Case law (SC) -- For time limit for issuance of a reassessment notice u/s 148, TOLA provisions will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021. The directions in Ashish Agarwal will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021.

Union of India & Ors. v. Rajeev Bansal [2024 INSC 754] dated 03.10.2024 

"B. Issues 

a. Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and 

b. Whether the reassessment notices issued under Section 148 of the new regime between July and September 2022 are valid.

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G. Conclusions 

114. In view of the above discussion, we conclude that: 

a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; 

b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; 

c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; 

d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March  2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; 

e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; 

f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; 

g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and 

h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside; 

115. The judgments of the High Courts rendered in Union of India v. Rajeev Bansal, 165 Keenara Industries Pvt. Ltd. v. ITO, Surat, 166 J M Financial and Investment Consultancy Services Pvt. Ltd. v. ACIT, 167 Siemens Financial 165 Writ Tax No. 1086 of 2022 (Allahabad High Court) 166 R/Special CA No. 17321 of 2022 (High Court of Gujarat) 167 WP No. 1050 of 2022 (High Court of Judicature at Bombay)  Services Pvt. Ltd. v. DCIT, 168 Geeta Agarwal v. ITO, 169 Ambika Iron and Steel Pvt Ltd v. PCIT, 170 Twylight Infrastructure Pvt Ltd v. ITO, 171 Ganesh Dass Khanna v. ITO, 172 and other judgments of the High Courts which relied on these judgments, are set aside to the extent of the observations made in this judgment. 

116. The appeals filed by the Revenue are accordingly allowed. "

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