Procedure before issuance of notice under section 280
[Section-281 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 281(1) of Income Tax Act 2025
281(1) Where the Assessing Officer has information which suggests that income chargeable to tax has escaped assessment in the case of an assessee for the relevant tax year, he shall, before issuing any notice under section 280 provide an opportunity of being heard to such assessee by serving upon him a show cause notice.
Section 281(2) of Income Tax Act 2025
281(2)The notice to show cause referred to in sub-section (1) shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment in his case for the relevant tax year, and on receipt of such notice, the assessee may furnish his reply within such period, as specified in therein.
Section 281(3) of Income Tax Act 2025
281(3)The Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 280.
Section 281(4) of Income Tax Act 2025
281(4)The provisions of this section shall not apply to income chargeable to tax escaping assessment for any tax year in the case of an assessee, where the Assessing Officer has received—
- (a)information under the scheme notified under section 260;
- (b)directions issued by the Approving Panel under section 274(6);
- (c)any finding or direction contained in an order passed by any authority, Tribunal or court in any proceeding under this Act by way of appeal, reference or revision, or by a Court in any proceeding under any other law.
FAQs on Section 281 of Income Tax Act 2025
What is the purpose of Section 281 of the Income Tax Act, 2025?
Section 281 provides a mandatory pre-notice procedure that the Assessing Officer must follow before issuing a notice under section 280, ensuring the assessee gets an opportunity to be heard.
What must the Assessing Officer do before issuing a notice under section 280?
The Assessing Officer must serve a show cause notice to the assessee, giving them an opportunity to explain why a notice under section 280 should not be issued.
What information must accompany the show cause notice under Section 281?
The show cause notice must be accompanied by the information that suggests income chargeable to tax has escaped assessment for the relevant tax year.
How much time does the assessee get to respond to the show cause notice?
The assessee must respond within the time period specified in the show cause notice.
What happens after the assessee submits their reply to the show cause notice?
The Assessing Officer shall consider the material on record and the assessee’s reply, and with prior approval of the specified authority, determine whether it is a fit case to issue notice under section 280.
Who must approve the Assessing Officer’s decision to issue a notice under section 280?
The specified authority must approve the Assessing Officer’s decision before a notice under section 280 can be issued.
Is Section 281 applicable in all cases where income is suspected to have escaped assessment?
No, Section 281 does not apply in cases where the Assessing Officer has received information under the scheme notified under section 260, directions from the Approving Panel under section 274(6), or findings/orders from a court or tribunal in relevant proceedings.
Does the assessee have any right to challenge the show cause notice?
The assessee has the right to respond to the show cause notice, presenting facts or contentions to prevent the issuance of notice under section 280.
What kind of information can trigger the issuance of a show cause notice under Section 281?
Information suggesting that income chargeable to tax has escaped assessment for a specific tax year in the case of an assessee can trigger the show cause notice.
Can the Assessing Officer issue a section 280 notice without following Section 281 procedure?
No, unless the case falls under the exceptions listed in Section 281(4), the Assessing Officer must follow the procedure in Section 281 before issuing a notice under section 280.
What are the exceptions to the application of Section 281?
The section does not apply where the Assessing Officer has received information under section 260, directions under section 274(6), or findings/directions from a court or tribunal in any relevant legal proceedings.
Why is prior approval from the specified authority required under Section 281?
To ensure fairness, accountability, and to prevent arbitrary issuance of notices under section 280.
Is the order passed under Section 281(3) appealable?
Section 281 does not specify any appeal mechanism for the order passed under subsection (3); however, the assessee may challenge subsequent proceedings as per the Act’s general framework.
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