[Opinion] Judgement of the Supreme Court in the Case of ‘Rajeev Bansal & Others’ | The Final Words on Reassessment Proceedings

Ruchesh Sinha & Prakash Sinha – [2024] 167 taxmann.com 177 (Article)

1. Introduction

It all started when the Finance Act, 2021 was enacted and the old provisions of sections 147, 148, 149, and 151 of the Income Tax Act, 1961 stood substituted with effect from 1st April 2021 and replaced by the existing provisions of the said sections with effect from 1st April 2021. Consequently, the old sections i.e. 147, 148, 149, and 151 of the said Act as they stood on 31st March 2021 stand completely obliterated. Accordingly, any notice issued after 1st April 2021 under section 148 of the Act will have to comply with the requirement as per law that is in force on the date on which the notice was issued.

2. Insertion of TOLA

The Government on account of (a) principles of tax certainty (b) country’s reputation (c) Covid-19 pandemic, enacted the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter ‘TOLA’). Suffice is to say that TOLA extends the time limit for issuing the notice U/s 148 of the Income Tax Act, 1961 which was otherwise getting time barred between 20th March, 2020 to 31st March, 2021. The time limit (i.e. six years from the end of the relevant assessment year) for issuing the notice for the A.Y. 2013-14 as per the erstwhile provisions ended on 31st March, 2020. Similarly, the time limit (i.e. six years from the end of the relevant assessment year) for issuing the notice for the A.Y. 2014-15 as per the erstwhile provisions ended on 31st March, 2021. In pursuance to TOLA, the time lines for issuing the notice of reassessment U/s 148 under the Income Tax Act, 1961 got extended from 31st March, 2021 to 30th April, 2021 vide Notification No. 20/2021 issued by the CBDT in exercise of power conferred U/s 3(1) of the TOLA and then again from 30th April, 2021 to 30th June, 2021 vide Notification no. 38/2021.

3. The Deliberation

The deliberation started between the revenue and assessee’s in terms that once the Finance Act, 2021 is notified and is applicable w.e.f 1st April, 2021, notifying the new time lines and procedure to the reassessment mechanism, the 148 notice issued by the department between the period 1st April, 2021 to 30th June, 2021 especially for the A.Y. 2013-14 and A.Y. 2014-15 on the thrust of TOLA, shall be time barred. In other words, it was contended that TOLA cannot be constructed in a manner so as to extend the life and validity of any repealed provisions, including sections 148 as it stood prior to Finance Act, 2021. In this regard, the Hon’ble Allahabad High Court in the case of Union of India v. Rajeev Bansal [2023] 147 taxmann.com 549/453 ITR 153 and the Hon’ble Gujarat High Court in the case of Keenara Industries Pvt. Ltd. v. ITO [2023] 147 taxmann.com 585/453 ITR 51 in essence in a detailed judgement, held in favour of the assessee’s that the reassessment notices issued U/s 148 for the A.Y. 2013-14 and A.Y. 2014-15 are time barred. Against this order, the Revenue filed special leave petition before the Hon’ble Supreme Court and the lead case in the same was of ‘Rajeev Bansal’. At this juncture, it is also relevant to state that besides deciding the main contention of time lines, the Hon’ble Supreme Court also decided and commented upon the other aspects of valid sanction etc in connection to decisions rendered by other High Courts. All these issues have been therefore, now been, settled by the Hon’ble Supreme Court.

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