TOLA Will Continue To Apply To Income Tax Act After April 1, 2021 If Any Action Or Proceeding Falls For Completion Between March 20, 2020 & March 31, 2021: SC
Union of India & Ors. Vs. Rajeev Bansal (Civil Appeal No 8629 of 2024)
Background:
1. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) (TOLA) was enacted in the backdrop of the COVID-19 pandemic to provide relaxation of time limits specified under the provisions of the Income Tax Act and certain other legislations as defined under Section 2(1)(b) of TOLA.
2. The Finance Act 2021 amended the provisions dealing with the reassessment procedure under the ITA with effect from April 1, 2021. Section 3(1) of TOLA contained an explanation declaring that the provisions under the old regime shall apply to the reassessment proceedings initiated under them.
3. The assessing officers accordingly issued reassessment notices U/S 148 of the Income Tax Act between April 1, 2021 and June 30, 2021 by relying on the provisions under Section 148 of the old regime. These reassessment notices were challenged by the assesses before various High Courts.
Hon SC held as below:
1. After 1 April 2021, 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.
2. 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.
3. If the time limit of three years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under Section 151(i) has extended time till June 30, 2021 to grant approval.
4. The period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued in Ashish Agarwal case has to be excluded from the computation of the period of limitation and moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149.
The copy of the Order is as under:
