Income-tax assessment is all about checking and reviewing the information you provided in your Income-Tax Return (ITR). There are different types of tax assessments under the law, such as Summary Assessment, Scrutiny Assessment, Best Judgment Assessment and Re-assessment. In the past, most assessments were done manually.
But now, as part of the e-governance initiative, the Central Board of Direct Taxes (CBDT) has been given the authority to create a scheme for electronic assessment of total income or loss under Section 143(3). This aims to enhance greater efficiency, transparency and accountability. Using this power, the CBDT introduced the e-Assessment Scheme, 2019, which was later renamed as Faceless Assessment Scheme, 2019.
According to Taxmann research, in Budget 2026, the government, in the Finance Bill, 2026 introduced several significant changes to the provisions governing income tax assessment and reassessment. Here’s an overview of the key amendments:
1. Tax notice: Notices under Sections 280 and 281 of Income Tax Act 2025 (Section 148 and 148A of Income Tax Act, 1961) can only be validly issued by the Jurisdictional Assessing Officer (JAO), and not by the faceless setup, despite contrary court rulings.
It confirms that initiating reassessment is a jurisdictional function of the JAO, while the actual reassessment is to be conducted facelessly by NaFAC. This amendment is applicable with retrospective effect from April 1, 2021 under Income Tax Act, 1961 and with prospective effect from April 1, 2026 under Income Tax Act 2025, thus resolving the controversy and safeguarding past notices.
2. DIN in tax communications: Assessment remains valid despite minor mistakes or omissions in quoting the computer-generated DIN, provided the order is linked or referenced to a DIN in any way.
3. Completion of assessment timeline: Under the old and new tax law, there is a strict timeline to follow for completing assessments, reassessments and recomputations. From AY 2019-20 onwards assessments must be completed within 12 months from the end of the assessment year.
The general time limits of Section 286 of Income Tax Act 2025 (Section 153/153B of Income Tax Act, 1961) apply only until the issuance of the draft assessment order under Section 275 of Income Tax Act 2025 (Section 144C of Income Tax Act, 1961) in eligible cases.
Once the draft order is issued, all subsequent steps, the assessee’s acceptance, DRP proceedings, and the final order will strictly follow the timelines under Section 275, overriding court rulings. This rule is made retrospective from April 1, 2009 for Section 153 and from October 1, 2009 for Section 153B under Income Tax Act 1961, to resolve past disputes, and is applicable from April 1, 2026 under Income Tax Act 2025.
4. Block assessment: Rationalisation in block assessment for “other persons” by limiting the block period solely to the year(s) the undisclosed income pertains to. The Finance Bill, 2026, proposes to change the starting point for calculating the time limit for block assessments from the last date of authorisation to the date when search or requisition begins, ensuring consistency in group search cases. It also proposes extending the time limit for completing block assessments from 12 months to 18 months, starting from Tax Year 2026-27.
When a transfer pricing reference is made, the 12-month extended time limit also applies to issuing the draft assessment order from Tax Year 2026-27.
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