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CMA Final · Direct Tax Laws and International Taxation · Assessment of Companies

Under section 314(2) of the Income-tax Act, 2025, a modified return is furnished after a business reorganisation order, and the assessment for the relevant tax year is still pending on that date. What must the Assessing Officer do?

The Assessing Officer must pass an order assessing or reassessing the total income as per the business reorganisation order, taking the modified return into account. This applies to pending proceedings under section 314(2)(b); modification of an order applies only where assessment was already completed.

  1. ADrop the proceedings and accept the original return
  2. BPass an order assessing or reassessing total income as per the reorganisation order, taking into account the modified returnCorrect
  3. CWait until a fresh assessment year begins
  4. DPass an order modifying the already completed assessment

Explanation

Section 314(2)(b) says where proceedings are pending on the date of the modified return, the Assessing Officer assesses or reassesses the total income according to the reorganisation order and the modified return. Modifying a completed assessment applies only under clause (a), where proceedings were already completed.

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