On Thursday, the Supreme Court affirmed the stance of the Revenue Department in a reassessment dispute that could negatively affect over 90,000 taxpayers who received tax notices between April and June 2021, issued under the previous reassessment framework.

This ruling extends a May 2022 decision involving Ashish Agarwal to encompass all assessment notices.

The new reassessment law, effective from April 1, 2021, limits the period for issuing notices related to reopening prior cases to three years, reduced from the previous six years. However, during the transition, the tax department issued more than 90,000 notices for earlier years under the old regime, creating a unique scenario where both reassessment systems were operational simultaneously.

These notices stemmed from a government notification that extended the deadline to June 30, 2021, due to pandemic-related disruptions, prompting over 9,000 writ petitions filed in various courts contesting the notices.

The notices were issued under Section 148 of the Income-Tax Act, alleging under-reporting and misreporting of income from years prior to the three-year limit.

“The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between April 1, 2021 & June 30, 2021 till the supply of relevant information & material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), & the period of two weeks allowed to the assesses to respond to the show cause notices,” a three-judge Bench led by Chief Justice D Y Chandrachud said in its judgment.