No reopening can be done once order is passed by Settlement Commission

Order of Settlement Commission is conclusive and final in respect of the relevant assessment year and AO have no jurisdiction to reopen the assessment under section 147.

In a recent judgment, Hon’ble Supreme Court has quashed the Special Leave Petition (SLP) against the judgment of the Hon’ble Gujarat High Court holding that once an order of Settlement Commission is made, the same is conclusive and final in respect of the assessment for the assessment year in relation to which the order has been passed. The Assessing Officer has therefore no jurisdiction to reopen the assessment by invoking the provision of Section 147 of the Income Tax Act, 1961 (the Act).

ABCAUS Case Law Citation:
4490 (2025) (04) abcaus.in SC

In the instant case, the respondent company was engaged in the business of Civil Construction on a contract basis mostly for Government and Semi-Government agencies. A search and seizure action was carried out under Section 132 of the Act at a Business Group by the department. The petitioner had before the search operations, filed an application under Section 245C(1) of the Act for five assessment years before the Income Tax Settlement Commission. The Settlement Commission passed an order under Section 245D(4) of the Act assessing the total income and directing the company to pay tax along with interest.

Consequentially, the Assistant Commissioner of income Tax passed an order under Section 245D(6) of the Act giving effect to the order of the Settlement Commission. The order was passed after the date of said search operation.

After a gap of nearly five years, a notice under Section 148 of the Act was issued to the company which raised objections inter-alia, stating that since the assessment had been concluded by the Settlement Commission, the Assessing Officer had no jurisdiction to reopen the same.

The matter travelled to the Hon’ble High Court which observed that the decision rendered by the Division Bench of the Court was that once an order of Settlement Commission is made, the same is conclusive and final in respect of the assessment for the assessment year in relation to which the order has been passed. The Assessing Officer had therefore no jurisdiction to reopen the assessment by invoking the provision of Section 147 of the Act.

Accordingly, the Hon’ble High Court allowed the petition and quashed the impugned notice under section 148 of the Act.

Not satisfied, the Revenue filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court challenging the order of the High Court.

However, the Hon’ble Supreme Court dismissed the SLP of the Revenue with the following observation, “we have gone through the Special Leave Petition and do not find any merit in the same.”

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