1) is received to the date the order under section 375(3) is made | Sub-section (3)(f) |
| Cap on the exclusion for exchange of information | One year, or the actual period, whichever is less | From the first reference for exchange of information under an agreement referred to in section 159 to the date the information is last received by the jurisdictional Principal Commissioner or Commissioner | Sub-section (3)(h) |
| Minimum period left after exclusions | Sixty days | Where the remaining period after the sub-section (3) exclusions, or after the extension of the Transfer Pricing Officer's period under section 166(8), is less than sixty days | Sub-sections (4) and (5) |
| Minimum period where an Interim Board proceeding abates | One year | Abatement under section 245HA of the Income-tax Act, 1961 and remaining period after the section 245HA(4) exclusion less than one year; also applied to sections 282, 287, 288 and 296 and to interest under section 437 | Sub-section (6) |
Read column C before column D — several entries run from the end of a month rather than a financial year, and entry 1 runs from the end of the financial year succeeding the tax year. The twelve-month transfer pricing extension is no longer general: as substituted it applies to entries 1 to 5, and the new clause (b) settles that a draft order under section 275 may be made at any time up to the extended limitation. The exclusions are not open-ended — sixty days for a section 375 declaration, one year for information exchange — while the floors ensure a case never has less than sixty days left, or less than a year where an Interim Board proceeding has abated.
An assessment is ordinarily to be completed within one year from the end of the financial year succeeding the tax year under Table Sl. No. 1. A reference to the Transfer Pricing Officer under section 166(1) adds twelve months. If a court stay then runs for four months that period is excluded under sub-section (3)(b), and if about a month is left when the certified copy of the vacating order is received, sub-section (4) extends the remaining period to sixty days.
You meet this section when checking whether an assessment or reassessment order was passed in time, and when an order giving effect to an appellate direction is delayed — entry 10 or 11 supplies the answer. It is also what an order relies on to record exclusions and explain why the period was enlarged.
Time limit for completion of any assessment or reassessment as provided in sub-section (1) [Table: Sl. Nos. 1 to 5], in a case where reference is made to the Transfer Pricing Officer for determining the arm's length price under section 166(1), shall be extended by an additional period of twelve months.
such remaining period shall be extended to sixty days and the aforesaid time limits for completion shall be deemed to have been extended accordingly
See the full 1961 to 2025 concordance.
See the notifications index.