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Reassessment provisions, applicability of TOLA, and way forward in light of the decision in the case of Rajeev Bansal — Part I

INTRODUCTION

1.1 Chapter XIV of the Income-tax Act, 1961 (“the Act”) lays down the procedure for assessment. Sections 147 to 151 contain the reassessment provisions. Considerable amendments have been made in the recent past with respect to these reassessment provisions which also resulted in considerable litigation.

1.2 Prior to the amendments made in the reassessment provisions by the Finance Act, 2021 (the ‘old regime’), the Assessing Officer (‘AO’) could issue a notice under section 148 of the Act provided he had reason to believe that any income chargeable to tax had escaped assessment. The time limit to issue such notice was prescribed in section 149 of the Act which was divided into three categories — (1) a period of 4 years from the end of the relevant assessment year in all cases; (2) a period of up to 6 years from the end of the relevant assessment year in cases where the income chargeable to tax which had escaped assessment (escaped income) amounted to or was likely to amount to ₹1 lakh or more for that year and (3) a period of up to 16 years from the end of the relevant assessment year if the income escaping assessment was in relation to any asset (