The limitation periods and approval requirements that decide whether a reassessment notice is even legally valid, and the case law that makes 'mechanical sanction' a fatal defect

Section 282: Time Limits for Notices

Section 282 of the Income-tax Act, 2025 prescribes the outer limits within which notices under Sections 280 and 281 can be issued. As a general rule, a notice under Section 280 cannot be issued once four years and three months have elapsed from the end of the relevant tax year. This period can be extended up to six years and three months only where the Assessing Officer possesses books of account, documents or other evidence relating to an asset, expenditure, transaction or entry showing that the income which has escaped assessment amounts to, or is likely to amount to, ₹50 lakh or more.

For the preceding show-cause notice under Section 281, the corresponding limits are four years (standard) and six years (high-value escapement of ₹50 lakh or more), each running from the end of the relevant tax year. Section 282(3) additionally imposes a cooling-off period — no notice under Section 280 or 281 can be issued within one year from the end of the relevant tax year, giving the summary and scrutiny assessment machinery adequate time to operate first.

Section 282(5) carries forward the principle, developed extensively under the erstwhile Section 149, that certain periods — time covered by a stay granted by any authority or court, and time taken to give the assessee an opportunity to respond — stand excluded from the limitation computation. Calculating the true limitation date therefore requires careful, case-specific arithmetic rather than simply counting from the return filing date.

Section 284: Sanction for Issue of Notice

No notice under Section 280 or show-cause notice under Section 281 can be issued without the prior approval of the specified sanctioning authority, whose seniority requirement generally increases the longer the elapsed time since the end of the relevant tax year. This layered internal check is intended to prevent reassessment powers from being exercised routinely or without senior oversight, particularly where the extended six-year-plus window is being invoked.

Crucially, sanction is not meant to be a rubber-stamp exercise. The sanctioning authority is expected to genuinely apply its mind to the material placed before it and to record, even briefly, that it has done so — a mechanical or one-word approval has repeatedly been held by courts to be no sanction in the eyes of the law at all.

Section 286: Time Limit for Completion

Separately from the time limit for issuing the notice, Section 286 prescribes the deadline for completing the resulting assessment, reassessment or recomputation. For a reassessment under Section 279, the order must generally be passed within one year from the end of the financial year in which the Section 280 notice was served, subject to specified extensions and exclusions for matters such as transfer pricing references, special audits, or proceedings stayed by a court or other authority.

How to Independently Verify the Department's Limitation Arithmetic

Given how heavily reassessment disputes turn on limitation calculations, it is worth setting out the arithmetic discipline a taxpayer or advisor should apply independently rather than accepting the department's stated computation at face value. Start from the end of the relevant tax year, not the date of filing the return or the date of the original assessment order. Add the base period (four years, or four years and three months, as applicable to the specific notice). Then identify and separately add back any period the department claims is excludable under Section 282(5) — a court or authority stay, or the time consumed in giving the assessee an opportunity to respond to a show-cause notice — and verify each such period against your own contemporaneous records rather than the department's summary assertion of the dates involved.

Only after this reconstruction is complete should the resulting date be compared against the date the notice was actually issued (and, separately, actually served) to determine whether the notice is within time. Because the Rajeev Bansal judgment specifically worked through this kind of computation for the pandemic-extension context, its reasoning offers a useful worked template for how courts expect this arithmetic to be approached even outside the specific TOLA fact pattern.

Relevant Case Laws

Chhugamal Rajpal v. S.P. Chaliha (1971) 79 ITR 603 (SC) — remains the classic illustration of what a mechanical, invalid sanction looks like. The sanctioning authority in that case had simply endorsed the Assessing Officer's proposal with the word 'yes,' without recording any independent satisfaction or application of mind to the material. The Supreme Court struck down the resulting reassessment, holding that such a mechanical approval does not satisfy the statutory requirement of sanction at all. The principle applies directly to any challenge to an approval granted under Section 284 of the 2025 Act.

Union of India v. Rajeev Bansal (2024) (Supreme Court, Larger Bench) — is equally central to the limitation question. The Court held that pandemic-period (TOLA) extensions apply only to assessment years whose statutory deadlines genuinely fell within the COVID exclusion window, and that the department must otherwise strictly comply with the ordinary limitation architecture — including obtaining sanction from the correct, appropriately senior authority. The judgment's detailed arithmetic for computing the 'surviving' limitation period after excluding the show-cause response window is directly instructive for computing time limits under Section 282(5) of the 2025 Act.

Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC) — is also relevant here because the transitional relief it granted was expressly conditioned on the department following the new procedural sequence — including fresh sanction — going forward; the judgment did not excuse the revenue from sanction or limitation compliance, it merely re-routed a batch of already-issued notices into the new procedural pathway.

New Delhi Television Ltd. v. Deputy Commissioner of Income Tax (2020) 424 ITR 607 (SC) — held, in the context of the extended limitation period for high-value escapement, that the department must demonstrate a live link between the material relied upon and the specific quantum threshold that triggers the extended limitation window, and cannot invoke the extended period merely by asserting a large figure without adequately connecting it to the material actually available; the same discipline applies to invoking the ₹50 lakh threshold under Section 282 of the 2025 Act.

Precautions to Be Taken

1.      Calculate the limitation period independently rather than relying on the department's stated date — confirm the relevant tax year, the date the notice was actually served (not merely dispatched), and any exclusion periods under Section 282(5).

2.      For any notice invoking the extended six-year-plus window, specifically verify whether the department genuinely possesses the requisite books, documents or evidence showing escapement of ₹50 lakh or more — this is a jurisdictional condition, not a discretionary threshold.

3.      Demand a copy of the sanction obtained under Section 284 if it is not furnished along with the notice; the identity and seniority of the sanctioning authority is a matter you are entitled to verify.

4.      Examine the sanction itself, if obtained, for signs of mechanical approval — a bare 'approved' or 'yes' with no recorded reasoning is, per Chhugamal Rajpal, no sanction at all and is an independently fatal defect.

5.      Note the one-year minimum cooling-off period under Section 282(3) — a notice issued within one year of the end of the relevant tax year, without a valid reason, may itself be open to challenge.

6.      Track the Section 286 deadline for completion of the reassessment as closely as the deadline for its initiation — an order passed beyond the prescribed time limit is void regardless of how strong the department's case may otherwise be.

7.      Preserve proof of service of every notice (portal timestamps, email headers, physical acknowledgment) since disputes over the actual date of service frequently determine whether a notice or order is time-barred.

8.      Where a stay has been obtained from any authority or court during the proceedings, keep a clear record of its dates, since this period is excluded from limitation and can extend the department's otherwise expired window — the Rajeev Bansal computation method is a useful template.

9.      Consult a tax professional to independently verify limitation and sanction compliance before conceding to a reassessment on merits — many reassessments fail purely on these procedural grounds.

10.  Reconstruct the limitation computation independently and in writing, starting strictly from the end of the relevant tax year, before accepting the department's assertion that a notice is within time.

11.  Where the extended six-year-plus window is invoked on the basis of a ₹50 lakh or higher escapement, specifically require the department to demonstrate the link between that quantum and the material actually relied upon, following New Delhi Television Ltd., rather than accepting a bare assertion of the figure.

12.  Keep your own contemporaneous log of every date relevant to a stay, adjournment, or response period during the proceeding, since these are exactly the periods most likely to be disputed in any subsequent limitation challenge.

 Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.