Reassessment – Rajeev Bansal’s case Impact Analysis – Approving Authority

CA Hari Om Jindal[1] & Adv. Surya Jindal[2]

The Hon’ble Supreme Court in case of Rajeev Bansal observed that the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. Section 151 of the new regime specifies two types of the authorities for Section 148 and 148A. However, there is lot of confusion in ascertaining, which clause of section 151 will be applicable. If the ratio of recent decisions is followed than 3 years or less regime will become otiose and in all cases, prior approval must be obtained from the appropriate authorities specified under clause (ii) of section 151 of the new regime, which seems to be against the mandate of Hon’ble Supreme Court decision in case of Rajeev Bansal’s case.

1 Introduction

1.1. Coronavirus also popularly known as COVID-19 is a virus that started spreading in themonth of November 2019. Due to coronavirus, life in most part of the world comes to standstill. Government of world, including India, have taken various measure to tackled the spread of this virus. The pandemic has forced the world to come to a complete standstill. Various compliances under various laws were not possible during that period due to lockdown etc.

1.2. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020, (TOLA 2020) was brought in by the government, as a relief measure for taxpayers in meeting challenges faced in meeting the statutory requirement faced due to pandemic. So, TOLA, 2020 extended the time-limit for completion and compliance for various time limits falling between 20th March, 2020 to 31st March, 2021, till 30-6-2021.

1.3. Due to extension of time-limit by TOLA, the Reassessment notices for certain assessment years were issued under old regime even after 1st April, 2021.

1.4. However, the Finance Act, 2021 revamped the whole regime of reassessment w.e.f. 1.04.2021 by which certain changes were brought in law and procedure.

1.5. This led to first round of litigation where various High Courts and ITATs had held that after Finance, Act 2021 amendments, notice of reassessment had to be issued under amended provision and all notices which had been issued between 1st April, 2021 to 30.06.2021, were held to be invalid.

1.6. This controversy when reached the Apex Court in case of Ashish Agarwal [2022] 138 taxmann.com 64 (SC), the Hon’ble Apex Court held that all the notices that were issued under old regime after 1st April, 2021 (Approx. 90,000) are valid with certain riders, The Apex Court held that the reassessment notices issued under the old regime after 1-4-2021, as one time relaxation, being bona-fide mistake on the part of tax authorities, will be deemed as notices issued under section 148A(b) of the new regime and new law will be applicable for reassessment.

1.7. However, even after Ashish Agarwal case, most of the High Courts quashed the reassessment notices issued between 1.04.2021 to 30.06.2021. Therefore, new batch of controversies started which reached the Apex court in case of Rajeev Bansal case [[2024] 167 taxmann.com 70 (SC)].

1.8. Two questions raised before the Apex Court were; (i) Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and (ii) Whether the reassessment notices issued under section 148 of the new regime between July and September 2022 are valid or not?

1.9. The Apex court in Rajeev Bansal case concluded that notices issued after 1st April, 2021 till 30 June 2021 had to be read with substituted provision, along with TOLA by concluding as follows:

G. Conclusions

114. In view of the above discussion, we conclude that:

a. After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions;

b. 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;

c. 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;

d. TOLA will extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has extended time till 30 June 2021 to grant approval;

e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has extended time till 31 March 2021 to grant approval;

f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021;

g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and

h. The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;

1.10. Recently, one article on “Reassessment – Rajeev Bansal’s case Impact Analysis – Surviving Period”[3] was published on taxmann.com. in which, one of the co-authors had explained the Concept of “Surviving Period” which was coined by Hon’ble Supreme Court in second round of litigation in Rajeev Bansal’s decision[4]. As per author’s opinion, as expressed in that article, if the AO had followed the mandate of CBDT Instruction than most of the notices issued during the period of May/June 2021 may liable to be quashed!

1.11. We have discussed the relevance of “Approving Authority” in this article.

1.12. The Hon’ble Supreme Court in case of Rajeev Bansal observed that the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. Section 151 of the new regime specifies two types of the authorities for Section 148 and 148A: (i) Principal Commissioner or Principal Director or Commissioner or Director if three years or less have elapsed from the end of the relevant assessment year; and (ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year.

1.13. However, there is lot of confusion in ascertaining, which clause of section 151 will be applicable. If the ratio of recent decisions is followed than 3 years or less regime will become otiose and, in all cases, prior approval must be obtained from the appropriate authorities specified under clause (ii) of section 151 of the new regime, which seems to be against the mandate of Hon’ble Supreme Court decision in case of Rajeev Bansal’s case.

2 Amendments brought in the Reassessment Procedure by Finance Act, 2021

2.1 The Finance Act 2021 substituted the entire scheme of reassessment under sections 147 to 151 of the Income-tax Act with effect from 1 April 2021. Substantial changes were brought about by the new regime. One of the aspect, which is relevant for this article is; changes relating to the approval of ‘Approving Authority’ for the purpose of reassessment.

2.2 The sanctioning authorities specified under section 151 of the new regime are different from those specified under the old regime. Section 151 of the new regime specifies the following authorities for Section 148 and 148A: (i) Principal Commissioner or Principal Director or Commissioner or Director if three years or less have elapsed from the end of the relevant assessment year; and (ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year.

3. Old vs New Regime of Reassessment:

4. Ruling in Ashish Agarwal’s case

4.1 The Apex court on the aspect of validity of notices issued under old regime based on TOLA, in the light amendments brought in by Finance act, 2021, held as under: –

10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under : –

(i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the show-cause notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-vis those notices which have been issued under section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required;

(iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted);

(iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

5 Approval from specified authority as per amended provision is jurisdictional condition

5.1 Hon’ble Supreme Court have made the following pertinent observation in relation to approval from prescribed authority:

“75. After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus:

(i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and

(ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148.

9. The effect of TOLA and the notifications issued under the legislation was that: (i) if the time prescribed for passing of any order or issuance of any notice, sanction, or approval fell for completion or compliance from 20 March 2020 to 31 March 2021; and (ii) if the completion or compliance of such action could not be made during the stipulated period, then the time limit for completion or compliance of such action was extended to 30 June 2021.

77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.

78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30 June 2021.”

5.2 Therefore, for the assessment year 2016-17 and AY 2017-18, specified authority for approval is the authority specified under section 151(i) of the new regime can grant sanction till 30 June 2021

“151. Sanction for issue of notice.— Specified authority for the purposes of section 148 and section 148A shall be,—

Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149.”

5.3 Therefore, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. If income escaping assessment is more than Rupees fifty lakhs, a reassessment notice could be issued after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Specified Authorities at different stages under new regime are:

5.4 Therefore, if the notice for AY 2016-17 and AY, 2017-18 is issued between 1.04.2021 to 30.06.2021, then these cases are covered by SC decisions and specified authorities are “Principal Commissioner or Principal Director or Commissioner or Director”.

5.5 This conclusion is also supported by the following observations of Hon’ble Supreme Court in Rajeev Bansal’s case:

“G. Conclusions

114. In view of the above discussion, we conclude that:

a. After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions;

b. 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;

c. 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;

d. TOLA will extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has extended time till 30 June 2021 to grant approval;

e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has extended time till 31 March 2021 to grant approval;

f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021;

g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and

h. The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;”

5.6 Therefore, as per SC decision in Rajeev Bansal’s case, if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has extended time till 30 June 2021 to grant approval. These AYs are AY 2016-17 and AY 2017-18. Specified authority under section 151(i) were Principal Commissioner or Principal Director or Commissioner or Director. Therefore, hon’ble Supreme Court specifically held that for AY 2016-17 and AY 2017-18, specified authority for approval [under section 151(i)] are Principal Commissioner or Principal Director or Commissioner or Director.

5.7 It is important to note that time taken for various formalities after 30.06.2021, as per SC decisions, have to be excluded for considering limitation period. If the time taken post 30.06.2021 is more than the time allowed by SC, then those case will also be quashed, as discussed in earlier article, based on concept of surviving period, as mentioned above.

5.8 Therefore, it is important to note that the specified period of stay and time given to taxpayer for reply needs to be excluded for ascertain the specified authority u/s 151 of new regime. Hon’ble Delhi High Court in case of Sunil Ghorawat vs. Assisstant Commissioner of Income-tax [2025] 173 taxmann.com 657 (Delhi)[06-02-2025] [Yashwant Varma and Harish Vaidyanathan Shankar, JJ], had also explained the position of law based on its earlier decision, as under:

“19. The Division Bench of the Court in Ram Balram was called upon to deal with a live case and where it was directly called upon to answer whether the reassessment notice could be said to be sustainable when tested on the principles enunciated in Rajeev Bansal. The Division Bench of the Court in Ram Balram upon application of the salient principles propounded by the Supreme Court in Rajeev Bansal came to hold as follows:- –

“65. Thus, in the facts of the present case, the last date for issuance of notice under Section 148 of the Act for AY 2013-14 under the statutory framework, as was existing prior to 01.04.2021 was 31.03.2020, that is, six years from the end of the relevant assessment year. 66. By virtue of Section 3(1) of TOLA time for completion of specified acts, which fell during the period 20.03.2020 to 31.12.2020 were extended till 30.06.20218. Thus, the notice dated 01.06.2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under Section 148 of the Act as was extended by TOLA. As noted above, the period from 01.06.2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal is required to be excluded by virtue of the third proviso to Section 149(1) of the Act.

67. Additionally, the period from the date of decision in Union of India & Ors. v. Ashish Agarwal till the date of providing material, as required to the accompanied with a notice under Section 148A(b) of the Act, is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A(b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act as held by the Supreme Court in Union of India & Ors. v. Rajeev Bansal.

68. In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022 -the period of two weeks -is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act. The petitioner had furnished its response to the notice under Section 148A(b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date.

69. As noted above, by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on 12.07.2022

70. Since the period of limitation, as provided under Section 149(1) of the Act, had expired period to issuance of the impugned notice on 20.07.2022. the said is squarely beyond the period of limitation.

20. The Court in Ram Balram was concerned with a notice for reassessment which had come to be issued on 01 June 2021 and thus falling within the broad Section 3(1) TOLA period of 20 March 2020 to 30 June 2021. The Court thus firstly proceeded to exclude the 29 days period falling between 01 June 2021 to 30 June 2021.”

5.9 In the case of Communist Party of India (Marxist) v. Income-tax Department, CIR Exmpt [2025] 174 taxmann.com 925 (Delhi), the Hon’ble Delhi High court for AY 2016­17, made the following observations:

“8. The AO issued a notice dated 29.07.2022 under Section 148 of the Act accompanied with the order dated 29.07.2022 passed under Section 148A(d) of the Act. It is the petitioner’s case that the said notice is barred by limitation.

9. It is material to note that the original notice under Section 148 of the Act [deemed to be a show cause notice under Section 148A(b) of the Act in terms of the decision in the case of Union of India & Ors. v. Ashish Agarwal (supra)] was issued on 28.06.2021, that is, two days prior to the expiry of the limitation period as extended by virtue of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. Thus, the AO had two days to issue the notice under Section 148 of the Act after receiving the reply dated 08.06.2022 filed by the petitioner. Since the said period was less than seven days, the AO had, by virtue of the fourth proviso to Section 149(1) of the Act, seven days to pass an order under Section 148A(d) of the Act (which was necessarily required to accompany a notice under Section 148 of the Act). The said period expired on 16.06.2022. Therefore, the order passed under Section 148A(d) of the Act was beyond the period of limitation.

10. The impugned notice is also liable to be set aside on the ground that it was issued without the approval of the authority specified under Section 151 of the Act. Since the impugned notice was issued beyond the period of three years from the end of the relevant assessment year, thus, in terms of Section 151(ii) of the Act, the same was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. The determination of the specified authority for grant of approval under Section 151 of the Act depends on whether the notice under Section 148 of the Act has been issued after the expiry of three years from the end of the relevant assessment year or within the said period.”

5.10 Therefore, the Hon’ble High Court in this case set aside the assessment based on surviving period and also on the ground that it was issued without the approval of the authority specified under Section 151 of the Act. Therefore, the reasoning of the Hon’ble High Court with respect to approval of the authority specified under Section 151 of the Act seems to be doubtful, still it will not affect the final decision.

5.11 Similarly, hon’ble Delhi High Court in case of H and M Hennes and Mauritz Retail (P.) Ltd. vs. Assistant Commissioner of Income-tax [2025] 174 taxmann.com 1113 (Delhi)[14-05-2025][ Vibhu Bakhru and Tejas Karia, JJ], observed as under:

“6. A notice under Section 148 of the Act for AY 2017-18 was issued on 30.06.2021. ..

8. In compliance of the directions issued by the Supreme Court in Ashish Agarwal (supra), the AO provided the information to the Assessee on 23.05.2022…………………….Another notice was issued to the Assessee on 02.06.2022, attaching the information and material relied upon by the AO. It was alleged that the Assessee has made a huge cash deposit in new currency during the period of demonetization. According to the AO, the said transaction was unexplained, therefore, it was concluded that the said amount of Rs.35,53,51,229/- has escaped assessment for the AY 2017-18. The petitioner responded to the said notice on 08.06.2022.

10. The learned AO was not persuaded with the explanation provided by the Assessee and passed an order dated 30.07.2022 under Section 148A(d) of the Act, holding that it was a fit case for reopening the assessment proceedings under Section 147/148 of the Act.

11. The AO issued a notice dated 30.07.2022 under Section 148 of the Act accompanied with the order dated 30.07.2022 passed under Section 148A(d) of the Act.

12. It is apparent from the said notice that it was not issued with the prior approval of the Principal Chief Commissioner of Income Tax (PCCIT) or any other authority specified under Section 151(ii) of the Act. Such approval is mandatory for issuance of a notice issued under Section 148 of the Act beyond the period of three years from the end of the relevant assessment year.

……………………….

17. In the recent decision of Communist Party of India (Marxist) v. Income-tax Department, CIR Exmpt [2025] 174 taxmann.com 925 (Delhi)/W.P.(C) 9031/2023 decided on 28.04.2025, this Court had referred to the earlier decisions including the decision rendered by the Bombay High Court in J M Financial & Investments Consultancy Services Private Limited v. ACIT [W.P. No. 1050 of 2020, dated 4-4­2022] and Siemens Financial Services Pvt. Ltd. v. Dy. CIT [2023] 154 taxmann.com 159/457 ITR 647 (Bom.)/2023 SCC OnLine Bom 2822; the Madras High Court in Ramachandran Shivan v. ITO [ W.P. No.8570 of 2023, dated 4-3-2024] and other connected matters, and the Orissa High Court in Ambika Iron and Steel Pvt. Ltd. v. Pr. CIT 2022 SCC OnLine Ori 4162 and had noted that the question as to which is the specified authority whose approval is mandatory, would depend on whether the notice under Section 148 of the Act was issued within a period of three years from the end of the relevant assessment year or thereafter.

18. In view of the above, the impugned notice is liable to be set aside on this ground alone.”

5.12 It is important to note that Hon’ble Delhi High Court had relied on some of these decisions, which are based on pre- Rajeev Bansal’s case decision, therefore, based on old law, hence, not good law. Therefore, the reasoning of court is contrary to SC decision in case of Rajeev Bansal’s case. It is important to note that Rajeev Bansal’s decision is not discussed in any of these two decisions, though this decision was available, where this issue is discussed at length.

5.13 Some of the other decisions, which seems to be doubtful based on the decision in case of Rajeev Bansal’s case, are given below:

• ACIT vs Munish Financial ITA No 5050 and 5055/Mum/2024 [Dated 02.12.2024] [ Rajeev Bansal discussed]
• Assistant Commissioner of Income-tax vs. Surya Ferrous Alloys (P.) Ltd. [2024] 169 com 736 (Mumbai – Trib.)[24-12-2024] [ Rajeev Bansal discussed]

5.14 If the ratio of recent decisions is followed than 3 years or less regime will become otiose and in all cases, prior approval must be obtained from the appropriate authorities specified under clause (ii) of section 151 of the new regime, [because the final notice u/s 148 is issued around June/July 2022, which is more than three years from AY 2016-17 and 2017-18] which seems to be against the mandate of Hon’ble Supreme Court decision in case of Rajeev Bansal’s case.

5.15 Perhaps, the Hon’ble High Court and ITATs had made mistake in applying the limitation period. They have applied the law based on the time of issue of final notice u/s 148, without excluding the specified periods. My conclusion is also supported by the following observations of Hon’ble Supreme Court in Rajeev Bansal’s case:

“iii. Effect of the legal fiction

94. Before we proceed, we need to bear in mind three important periods:

i. The period up to 30 June 2021 – this period is covered by the provisions of the Income-tax Act read with TOLA;

ii. The period from 1 July 2021 to 3 May 2022 – the period before the decision of this Court in Ashish Agarwal (supra); and

iii. The period after 4 May 2022 – the period after the decision of this Court in Ashish Agarwal (supra). This period is covered by the directions issued by this Court in Ashish Agarwal (supra) and the provisions of the Income-tax Act read with TOLA.

a. Third proviso to Section 149

95. The third proviso to Section 149 reads thus:

“Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded.”

96. The third proviso excludes the following periods to calculate the period of limitation: (i) the time allowed to the assessee under section 148A(b); and (ii) the period during which the proceedings under section 148A are “stayed by an order or injunction of any court.”

5.16 Therefore, this issue will surely provide opportunity for third round of litigation.

Notes:

[1] CA Hari Om Jindal, is practising in the field of income tax, international tax and transfer pricing for more than 30 years. The author has written many books on income tax and transfer pricing. The author can be reached at hojindal@yahoo.co.in 

[2] Adv. Surya Jindal, is practising in the field of income tax, international tax and transfer pricing. The author can be reached at suryajindal34@gmail.com

[3] https://www.taxmann.com/research/search?searchData=surya%20jindal

[4] Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC)[03-10-2024]

Disclaimer: Nothing in this paper should be construed or treated as legal advice. We would like to mention that the opinion expressed in this paper is very complex and subjective views of the Authors which may or may not be accepted by administrative or judicial authorities. We would also like to mention that we have commented on some of the observations mentioned in various decisions for the purpose of explaining the provisions, to the best of our knowledge and ability, without undermining the judicial authorities. We would also like to mention that the views expressed in this paper is for academic discussion and development of subject of transfer pricing. Therefore, the readers are requested to take proper legal advice before acting on any of the observations in this paper.

CA Hari Om Jindal	Adv. Surya Jindal