TOLA Extensions Doesn’t Apply to Black Money Act Proceedings: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed an assessment framed under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA), holding that the assessment order was passed beyond the statutory limitation period and that the extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) did not extend the time limit for completing assessments under the Black Money Act. The bench of Sudhir Kumar (Judicial Member) and Ramit Kochar (Accountant Member) has quashed the assessment order being barred by limitation under the black money law, holding that TOLA did not extend time limit to pass the assessment order during period of COVID-19, after examining each notification issued by the CBDT under TOLA in that period. Also, holding that period of Foreign references made before initiating proceedings cannot extend the time limit. The proceedings arose from information received by the tax authorities regarding the assessee's alleged connection with Woodstock Universal Ltd., a company incorporated in the British Virgin Islands (BVI) in April 2007. According to the department, the assessee, along with two other individuals, was associated with the offshore entity and held one share in the company. The department alleged that certain payments received from the foreign company were not disclosed in the assessee's income tax returns. Based on information gathered through foreign tax and information exchange channels, proceedings under the Black Money Act were initiated. The Assessing Officer ultimately made an addition of ₹15.66 lakh under the Black Money Act, alleging undisclosed foreign income arising from payments of USD 11,020 and USD 25,000 received during 2008. Before the Tribunal, the assessee raised a legal challenge contending that the assessment itself was invalid because it had been completed after the expiry of the statutory limitation period prescribed under Section 11 of the Black Money Act. The assessee pointed out that Notice under Section 10(1) of the Black Money Act was issued on April 10, 2018. Under Section 11(1), an assessment must be completed within two years from the end of the financial year in which such notice is issued. Since the notice was issued during FY 2018-19, the assessment ought to have been completed by March 31, 2021. However, the assessment order was passed only on February 17, 2022, rendering it time-barred. The department argued that the limitation period stood extended because Parliament enacted TOLA during the COVID-19 pandemic to relax various statutory timelines. According to the department, a series of notifications issued under TOLA extended the deadline for completing assessments, with the final extension carrying the limitation period up to March 31, 2022. Since the assessment order was passed on February 17, 2022, it was claimed to be within the extended period. The Tribunal carefully examined the provisions of TOLA and the various notifications issued by the Ministry of Finance between December 2020 and September 2021. It noted that while TOLA initially applied to several "specified Acts," subsequent notifications selectively extended timelines only for certain enactments. The Bench observed that the final notification dated September 17, 2021 (Notification No. 113/2021) extended limitation periods specifically in relation to proceedings under the Income-tax Act, 1961 and the Prohibition of Benami Property Transactions Act, 1988. The notification did not extend timelines for proceedings under the Black Money Act. The Tribunal also considered whether the exclusion available under Explanation 1 to Section 11 of the Black Money Act could save the assessment. The provision allows exclusion of a period relating to foreign information exchange requests made under tax treaties. However, the Bench found that the references to authorities in the British Virgin Islands and Singapore had been made and the information received well before the issuance of the notice under Section 10(1) of the Black Money Act. Therefore, the department could not rely on that provision to extend the limitation period in the present case. After analyzing the statutory framework, the Tribunal held that the notice under Section 10(1) was issued on April 10, 2018. The limitation period expired on March 31, 2021. The TOLA notifications relied upon by the department did not extend the limitation period for assessments under the Black Money Act. The assessment order dated February 17, 2022 was therefore passed beyond the permissible period prescribed by law. The Bench concluded that the assessment proceedings were liable to be quashed on the ground of limitation alone. The ITAT set aside the assessment as time-barred and ruled in favour of the assessee. Since the legal ground regarding limitation succeeded, the Tribunal held that the remaining grounds became academic and did not require adjudication. Case Details Case Title: Smt. Bindu Todi Versus DDIT(Inv) 1 Gurgaon Citation: JURISHOUR-1561-ITA-2026(DEL) Case No.: BMA 7/DEL/2025 Date: 05/06/2026 Counsel For Appellant: Adv. Gaurav Jain Counsel For Respondent: Sidharth Bhimsingh Meena, CIT(DR) Click Here To Read Order Read More: GSTAT Appeal Fee: How It Should Be Vs. How Portal Is Computing

TOLA Extensions Doesn’t Apply to Black Money Act Proceedings: ITAT

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