Chapter XVI - Procedure for Assessment
Section 285
Section 285: other provisions relating to income escaping assessment
Section 285 rounds off the income-escaping-assessment scheme with two practical rules: which tax rate applies on a reassessment, and how an assessee can get a reassessment proceeding dropped by showing the original assessment was already adequate.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) In an assessment, reassessment or recomputation made under section 279, the tax shall be chargeable at the rate or rates at which it would have been charged had the income not escaped assessment.
(2) The proceedings initiated under section 279 shall be dropped on a claim made by the assessee and on his showing to the effect that—
(a) the assessee had been assessed on an amount not lower than what he would be rightly liable for, even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made; and
(b) he has not impugned any part of the original assessment order for the relevant tax year under section 356 or 357 or 378.
(3) Where a claim has been made by an assessee under sub-section (2), he shall not be entitled to reopen matters concluded by an order under section 287 or 288 or 365(10) or 368 or 377.
Introduction
Section 285 supplies rules for tax on income determined on reassessment and the treatment of matters already concluded in earlier proceedings.
Its conditions should be applied after confirming a valid reassessment route under sections 279 to 284.
Key takeaways
Original-year rate
Reassessed income under section 279 bears the rate that would have applied if it had not escaped assessment.
Limited claim to drop proceedings
The assessee must establish both statutory conditions: no lower original assessment than the correct liability, and no challenge to the specified part of the original order.
Concluded matters stay closed
A claim under this section cannot reopen matters concluded by the orders listed in subsection (3).
Rate of tax on reassessment
In an assessment, reassessment or recomputation made under section 279, tax is chargeable at the rate or rates that would have applied had the income not escaped assessment in the first place.
Dropping the proceedings
Proceedings initiated under section 279 must be dropped if the assessee makes a claim, and shows, that:
- the assessee had already been assessed at an amount not lower than what he would rightly be liable for even if the allegedly escaped income had been properly taken into account or the assessment/computation had been properly made; and
- the assessee has not challenged any part of the original assessment order for the relevant tax year under section 356, 357 or 378.
No reopening of matters already concluded
Where an assessee makes a claim under sub-section (2) to have the proceedings dropped, he is not entitled to reopen matters already concluded by an order under section 287, 288, 365(10), 368 or 377.
Step-by-step flow for Section 285 in a reassessment
- 1
Is there an assessment, reassessment or recomputation under Section 279?
Section 285 applies only to proceedings under Section 279.
- 2
Which rate applies to the escaped income?
Under Section 285(1), the rate or rates are those at which the income would have been charged had it not escaped assessment. Section 285 does not state any rate.
- 3
Does the assessee want the proceedings dropped?
- No: The reassessment continues on its merits.
- Yes: Go to the next step.
- 4
Can the assessee show both conditions of Section 285(2)?
(a) The assessee was already assessed on an amount not lower than the correct amount, even after taking the escaped income into account or making the computation properly. (b) The assessee has not challenged any part of the original assessment order for that tax year under Section 356, 357 or 378.
- No: The claim to drop does not succeed under Section 285(2).
- Yes: The proceedings are to be dropped.
- 5
Limit after making the claim
Under Section 285(3), an assessee who has made the claim cannot reopen matters concluded by an order under Section 287, 288, 365(10), 368 or 377.
Practical checklist
Do
- Separate newly reassessed income from matters previously concluded.
- Reconcile the reassessment computation with credits and tax already paid.
Avoid
- Reopen a concluded issue without checking the section’s limitation on doing so.
Illustrative example
Worked example: escaped income offset by an excess addition
Hypothetical facts (illustration only, not a real taxpayer): Mr. Menon was assessed for tax year 2027-28 on total income of ₹12,00,000. That assessment included an addition of ₹70,000 that was in fact not his income. He did not appeal. Later, proceedings under Section 279 are started for interest of ₹50,000 that escaped assessment. All amounts are assumed.
Correct income
If the escaped interest is added and the wrong addition removed: ₹12,00,000 − ₹70,000 + ₹50,000 = ₹11,80,000.
Condition (a)
He was assessed on ₹12,00,000, which is not lower than ₹11,80,000.
Condition (b)
He has not challenged any part of the original order under Section 356, 357 or 378.
Claim and its effect
He makes the claim under Section 285(2). Under Section 285(3), he cannot then reopen matters concluded by an order under Section 287, 288, 365(10), 368 or 377.
Outcome
- If he shows both conditions, the Section 279 proceedings are to be dropped.
- If they continued instead, the escaped income would be taxed at the rates that would have applied had it not escaped (Section 285(1)). Those rates come from the Central Act for that year.
Frequently asked questions
What tax rate applies when income is reassessed under Section 279?
The rate or rates that would have applied had the income not escaped assessment in the first place - not a special or penal rate.
Can I get a reassessment proceeding against me dropped?
Yes, if you can show you were already assessed at an amount not lower than what you would rightly owe even taking the allegedly escaped income into account, and you have not challenged any part of the original assessment order under section 356, 357 or 378.
Need help applying this provision to your situation?
Talk to our team about your reassessment caseLast updated 9 October 2026