The reassessment notices issued between April and June 2021 by Income Tax Assessing Officers across the country were, by almost any measure, a product of institutional improvisation under pressure. COVID had suspended the country. Parliament had extended limitation periods through TOLA — the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Finance Act 2021 was, on the very day those notices were issued, substituting an entirely new reassessment regime for the old one. Officers issued notices under the old regime, using old-regime forms and old-regime sanction authorities, at the same time as the new regime came into force.

The litigation that followed was, correspondingly, sprawling. High Courts in Allahabad, Bombay, Delhi, and Gujarat quashed notices by the thousands on the ground that the old regime under which they were issued no longer existed. The Revenue appealed. The Supreme Court's judgment in Ashish Agarwal (2022) found a middle path — treating the old-regime notices as deemed to have been issued under the new regime — but left open questions that went on to generate a second wave of litigation. The October 2024 ruling in Rajeev Bansal closes that second wave, though not in the direction either side would have entirely chosen.

Three Positions on the Table

The central question before the Court was whether TOLA continued to apply to the Income Tax Act after the Finance Act 2021 amendments had replaced the old reassessment regime. The taxpayers' position was that TOLA could not extend limitation under a regime that Parliament had abolished; notices issued under the old regime on the day the new regime took effect were invalid on their face. The Revenue's position was that TOLA applied to the Income Tax Act as a whole — not to any particular version of it — and that the extended limitation saved notices issued within the TOLA window regardless of which regime the officer had applied.

High Courts had divided. The Ashish Agarwal middle path had resolved one dimension while generating uncertainty on the questions of limitation and sanction that remained. The Revenue's position, on the TOLA point, was that any other reading would render thousands of reassessment notices permanently void and deprive it of the ability to reopen assessments that COVID had genuinely prevented it from examining.

What the Supreme Court Settled

The Court agreed with the Revenue on the limitation question. TOLA's reference to "the Act" is not frozen to the pre-amendment version of the Income Tax Act. Where a provision is amended, TOLA continues to apply to the amended provision. The extended limitation saves the notices within the TOLA window. The argument that had been used to quash thousands of notices across multiple High Courts is now closed.

But saving the limitation is not saving the notice. The Court held — and this is where the judgment goes on to shift the battleground rather than simply close it — that the sanction required under Section 151 must be obtained from the authority specified in the new regime, not the old. Any notice where sanction came from the wrong authority is invalid on that ground alone. The time consumed between Ashish Agarwal's deemed-notice step and the supply of information to the assessee is excluded from the limitation computation under the third proviso to Section 149.

Why the Ruling Changes the Terrain

For taxpayers who received reassessment notices in April-June 2021, the ruling moves the battleground. The TOLA argument — which was, for many of those notices, the primary ground of challenge — is gone. What remains open is whether the specific notice satisfied the new sanction authority requirement. This is a question that can only be answered by examining the file for each notice individually. For notices where the sanctioning authority was the officer designated under the pre-2021 provisions, and the evidence suggests a substantial number were, the notice remains challengeable on that ground alone.

For the Revenue, the ruling revives tens of thousands of reassessment cases. For taxpayers, the exposure is real — but so is the remaining defence. Both questions that survive — sanction authority and the limitation computation with the Ashish Agarwal exclusion applied — are fact-specific, genuinely litigable, and capable of producing different outcomes for different assesses.

The Takeaway

If you received a Section 148 reassessment notice between April and June 2021, the TOLA argument is no longer available. But the sanction-authority question remains open and is worth examining for each notice on its own facts.

The litigation is narrower now. But it is also cleaner — stripped down, at last, to the arguments that actually decide cases.