GG News Bureau
New Delhi, 4th Oct. In a key ruling for the Income Tax Department, the Supreme Court upheld the validity of nearly 90,000 reassessment notices issued post-April 1, 2021, under the old provisions of the Income Tax Act. The decision, delivered on Thursday, overturns multiple high court verdicts that claimed the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA) of 2021 did not extend the time limit for issuing these notices.
TOLA, introduced during the COVID-19 pandemic, was aimed at extending compliance timelines for various tax obligations. A bench comprising Chief Justice D.Y. Chandrachud, Justices J.B. Pardiwala, and Manoj Misra addressed two crucial legal questions regarding the applicability of TOLA to reassessment notices and the validity of notices issued under Section 148 of the new regime between July and September 2022.
In a comprehensive 112-page judgment, the Chief Justice stated, “After April 1, 2021, the Income Tax Act must be read in conjunction with the substituted provisions, and TOLA will continue to apply.” He further clarified that TOLA’s provisions “override Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuing a reassessment notice.”
Over 9,000 petitions challenging reassessment notices had been filed across various high courts, leading to several favorable rulings for taxpayers. The Income Tax Department appealed to the Supreme Court after these lower courts quashed the notices.
Initially enacted during the nationwide lockdown in March 2020, TOLA extended the deadlines for tax compliance actions. A subsequent notification in June 2020 further prolonged the compliance deadlines until March 31, 2021.
The Supreme Court’s ruling allows the Income Tax Department to proceed with reassessment notices related to assessment years from 2013-14 to 2017-18, potentially involving amounts totaling thousands of crores.
While the high courts in Bombay, Gujarat, and Allahabad had ruled against the reassessment notices, asserting that the new provisions offered greater protection for taxpayers, the Supreme Court clarified that the reassessment regime would apply retrospectively, enabling the Income Tax Department to utilize the extended timelines due to pandemic challenges.
However, the apex court also emphasized that TOLA could not extend the old reassessment regime beyond the amended Section 149’s specified timeline, which governs the issuance of income tax notices.
The post SC Upholds Validity of 90,000 Income Tax Reassessment Notices appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates.
