April 2012
Settlement of cases: Sections 245C, 245D, 245F & 245-I of Income-tax Act, 1961: A.Ys. 2000-01 to 2006-07. Order of Settlement Commission is final: AO has no power to make any addition other than the addition sustained by the Settlement Commission.
By K. B. Bhujle
Advocate
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Search and seizure operations u/s.132 of the Incometax Act, 1961 were carried out at the premises of the assessee. The assessee moved application before the Settlement Commission. The Settlement Commission passed order u/s.245D(4) whereby the undisclosed income of the assessee was settled for the relevant assessment years. The order of the Settlement Commission observed that the CIT/AO may take such appropriate action in respect of the matter not before the Commission as per provision of section 245F(4) of the Act. Thereafter, the Assessing Officer issued notice and made additions over and above the additions sustained by the Settlement Commission. The additions were deleted by the CIT(A) and the Tribunal upheld the order of the CIT(A).
On appeal by the Revenue, the Allahabad High Court upheld the decision of the Tribunal and held as under:
“(i) After passing the order by the Settlement Commission, no power vests in the Assessing Officer or any other authority to issue the notice in respect of the period and income covered by the order of the Settlement Commission. Except in the case of fraud or misrepresentation of facts, the order passed by the Settlement Commission is final and conclusive and binding on all parties. The Assessing Officer, therefore, has no jurisdiction to issue the impugned notice for making further enquiry in the matter in view of sections 245D(6) and 245I.
(ii) There cannot possibly be piecemeal determination of the income of an assessee for relevant period, one by the Settlement Commission and another by the Assessing Officer. Otherwise the very purpose of filing application before the Settlement Commission would be frustrated.
(iii) In the absence of any right conferred by the Act, mere observation of the Settlement Commission will not empower the assessing or Appellate Authority to reassess on any ground, whatsoever, for the same financial year with regard to which the Settlement Commission had exercised jurisdiction and given a finding.”
