Setback for Taxpayers: 90000 Tax reassessment notices issued under old regime upheld by SC:

Setback for Taxpayers: 90000 Tax reassessment notices issued under old regime upheld by SC In a major setback to taxpayers, the Supreme Court has upheld, around 90000 Income Tax reassessment notices issued by Income Tax Department under the old regime between 1st April and 30th June 2021, for assessment years 2013-14 to 2017-18. These notices were challenged by Taxpayers, where they argued that they should fall under the new reassessment regime that took effect on 1 April 2021, during the COVID-19 pandemic. However, a three-judge panel headed by Chief Justice DY Chandrachud upheld the Ashish Agarwal case verdict of the supreme court, which permitted the issuance of these tax letters during the contested period under the previous government. The verdict on Thursday also overturned a number of high court orders that had stopped the revenue department from using the previous system to send out tax notices. The decision is based on disagreements that surfaced during the pandemic years when the government upheld the former system regarding the income tax (I-T) department's authority to reopen earlier tax returns in the event that it was suspected that certain earnings had eluded taxes. As a result, for a few months, the old and new reassessment legislation were both understood to be in effect simultaneously, creating an unprecedented situation. Numerous letters were sent out as a result of this overlap, and over 10,000 writ petitions were filed. The tax authorities counter challenged many of these petitions by filing special leave applications with the Supreme Court. The ruling of the Supreme Court successfully clarifies the tax legislation that are in place throughout this transitional time. New versus old laws The tax department may examine cases dating back 11 years (10 years from the end of the assessment year when a notice is received) if tax evasion exceeds Rs. 50 lakh, according to the new reassessment law, which went into force on April 1, 2021. Four years are allowed for reconsideration in cases where the total amount is less than Rs. 50 lakh. Prior to this, the tax department could only look into cases that went back a maximum of six years if the taxpayer was proven to have concealed information and the hidden income exceeded Rs. 1 lakh. However, the pandemic's interruptions led to an extension of the old law's provisions, which resulted in a brief overlap with the new legislation following April 1, 2021.