An inquiry notice, a scrutiny notice and a reassessment notice are three different things with three different risks — and from 1 April 2026 three different section numbers. Which Act applies turns on the year the notice is about, not the date it was issued. The limits, the safeguards and the reassessment case law, set out together.
CA Rahul Dang
Founder & Practice Lead
Three income-tax notices account for most of the alarm that arrives in a taxpayer’s inbox: an inquiry notice asking for accounts, a scrutiny notice saying your return is being examined, and a reassessment notice saying income may have escaped assessment. They are not the same thing, they do not carry the same risk, and from 1 April 2026 they do not even carry the same section numbers.
This guide covers all three, under both Acts, and tells you which one applies to the notice in front of you.
This is not a technicality. Section 536(2)(c) of the Income-tax Act, 2025 provides that the repealed Income-tax Act, 1961 continues to apply to proceedings initiated on or after 1 April 2026 “(including notices, assessment, reassessment, recomputation, rectification, penalty, reference, revision and appeals) in respect of any tax year beginning before the 1st April, 2026”.
Notices are named expressly. So the test is the year the notice is about, not the date it was issued:
Check the year on the notice before anything else. Most notices arriving now are still old-Act notices.
| What it is | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Inquiry before assessment | s.142(1) | s.268(1) |
| Processing / intimation | s.143(1) | s.270(1)–(2) |
| Scrutiny notice | s.143(2) | s.270(8) |
| Assessment order | s.143(3) | s.270(10) |
| Best judgment assessment | s.144 | s.271 |
| Income escaping assessment | s.147 | s.279 |
| Reassessment notice | s.148 | s.280 |
| Show-cause before that notice | s.148A | s.281 |
| Time limits for the above | s.149 | s.282 |
This is the Assessing Officer gathering material. Under section 268(1) of the 2025 Act (and s.142(1) before it) the officer may serve a notice requiring you to:
Two limits worth knowing, because officers do not always volunteer them. Section 268(2) provides that the previous approval of the Joint Commissioner must be obtained before you can be required to furnish a statement of assets and liabilities not included in the accounts; and that the officer “shall not require the production of any accounts relating to a period more than three years prior to the relevant tax year”.
An inquiry notice is not an accusation. It is, however, a notice whose terms you must comply with — see the consequence below.
This is the one people mean when they say “my return has been picked up”. Under section 270(8), where a return has been furnished, the officer may serve a notice if they consider it necessary to ensure that you:
The notice requires you either to attend the officer’s office or to produce evidence in support of your return.
There is a hard outer limit, and it is short. Section 270(9): “No notice under sub-section (8) shall be served on the assessee after the expiry of three months from the end of the financial year in which the return is furnished.” The 1961 Act said the same thing in the proviso to s.143(2).
So a return filed in, say, July 2026 cannot attract a scrutiny notice served after 30 June 2027. If a scrutiny notice reaches you outside that window, the date it was served is the first thing to check — not the contents.
After hearing your evidence, section 270(10) requires the officer to make the assessment “by an order in writing” and determine the sum payable or refundable.
This is the serious one, and it is the only one of the three that comes with a statutory safeguard you can hold the department to.
Under section 279 (s.147 before it), where income chargeable to tax “has escaped assessment” for a tax year, the officer may assess or reassess it. But before issuing the notice, section 281 (s.148A before it) requires a sequence:
Only then does the section 280 notice issue — and it must be accompanied by a copy of the section 281(3) order. Two further conditions sit on it: section 280(4), that “no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment”; and section 280(5), requiring prior approval of the specified authority in the cases it lists.
How long you get to respond. Section 280(1)(c) requires the period specified in the notice to be “not less than thirty days from the date of such notice but… not exceed three months from the end of the month in which such notice is issued”. The 1961 Act carried the same floor and ceiling in s.148(1).
One trap in section 280(3): a return filed after the period specified in the notice “shall not be deemed to be a return under section 263”. Late compliance is not the same as compliance.
Put the two sections side by side and the 2025 Act looks more generous to the department: four years and three months, where the old section said three years and three months. That reading is wrong, and the mistake is easy to make.
The two sections measure from different starting points.
So the period was lengthened by a year because the starting line moved back by a year. Work it through on the same income:
| Income of FY 2022-23 | Reference point | Period | Outer date |
|---|---|---|---|
| s.149, Act of 1961 | AY 2023-24 ends 31 Mar 2024 | 3 years 3 months | 30 June 2027 |
| s.282, Act of 2025 | Tax year 2022-23 ends 31 Mar 2023 | 4 years 3 months | 30 June 2027 |
The same outer date. The extended window works out the same way too — 30 June 2029 under either Act — and so does the show-cause limit, 31 March 2027 either way. The headline difference between “three years three months” and “four years three months” is an artefact of the changed reference point, not an extension of the department’s reach.
| s.149 — from end of assessment year | s.282 — from end of tax year | |
|---|---|---|
| Reassessment notice, ordinary case | 3 years 3 months | 4 years 3 months |
| Extended, escaped income ₹50 lakh or more | up to 5 years 3 months | up to 6 years 3 months |
| Show-cause notice, ordinary case | 3 years | 4 years |
| Show-cause, extended | up to 5 years | up to 6 years |
The extended window is not available on suspicion. Section 282(1)(b) requires the officer to have “books of account or other documents or evidence related to any asset or expenditure or transaction or entry” showing escaped income of fifty lakh rupees or more — section 149(1)(b) was in the same terms.
Section 282(3) adds a floor: no notice under section 280 or 281 may be issued within one year from the end of any tax year.
And the point that actually decides your case: which Act applies to your year. Because section 536(2)(c) keeps the 1961 Act alive for tax years beginning before 1 April 2026, a notice about one of those years is governed by section 149 — three years and three months from the end of that year’s assessment year. The 2025 Act’s longer-looking period does not reach back and extend the window for an earlier year. Compute the limit under the Act that governs the year, using that Act’s own reference point.
Section 271 of the 2025 Act (s.144 before it) is the answer, and it names the notices expressly. Best judgment assessment follows where a person:
The officer then assesses “to the best of his judgment” on the material gathered. Note the phrase “all the terms”: partial compliance is non-compliance. Section 271(2) does require a show-cause before a best-judgment assessment — but section 271(3) removes even that where a section 268(1) notice was issued first.
We have not set out the penalty consequences here. Those sit in provisions we have not read for this guide, and we would rather say nothing than guess at them.
Two Supreme Court decisions dominate the reassessment landscape for the old-Act years, and both arose from the same transition.
Union of India v. Ashish Agarwal — Supreme Court, 4 May 2022, M.R. Shah and B.V. Nagarathna JJ, Civil Appeal Nos. 3005 to 3017 and 3019-3020 of 2022, reported at [2022] 138 taxmann.com 64 (SC). Assessing Officers had issued reassessment notices on or after 1 April 2021 under the unamended section 148, relying on notifications that purported to extend the old provisions. High Courts set those notices aside, holding that notices issued on or after 1 April 2021 are governed by the substituted sections 147 to 151 introduced by the Finance Act, 2021. The Supreme Court agreed that the High Court view was correct, but — treating the revenue’s error as bona fide and exercising its power under Article 142 — did not simply set the notices aside.
Union of India v. Rajeev Bansal — Supreme Court, 3 October 2024, Chandrachud CJI, Pardiwala and Misra JJ, Civil Appeal Nos. 8629 and 8631 of 2024 and others, reported at [2024] 167 taxmann.com 70 (SC). The follow-on question was limitation. The Court held that TOLA overrides the Income-tax Act to the extent of relaxing the time limit for a reassessment notice falling due between 20 March 2020 and 31 March 2021, until 30 June 2021; and that the entire period allowed to the assessee to respond to the show-cause notice is excluded when computing limitation.
The practical point for anyone holding an old-Act reassessment notice: limitation is a live argument, and it is fact-specific. The dates on the notice, the date information was supplied to you, and the time you were given to reply all feed into it.
A note on sourcing. We hold these judgments as publisher reproductions rather than official court copies. The citations above are accurate and the holdings are stated as the reports record them, but anyone relying on them in a proceeding should work from the court’s own text.
And one distinction worth making because the forms look similar: an income-tax notice is not a GST notice. A GST scrutiny notice in Form ASMT-10 runs on an entirely different statute and timetable — see our guide to replying to an ASMT-10.
At RDA Tax Advisory Services, Baner, Pune, we handle income-tax notices end to end: establishing which Act and which limitation period governs, testing whether the notice was validly issued and served, drafting the reply to a section 281 or 148A show-cause before a reassessment notice issues, and representing through scrutiny assessment.
If what you have received is a section 143(1) intimation rather than a scrutiny notice, that is a different and usually much smaller problem — see our guide to replying to a 143(1) intimation. See also our litigation support and tax advisory services.
Received a notice and not sure how serious it is? Talk to RDA before the response window closes — Office No. 102, Snehraj Apartment, Baner, Pune 411045.
This guide explains the statutory machinery for three notices and the limits that attach to them. It is not advice on any particular notice. Whether a notice is valid, and what reply it needs, depends on its contents, the year, the dates and the material behind it. Take advice on the notice you actually hold.
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