Sections 290-291 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 290 requires the Assessing Officer to serve a modified notice of demand where an earlier demand is reduced by an insolvency order, and to revise it if that order is changed on appeal. Section 291 requires the Assessing Officer to tell the assessee, by a written order, the amount of a loss computed in an assessment that can be carried forward. This article reads both as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
If a demand notice under section 289 is reduced by an order of the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, the Assessing Officer must serve a modified notice of demand; if that order is changed by the National Company Law Appellate Tribunal or the Supreme Court, the modified notice is revised. Separately, where an assessment shows a loss that can be carried forward and set off, the Assessing Officer must notify the loss in writing.
Section 290: modification and revision of notice in certain cases
Sub-section (1): when a modified notice must be served
Section 290(1) applies where both conditions are met:
- (a) a notice of demand has been issued earlier under section 289 for any tax, interest, penalty, fine or any other sum; and
- (b) that sum is reduced as a result of an order of the Adjudicating Authority as defined in section 5(1) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).
The Assessing Officer then shall serve on the assessee a modified notice of demand specifying the sum payable, if any. The modified notice is treated as a notice under section 289, and the provisions of the Act apply to it accordingly. The words "if any" allow for the case where the order reduces the sum to nil, so that no amount is payable. The Act refers to the Insolvency and Bankruptcy Code, 2016 for the meaning of "Adjudicating Authority"; read that law for it, as this article explains nothing from it.
Note the word "shall": once the two conditions are met, the Assessing Officer has no choice about serving a modified notice. The assessee does not have to apply for it, although an assessee may well draw the order to the Assessing Officer's attention; our income tax return filing team can help you with that follow-up. The sub-section does not state a time limit for the modified notice, so the text is silent on that point.
Sub-section (2): revision after a higher forum modifies the order
The modified notice of demand under sub-section (1) shall be revised where the order referred to in sub-section (1)(b) is modified by the National Company Law Appellate Tribunal or the Supreme Court. So the demand follows the order: if the order that reduced the sum is itself altered, the notice is revised to match it. Again no time limit is stated.
How it fits with section 289
Section 289(1) is the general provision: when any tax, interest, penalty, fine or any other sum is payable in consequence of an order passed under the Act, the Assessing Officer serves a notice of demand in the prescribed form. Our article on section 289 explains that section. Section 290 does not create a new kind of demand; it keeps the existing demand in line with the insolvency order. For the amendment of orders that can also lead to a revised demand, see our articles on section 287 and on section 288.
Section 291: intimation of loss
Section 291 says the Assessing Officer shall notify to the assessee, by an order in writing, the amount of the loss as computed by him for the purposes of section 111(1), 112, 113(2) or 115(1), where:
| Condition | Text |
|---|---|
| (a) | In the course of the assessment of the total income of any assessee, it is established that a loss has taken place; and |
| (b) | The assessee is entitled to have carried forward and set off such loss under the provisions of the said sections. |
Both conditions must be met. The sections named are those on carry forward and set off of losses. Our articles on section 111 (capital loss carry forward) and section 112 (business loss carry forward) explain two of them. The scope of each of the four references is a matter for those sections; section 291 only requires that the figure be notified.
Why the written intimation matters
The intimation fixes, in writing, the Assessing Officer's computation of the loss. An assessee who intends to carry forward a loss can compare the figure notified with the figure in the return. If the two differ, the assessee knows the point on which to seek rectification or appeal. The sub-section itself does not give the intimation any further effect and states no time limit, so the text is silent on both. Section 291 is also linked to the amendment power in section 288(1), row 3, where a recomputation of loss under section 279 flows into later years.
A worked example
Names and amounts are assumed.
Demand reduced by an insolvency order. Orchid Packaging Pvt Ltd is served a notice of demand under section 289 for Rs. 12,00,000 (tax, interest and penalty together). An order of the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 reduces the sum payable by the company to Rs. 4,00,000.
- Both conditions of section 290(1) are met: an earlier notice under section 289, and a reduction by that order.
- The Assessing Officer serves a modified notice of demand specifying the sum payable, which is Rs. 4,00,000 on the facts assumed. The reduction is Rs. 12,00,000 minus Rs. 4,00,000 = Rs. 8,00,000.
- The modified notice is treated as a notice under section 289.
- The order is later modified by the National Company Law Appellate Tribunal so that the payable sum is Rs. 6,00,000. Under section 290(2) the modified notice is revised accordingly, to Rs. 6,00,000.
Intimation of loss. Tarang Textiles, an assessee, files a return showing a business loss. In the assessment the Assessing Officer computes the loss at Rs. 5,00,000. Since a loss has taken place and Tarang is entitled to carry it forward and set it off under the sections named, the Assessing Officer notifies the Rs. 5,00,000 by an order in writing under section 291. If Tarang had claimed Rs. 6,50,000, the difference of Rs. 1,50,000 shows what to question.
Need help with a demand or a loss carried forward?
A demand that has been reduced by an insolvency order should be matched with a modified notice, and a loss that is not notified in writing can be hard to carry forward with confidence. If you have either problem, our team can help you review the orders and the return. See our income tax return filing service.
Key takeaways
- Section 290(1) applies when a section 289 demand is reduced by an order of the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016; a modified notice must then be served.
- The modified notice is treated as a notice under section 289.
- Section 290(2) requires the modified notice to be revised if the order is modified by the National Company Law Appellate Tribunal or the Supreme Court.
- Section 291 requires the Assessing Officer to notify the computed loss by a written order where a loss has taken place and the assessee is entitled to carry it forward and set it off.
- Neither section states a time limit for the notice or the intimation.
Read next
- Section 289: notice of demand
- Section 288, serial numbers six to eleven, and transfer pricing recomputation
- Sections 292 and 293: assessment of undisclosed income in search cases
- Section 111: capital loss carry forward
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.