During the COVID-19 pandemic, the Government of India enacted the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), which was notified on September 29, 2020, after receiving the President's assent. TOLA was introduced to provide legislative amendments in both direct and indirect tax laws as a relief measure during the pandemic. These amendments were initially brought in by the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.

In a significant ruling today, the Hon'ble Supreme Court today on 3rd October 2024 ruled in favor of the Revenue in UNION OF INDIA vs. RAJEEV BANSAL C.A. 8629 of 2024 a batch of re-assessment cases related to TOLA. The Court held that after April 1, 2021, the Income Tax Act must be read in conjunction with the substituted provisions. TOLA will continue to apply to the Income Tax Act after April 1, 2021, if any action or proceedings under the substituted provisions needed to be completed between March 20, 2020, and March 31, 2021. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act but only to the extent of extending the time limit for issuing re-assessment notices under Section 148. TOLA also extends the time for granting sanction by the authority specified under Section 151.

The test for determining whether TOLA applies to Section 151 under the new regime is based on whether the three-year time limit from the end of an assessment year falls between March 20, 2020, and March 31, 2021. In such cases, the authority under Section 151 has an extended deadline until June 30, 2021, to grant approval. For the old regime under Section 151, the test is whether the four-year time limit from the end of an assessment year falls between March 20, 2020, and March 31, 2021. If so, the authority has until March 31, 2021, to grant approval.

The directions laid down in the Ashish Agarwal judgment extend to all 90,000 re-assessment notices issued under the old regime during the period of April 1, 2021, to June 30, 2021. Any notices issued beyond the surviving period were deemed time-barred and subsequently set aside. The time during which show-cause notices were considered stayed was between the issuance of deemed notices from April 1, 2021, to June 30, 2021. The assessing officers were required to issue re-assessment notices under Section 148 of the new regime within the applicable time limits under the Income Tax Act, as read with TOLA.

As a result, High Court judgments from Allahabad (Rajeev Bansal case), Bombay, Rajasthan, Orissa, and Delhi have been set aside to the extent they conflict with this Supreme Court judgment.