[Opinion] Interpretative Doctrines Embodied in Rajeev Bansal Decision

S. Mathangi – [2024] 168 taxmann.com 146 (Article)

1. Introduction

It has been a month since the Hon’ble Apex Court had upheld the validity of almost 90,000 notices issued by the Tax Department during the Covid-19 period, giving the Department, a huge relief. The three Judges Bench of the Supreme Court comprising of Hon’ble Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra, looked into the validity of the reassessment notices issued to the assessees between April 2021 and June 2021. Accepting the contentions made on behalf of the Department by Learned Additional Solicitor General of India Mr N.Venkataraman, the Supreme Court has ruled in favor of the Department on 03/10/2024 in the case titled Union of India & Ors. v. Rajeev Bansal. There has been a lot of discussions relating to the dates of events and the effects of the decision on the proceedings etc. However, the legal interpretation tools applied in this landmark judgement have not been a talk among the legal academicians. These interpretation principles make the decision more intriguing and the Author wishes to discuss the same in this Article.

2. Background

The Income Tax Act, 1961 provides a time frame to the Assessing Officers to complete the assessment proceeding. But these statutory timelines could not be met by the authorities of the Department due to the pandemic. In order to fix the situation, the Legislature enacted the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [TOLA] which extended the prescribed time limit under various statutes. In the meantime, new regime for reassessment proceeding with provisions for Faceless Assessment was introduced by the Finance Act, 2021 with effect from 01/04/2021.

The Department was perplexed with this triangular paradox as their application to the reassessment proceedings became complicated, overlapping and prone to radical interpretations. Consequently, many notices issued by the Department were disputed before the High Courts and other judicial forums, which created a lot of pending litigations and complex situation for both the Department and the assessees.

The issue of validity of assessment notices between the said period came up before the Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal wherein the Supreme Court invoked Article 142 of the Constitution and saved the validity of the said notices by deeming the issued notices under the old reassessment regime as an enquiry notice [Notice under Section 148A(b)] under the new reassessment regime and allowed the Revenue Department to continue with the proceedings under the new regime.

Following this, various notices issued during July to September 2022 in compliance with the procedure laid down by the Supreme Court in the Ashish Agarwal were challenged on the ground of bar of limitation. Various High Courts had quashed the notices for specific years on the ground of limitation by holding that TOLA does not extend the limitation for the notices issued under the new reassessment regime.

All these High Court orders were challenged before the Supreme Court in this Rajeev Bansal case. Hence, the Supreme Court came to the remedy and clarified the position with respect to the dispute between application of old law and new law to the reassessment proceeding.