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TMI Blog2024 (3) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement Commission ["ITSC"] in light of the interplay between Section 245-I and Section 150 of the Act. 2. The facts necessary for adjudication of the present case would reveal that on 31.10.2007, the petitioner filed its Income Tax Return ["ITR"], declaring the income to the tune of Rs. 12,41,50,220/- for the concerned AY. It was followed by an assessment order passed under Section 143(3) of the Act on 30.12.2008, whereby, the said disclosure was duly accepted. However, pursuant to a search conducted on the premises of Shri Hari Ram Group, a notice under Section 153A of the Act was issued to the petitioner with a direction to file its ITR within a period of three weeks therein. 3. In furtherance of the said notice, the petitioner filed another ITR declaring the same income as was disclosed in the original ITR dated 31.10.2007. Thereafter, another assessment order was passed on 30.12.2010, wherein, the Assessing Officer ["AO"] had made the following additions:- i. Rs. 2,69,48,770/- was disallowed on account of interest expenses. ii. Rs. 3,42,79,320/- was added for being difference amount in valuation of closing Work in Progress ["WIP"] of a project of the petitioner. 4. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.11.2023 under Section 148A(d) of the Act. Contemporaneously, upon approval being accorded to the respondent by the prescribed authority, it also issued the impugned notice under Section 148 of the Act and the corrigendum thereto, both dated 30.11.2023. The respondent has also relied upon Section 150(1) of the Act to issue the impugned notice. 10. It is in the aforesaid backdrop that the petitioner has preferred the instant writ petition assailing the impugned order and other consequential proceedings. 11. Learned counsel appearing on behalf of the petitioner confined his submissions to the extent that both the issues on which the respondent seeks to reopen the assessment proceedings are already settled by the order of the ITSC dated 16.09.2016. According to him, once the ITSC is seized of the assessment of a particular AY, it can only be reopened as per the procedure mentioned in Section 245 of the Act and not in the form of separate proceedings under Section 148 of the Act. 12. While drawing the attention of this Court towards the final order of the ITSC dated 16.09.2016, learned counsel submitted that both the issues were duly considered by the ITSC for the concerned AY and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment is sought to be reopened. He, therefore, contended that there is no cogent reason to proscribe the respondent from proceeding with the reopening of the assessment of the petitioner with regard to the issues in question for the concerned AY. 16. We have heard the learned counsels appearing on behalf of the parties and perused the record. 17. The limited aspect which requires our consideration in the present lis is whether the order of the ITSC dated 16.09.2016 is final in all respects for the concerned AY and consequently, whether the issues raised by the respondent stood subsumed in the said decision. 18. Before delving into a detailed analysis of the nature and ambit of Section 245D and 245-I of the Act, it is significant to examine whether the two aspects which form the basis of reopening assessment proceedings were brought to the knowledge of the ITSC at the time of the proceedings before the ITSC. The details of the case mentioned in the ITSC order dated 16.09.2016, which is annexed as Annexure P-8, at the very threshold, would show that the settlement application was preferred for the AY in question i.e., 2007-08 and the entry regarding the returned income of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Sameer Rohatgi, learned counsel for the Respondent No. 1 that in fact, the Respondent No. 1 never sought any immunity from prosecution. He pointed out that the said complaint by the Income Tax Department against the Respondent No. 1 is still pending. 5. In view of that matter, the question of granting Respondent No. 1 immunity from penalty and prosecution under Section 245H of the Act, does not arise. 6. As regards the second issue, learned counsel for the Respondent No. 1 submits that all the documents were not supplied by the Department in the first instance. Two reminders had to be sent. In the circumstances, the Court finds that no error has been committed by the ITSC in granting waiver of interest to Respondent No. 1. 7. The petition is accordingly dismissed." 20. It is thus palpably observed that the issues pertaining to the valuation of WIP as well as disallowance of interest were considered at the stage of proceedings before the ITSC, particularly in issue nos.1 and 3 therein, respectively, which is recorded in the findings of the ITSC in its final order dated 16.09.2016. Therefore, the contention raised by the respondent that the alleged escapement of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stated that assessment in law is different from assessment by way of settlement. If one reads Section 245-D(6) with Section 245-I, it becomes clear that every order of settlement passed under Section 245-D(4) shall be final and conclusive as to the matters contained therein and that the same shall not be reopened except in the case of fraud and misrepresentation. Under Section 245-F(1), in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it shall also have all the powers which are vested in the Income Tax Authority under the Act. In this connection, however, we need to keep in mind the difference between "procedure for assessment" under Chapter XIV and "procedure for settlement" under Chapter XIX-A (see Section 245-D). Under Section 245-F(4), it is clarified that nothing in Chapter XIX-A shall affect the operation of any other provision of the Act requiring the applicant to pay tax on the basis of self-assessment in relation to matters before the Settlement Commission. *** 25. Our detailed analysis shows that though Chapter XIX-A is a self-contained code, the procedure to be followed by the Settlement Commission under Sections 245-C and 245 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was issued the petitioner had approached the Settlement Commission by an application filed on May 31, 2007. Under section 245F(1), the ITSC, in addition to the powers conferred on it under Chapter XIX-A, shall have all the powers which are vested in an income-tax authority under the Act. By virtue of the provisions of section 245F(2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an Income-tax authority under the Act relating to the case, till the final order of settlement is passed under section 245D(4). Thus, the moment the application of the assessee was allowed to be proceeded with by the ITSC till the final order of the settlement is passed on March 17, 2008, it was the ITSC which had exclusive jurisdiction in relation to the assessee's case. Therefore, all matters which could be examined by the Assessing Officer could be examined by the ITSC in these proceedings, including the assessee's claim for deduction under section 80-IB(10). The total income of the assessee for the assessment year 2006-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re or a fresh discovery of facts which might have a bearing on the assessee's returns, prima facie, stands excluded from what is referred to a Settlement Commission, the fallacy in that argument is the Commission has a full weight and the jurisdiction of all the authorities under the Income-tax Act when it is seized of a matter. Concededly in this case, the subject matter before the Commission was the submission of the assessee to its jurisdiction with respect to the assessment year 2006-07. Of course, the Revenue contends that the recovery of material in a third party's premises were not a subject matter of the settlement proceedings, which got concluded on March 17, 2008. However, equally its case can proceed only on the assumption that the assessee was guilty of non-disclosure or suppression of material facts which ought to have been primarily revealed to the Settlement Commission when the application was moved under section 245D in the first place. The fallacy in the Revenue's argument is that it overlooks the remedy available for the Revenue, i.e., to approach the Settlement Commission under section 245D(6) contending that its previous order of March 17, 2008, ough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. The relevant paragraphs of the said decision are reproduced as under:- "7.10 The upshot of the above discussion is that once an order has been made by the Settlement Commission under section 245D(4) of the Act, the same is conclusive and final in respect of the assessment for the assessment year in relation to which such order was passed and the Assessing Officer has no jurisdiction under section 147 of the Act to reopen an assessment made under section 245D(4) of the Act. That, however, does not mean that the Revenue is without remedy if at a subsequent stage it is noticed that the assessee had suppressed its actual income before the Settlement Commission. In view of the provisions of sub-section (6) of section 245D of the Act, an order made by the Settlement Commission under section 245D(4) of the Act shall provide for the terms of settlement, which should, inter alia, provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation. Section 245D(7) of the Act provides that where the settlement becomes void, as provided in sub-section (6) of section 245D, the proceedings in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self-contained in nature and the intent appears to be to facilitate a mutually satisfactory arrangement which could not be reopened, unless explicitly covered under the textual exceptions of fraud or misrepresentation. 29. In the instant case, the application of the petitioner was accepted and the proceedings were initiated therein by the ITSC after the second search and seizure operation was conducted by the respondent on 05.03.2013. Thus, undoubtedly, since the ITSC was already held up with the concerned AY, including the aspects raised by the respondent in the present petition, the AO cannot be allowed to exercise jurisdiction to reopen the proceedings under the guise of Section 147/148 of the Act for the relevant AY in consideration. As already settled by the catena of judgments, some of which are already discussed above, allowing the AO to proceed with the impugned notices and order for reopening assessment for the concerned AY would create a situation of downright chaos and vagueness. Put otherwise, it would tantamount to simultaneous existence of two concomitant and materially different assessment orders for the same AY, which is completely impermissible as per the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court on altogether different aspects as compared to the ones raised in the present petition. In any case, the same was also dismissed vide order dated 05.09.2017. 32. Further, the respondent has strenuously relied upon sub-Section (1) to Section 150 of the Act in juxtaposition with the decision in Abhisar Buildwell P. Ltd. (supra), to contend that the same confers an authority on the respondent to issue the impugned notices and reopen the completed assessments under Section 147/148 of the Act. At this juncture, it is significant to extract Section 150 of the Act, which reads as under:- "150. Provision for cases where assessment is in pursuance of an order on appeal, etc.-(1) Notwithstanding anything contained in Section 149, the notice under Section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where any such assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 SCC OnLine SC 618] in the case of Abhisar Buildwell P. Ltd. (supra). The Hon'ble Supreme Court refused to entertain the said clarification application qua the prayers sought therein and held as under:- "1. Present Miscellaneous Application has been preferred by the Revenue seeking following prayers: "(a) This Hon'ble Court may clarify that the waiver of limitation as stipulated in section 150(2) is to be read in respect of the date of issue of notice for reassessment under section 148 (i.e.) if as on the date the assessment under section 153A or section 153C was passed, a notice under section 148 could have been issued as per the law then in force, then fresh proceedings for reassessment of such income not arising from the incriminating material found in search can now be initiated pursuant to the findings of this Hon'ble Court in the present appeals/application and may further clarify as follows: (i) That the findings in para 11 and 14 would apply to all the proceedings pending in all the forums including before this Hon'ble Court. (ii) That even though the appeals of the Revenue are dismissed in respect of assessments passed under 153A and 153C, in the ab ..... 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