UNION OF INDIA & ORS. vs. RAJEEV BANSAL

CIVIL APPEAL No. 8629/2024Supreme Court[2024] 10 S.C.R. 163303 October 2024Bench: 3 JudgesAuthor: D.Y. CHANDRACHUD, J.B. PARDIWALA, MANOJ MISRA76 pages
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What did the Supreme Court hold?

The Supreme Court held that after April 1, 2021, the Income Tax Act must be read with its substituted provisions. TOLA continues to apply if any action or proceeding under the substituted provisions falls for completion between March 20, 2020, and March 31, 2021. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuing a reassessment notice under Section 148. TOLA extends the time limit for granting sanction under Section 151. The test for Section 151 of the new regime is whether the three-year time limit falls between March 20, 2020, and March 31, 2021, extending approval time to June 30, 2021. For Section 151 of the old regime, if the four-year time limit falls within the same period, approval time is extended to March 31, 2021. The directions in Ashish Agarwal extend to all ninety thousand reassessment notices issued under the old regime between April 1, 2021, and June 30, 2021. The period of stay for show cause notices is from issuance until the supply of information and the two-week response period. Assessing officers must issue reassessment notices under Section 148 of the new regime within the surviving time limit under the Income Tax Act read with TOLA; notices issued beyond this period are time-barred. The High Court judgments relied upon by the assesses were set aside. The appeals by the Revenue were allowed, and appeals by the assesses would be governed by the judgment's reasoning.

What were the facts?

This Supreme Court judgment concerns the interpretation of reassessment provisions under the Income Tax Act, 1961, particularly after the Finance Act, 2021, and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The core issue revolves around the applicability of TOLA's extended timelines to reassessment notices issued under the old regime, but after the new regime's commencement. The Supreme Court was tasked with clarifying whether TOLA overrides Section 149 of the Income Tax Act, if it extends time for sanction under Section 151, and if the directions in the 'Ashish Agarwal' case apply to all reassessment notices issued under the old regime between April 1, 2021, and June 30, 2021. The judgment also examines the requirements for issuing reassessment notices under the new regime.

What were the issues?

1. Whether, after April 1, 2021, the Income Tax Act, 1961, must be read along with its substituted provisions (mixed law and fact, concerning Finance Act 2021). 2. Whether TOLA continues to apply to the Income Tax Act after April 1, 2021 (mixed law and fact, concerning TOLA and Finance Act 2021). 3. Whether Section 3(1) of TOLA overrides Section 149 of the Income Tax Act (mixed law and fact, concerning TOLA and Section 149). 4. Whether TOLA extends the time limit for the grant of sanction by the authority specified under Section 151 of the Income Tax Act (mixed law and fact, concerning TOLA and Section 151). 5. Whether the directions in Ashish Agarwal extend to all reassessment notices issued under the old regime (mixed law and fact, concerning Ashish Agarwal and reassessment notices). 6. What were the requirements for issuing a reassessment notice under Section 148 of the new regime (mixed law and fact, concerning Section 148). Assessee's Contentions: Not explicitly recorded in the provided text, but implied to be in line with the High Court judgments that were set aside. Revenue's Contentions: The Revenue argued for the application of TOLA and the principles laid down in Ashish Agarwal to validate reassessment notices issued under the old regime, even if post-April 1, 2021. They contended that the extended timelines should be considered for issuing notices and obtaining sanctions.

Which sections of the Income-tax Act were involved?

Section 148,Section 149,Section 151

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[2024] 10 S.C.R. 1633 : 2024 INSC 754 Union of India & Ors. v.

Rajeev Bansal (Civil Appeal No. 8629 of 2024) 03 October 2024 [Dr Dhananjaya Y Chandrachud,* CJI, J.B. Pardiwala and Manoj Misra, JJ.] Issue for Consideration Whether after 01 April 2021, the Income Tax Act, 1961 has to be read along with the substituted provisions; whether Taxation and Other Laws (Relaxation and Amendment of Certain Provisions)

Act 2020 (TOLA) will continue to apply to the Income Tax Act after 01  April 2021; whether section 3(1) of TOLA overrides section 149 of the Income Tax Act; whether TOLA will extend the time limit for the grant of sanction by the authority specified under section 151 of the Income Tax Act; whether the directions in Ashish Agarwal will extend to all the reassessment notices issued under old regime; what were the requirements for issuing reassessment notice under section 148 of the new regime.

Headnotes† Income Tax Act, 1961 – Finance Act 2021 – Whether after 01 April 2021, the Income Tax Act, 1961 has to be read along with the substituted provisions: Held: After 01 April 2021, the Income Tax Act has to be read along with the substituted provisions. [Para 114(a)]

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