Supreme Court Upholds Constitutional Validity of TOLA, Extends Income Tax Reassessment Time Limit

In a recent ruling, the Hon’ble Supreme Court in the case Union of India & Ors. v. Rajeev Bansal [Civil Appeal No. 8629 of 2024 dated October 03, 2024] upheld the constitutional validity of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions Act) 2021 (TOLA), which extends the time limit for reassessment notices under Section 148 of the Income Tax Act, 1961.

The Supreme Court overturned the judgments of various High Courts, which previously held that reassessment notices issued under the new regime must comply with the time limits under the old provisions of the Income Tax Act, 1961. The ruling clarifies that reassessment notices, including those deemed as notices under the new regime, are valid if issued within the extended timeframe permitted by TOLA.

Key Highlights:

The Supreme Court set aside previous judgments from High Courts that restricted reassessment notices under the old time limits.

Constitutional validity of the TOLA has been upheld, allowing for extended timelines for issuing reassessment notices.

Reassessments under Section 148 can now proceed according to the extended time limits provided by TOLA.

This ruling provides clarity and upholds the government’s stance on the reassessment process, ensuring that notices issued under the new provisions are within the permissible time limits.

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