Facts of the Case

The petitioner challenged the order dated 30.11.2023 passed under Section 148A(d) of the Income-tax Act, 1961 for Assessment Year 2007-08 along with the notice issued under Section 148. The petitioner had earlier filed returns which were assessed, followed by search proceedings and additions relating to interest expenses and valuation of work-in-progress. The matter was subsequently settled before the Income Tax Settlement Commission (ITSC), which passed a final order under Section 245D(4).

Issues Involved

1. Whether assessment proceedings can be reopened after a final settlement order of the ITSC.

2. Whether Sections 147/148 can override the finality under Section 245-I.
3. Whether Section 150 permits reopening in consequence of judicial findings.

Petitioner’s Arguments

The petitioner contended that once the ITSC had passed a final settlement order for the assessment year, all issues stood concluded and could not be reopened. It was argued that the issues sought to be reopened were already considered by the ITSC and had attained finality.

Respondent’s Arguments

The Revenue argued that the issues forming the basis of reassessment had not been examined by the ITSC and that reopening was justified in light of the Supreme Court judgment in Abhisar Buildwell Pvt. Ltd.

Court Order / Findings

The Delhi High Court allowed the writ petition and quashed the impugned order and notice. The Court held that once the ITSC passes an order under Section 245D(4), it becomes final and conclusive under Section 245-I, and reassessment proceedings for the same assessment year cannot be initiated except in cases of fraud or misrepresentation.

Important Clarification

The Court clarified that reopening an assessment after settlement would lead to conflicting assessment orders for the same year, which is impermissible. The only remedy available to the Revenue is under the provisions governing settlement orders.

Sections Involved

Income-tax Act, 1961 — Sections 147, 148, 148A, 150, 245D(4), 245‑I; Article 226 of the Constitution of India.

Link to download the order -

https://delhihighcourt.nic.in/app/showFileJudgment/59619032024CW165242023_172835.pdf 

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