s.153 — Time limit for completing an assessment

Currently operative

Income-tax Act, 1961

s.153

Income-tax Act, 2025

s.286

In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.

In short

Section 153(1) of the Income-tax Act, 1961 bars an order of assessment under section 143 or section 144 after a stated period from the end of the assessment year. The principal provision says twenty-one months and four provisos shorten it: eighteen months for assessment year 2018-19, twelve months for 2019-20, eighteen months for 2020-21, nine months for 2021-22, and twelve months for assessment year 2022-23 and every year after it. Explanation 1 then lists the periods excluded from the computation, and the proviso that follows extends to sixty days whatever is left after an exclusion. The corresponding provision in the Income-tax Act, 2025 is section 286, which works through a Table in sub-section (1), lists the exclusions in sub-section (3) and carries the sixty-day floor in sub-section (4).

What the provision does

Fixes the outer date, excludes identified periods from the computation, and guarantees a minimum of sixty days after an exclusion ends. The exclusions most often in issue are the special audit under section 142(2A), the valuation reference under section 142A(1), and the period up to the handing over of seized material after a search, which is capped at one hundred and eighty days.

Threshold questions

Which proviso to sub-section (1) governs the assessment year in question
Which exclusion is being relied on, and under which clause of Explanation 1
Whether the step said to trigger the exclusion was in fact taken under the provision the clause names
Whether any cap in the clause has been exceeded
Whether the sixty-day floor has been applied, and from what date

The recurring disputes.

Nine months against twelve

The nine-month period is confined to assessment year 2021-22. The Finance Act, 2023 omitted the words "or after" from that proviso and added a fourth giving twelve months for assessment year 2022-23 and later years. Working a current file on nine months puts the date six months out.

An exclusion claimed on a step that was never validly taken

Clause (v) excludes time for a reference to the Valuation Officer under section 142A(1). Where the reference is quashed, or was made under a different power, the argument is that there was nothing for the clause to operate on and no period stood excluded. The Department answers that the clause is keyed to the making of the reference and not to its quality.

Whether an exclusion can run without limit

Clause (v) ends when the report is received and names no outer date. Whether the six-month period in section 142A(6) is to be read into it has been decided at the Tribunal and not above.

The handing over of seized material

The exclusion for the period from initiation of a search to the handing over of the seized material to the Assessing Officer having jurisdiction is capped at one hundred and eighty days. Where an extension is asserted on this clause the arithmetic should be worked, because the cap is often reached before the date claimed.

Frequently asked.

What is the time limit for completing an assessment for a current year?

Twelve months from the end of the assessment year, under the fourth proviso to section 153(1), which governs assessment year 2022-23 and every year after it. The nine-month period applies to assessment year 2021-22 alone.

Does a reference to the Valuation Officer extend the time?

Yes. Clause (v) of Explanation 1 excludes the period from the date of the reference under section 142A(1) to the date the report is received, and the proviso that follows extends whatever is left to sixty days. A reference made on the last day therefore buys the whole of the valuation period and sixty days after it.

Can an assessment be completed after the date, if a court has quashed something?

Section 153(6)(i) takes an assessment made in consequence of or to give effect to a finding or direction in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act outside the limits in sub-sections (1), (1A) and (2), and allows twelve months from the end of the month in which the order is received or passed by the Principal Commissioner or Commissioner. It is triggered by a finding or direction, so an order that quashes a step and says nothing else does not obviously engage it.