Income Tax Assessment Types Under the Income-tax Act, 2025

Last Updated: 15 April 2026  |  Applicable From: Tax Year 2026-27 (1 April 2026 onwards)  |  Reference: Income-tax Act, 2025 (30 of 2025), as amended by Finance Act, 2026; Chapter XVI

Assessment is the process by which the Income Tax Department determines the correct amount of tax payable by a taxpayer for a tax year. Under the Income-tax Act, 2025, the assessment framework has been streamlined and largely digitised. The days of physically visiting an Assessing Officer’s chamber with a bundle of documents are over for the vast majority of cases. Instead, taxpayers respond to notices through the e-filing portal, upload documents, and — if a personal hearing is needed — appear via video conferencing from home or office. This guide explains every type of assessment under Chapter XVI of the 2025 Act.

Table of Contents

1. Self-assessment (Sec 140A equivalent)
2. Summary assessment (Sec 143(1) equivalent)
3. Scrutiny assessment (Sec 143(3) equivalent)
4. Best judgment assessment (Sec 144 equivalent)
5. Reassessment (Sec 147/148 equivalents)
6. Search assessment (Sec 153A equivalent)
7. Faceless assessment framework
8. Consolidated time limit table
9. Taxpayer rights during assessment
10. Expert Insight
11. Key Takeaways
12. Frequently Asked Questions

1. Self-assessment (Sec 140A equivalent)

Self-assessment is the first step in any tax year’s compliance cycle. Before filing the return, the taxpayer must compute his total income, apply the appropriate tax rates, account for TDS, TCS, and advance tax already paid, and determine whether any further tax (self-assessment tax) is due. If so, the tax and the interest under the Sec 234A/B/C equivalents must be paid before the return is submitted.

Key points:

• Self-assessment tax is paid via Challan ITNS 280 under the “Self-Assessment Tax” head
• The Challan Identification Number (CIN) is entered in the return
• If self-assessment tax is unpaid, the return is treated as defective under the Sec 139(9) equivalent
• Self-assessment covers both the computed tax liability and the interest for late payment

2. Summary assessment (Sec 143(1) equivalent)

Summary assessment is the automatic processing of every filed return by the Centralised Processing Centre (CPC). It is not a detailed examination — it is a machine-run arithmetic and data-matching check. Common adjustments that can be made at this stage:

• Arithmetic errors in the return
• Incorrect claim of deduction or exemption not permitted under the opted regime
• Mismatch of TDS/TCS/advance tax credits with Form 26AS and AIS
• Disallowance of an expense that is clearly prima facie inadmissible (e.g. business expense claimed against salary income)

Time limit: 9 months from the end of the tax year in which the return is furnished. The taxpayer receives an intimation accepting the return, raising a demand, or issuing a refund. If aggrieved, a rectification application can be filed under the Sec 154 equivalent.

3. Scrutiny assessment (Sec 143(3) equivalent)

Scrutiny assessment is a detailed examination of a return by the Assessing Officer (or the faceless assessment unit) to verify the accuracy of income declared, deductions claimed, and tax paid. Scrutiny is the assessment type most taxpayers fear, though only 1–2% of returns are selected for scrutiny each year based on risk parameters set by the Central Board of Direct Taxes.

Procedure:

1. A notice under the Sec 143(2) equivalent must be issued within 3 months from the end of the tax year in which the return was furnished
2. The taxpayer receives the notice on the e-filing portal, specifying the scope of scrutiny (limited or complete)
3. The AO issues further notices under the Sec 142(1) equivalent seeking specific information, documents, and clarifications
4. The taxpayer responds electronically, uploading supporting documents
5. Additional queries may be raised; the taxpayer can request a personal hearing via video conferencing
6. The AO passes an order after hearing the taxpayer, confirming the return or making additions/disallowances

Time limit: 12 months from the end of the tax year in which the return is furnished.

4. Best judgment assessment (Sec 144 equivalent)

Best judgment assessment is an adverse fallback assessment invoked when the taxpayer:

• Fails to furnish a return of income under the Sec 139 equivalent
• Fails to comply with a notice under Sec 142(1) or Sec 143(2) equivalent
• Fails to cooperate with the Assessing Officer
• Refuses to produce books of account when required

The AO makes the assessment to the best of his judgment using available information — bank statements, third-party information, AIS data, industry benchmarks, prior year returns, and any other material on record. Best judgment assessments are usually unfavourable because the AO tends to estimate on the higher side in the absence of cooperation.

Opportunity to be heard: Before finalising a best judgment assessment, the AO must give the taxpayer an opportunity to explain and respond. Failure to grant this opportunity renders the assessment liable to be set aside on appeal.

5. Reassessment (Sec 147/148 equivalents)

Reassessment — also called income escaping assessment — is the reopening of a past tax year where the AO has information suggesting that income chargeable to tax has escaped assessment. Under the 2025 Act, the reassessment regime is significantly more structured than under the 1961 Act, with clearer time limits and procedural safeguards.

Time limits

• Normal period: 3 years from the end of the relevant tax year
• Extended period (10 years): If the AO has books, documents, or evidence suggesting income represented in the form of an asset, expenditure, or entry above ₹50 lakh has escaped assessment

Procedure

1. The AO must record reasons for believing that income has escaped assessment
2. Sanction from the prescribed authority (Joint Commissioner, Commissioner, or higher) must be obtained
3. A notice under the Sec 148 equivalent is issued to the taxpayer
4. The taxpayer files a return within the time specified
5. The reassessment then proceeds similarly to a regular scrutiny assessment

6. Search assessment (Sec 153A equivalent)

When a search is conducted under the Sec 132 equivalent or a requisition is made under the Sec 132A equivalent, a special assessment regime applies:

• The AO assesses or reassesses the total income for the tax year in which the search is initiated and for the six preceding tax years
• In specified high-value cases, this can extend to ten tax years
• All pending assessments and reassessments for those years abate
• The assessment is based on material seized during search, statements recorded, and other evidence
• Strict time limits apply — typically 12 or 18 months from the end of the tax year in which the search is conducted

7. Faceless assessment framework

Faceless assessment was introduced progressively from 2019 and is now the default mode under the Income-tax Act, 2025 for most assessments. The key features:

• No physical interaction between the taxpayer and the Assessing Officer
• National Faceless Assessment Centre (NaFAC) coordinates all proceedings
• Regional units (assessment, verification, review, technical) handle different aspects of the same case, distributed algorithmically
• Draft order is reviewed before being finalised
• Personal hearing via video conferencing is available on request
• Anonymity of the AO is preserved — the taxpayer does not know who is making the assessment
• Digital footprint of every communication is maintained on the e-filing portal

Excluded categories (where jurisdictional assessment continues):

• Search and seizure cases
• International taxation and transfer pricing cases
• Cases involving black money
• Certain high-value or sensitive cases notified by the CBDT

For full details on the faceless mechanism, see our faceless assessment and appeals guide.

8. Consolidated time limit table

9. Taxpayer rights during assessment

The Income-tax Act, 2025 preserves and strengthens taxpayer rights:

• Right to know the reasons for reassessment or any adverse action
• Right to respond to notices with adequate time
• Right to be heard before any adverse order is passed
• Right to a personal hearing via video conferencing in faceless cases
• Right to engage a representative (CA, advocate, or authorised person)
• Right to appeal against any adverse order
• Right to seek stay of demand pending appeal
• Right to rectification of mistakes apparent from record

Expert Insight

Key Takeaways

• Chapter XVI of the Income-tax Act, 2025 governs assessment — commencement 1 April 2026
• Six broad types: self-assessment, summary, scrutiny, best judgment, reassessment, search assessment
• Faceless is the default mode for most assessments
• Summary assessment time limit: 9 months from end of tax year of filing
• Scrutiny notice time limit: 3 months; completion 12 months
• Reassessment time limit: 3 years normal, 10 years for escaped income above ₹50 lakh
• Search assessment reopens 6 preceding years (up to 10 in high-value cases)
• Personal hearing via video conferencing available on request
• Rectification available for mistakes apparent from record — 4 years
• Appeal to CIT(A) or JCIT(A) within 30 days of assessment order

Frequently Asked Questions

Related guides: Income-tax Act, 2025 — Complete Guide · Faceless Assessment & Appeals · Appeals Procedure · Penalties & Interest · Updated Return · ITR Filing 2026-27