Final 245C settlement u/ss245I, 245F(1) bars reopening u/s153C for covered assessment years entirely thereafter

HC held that once an order of settlement under s.245C attains finality under ss.245I and 245F(1), assessments for the concerned years cannot be reopened by invoking s.153C (or other reassessment provisions) on matters covered by the settlement. The Settlement Commission's order is conclusive regarding all issues, items and heads of income for the specified assessment years, subject only to fraud or misrepresentation, which was not established in this case. Accordingly, the impugned notice issued under s.153C and all consequential proceedings for AYs 2004-05 to 2006-07 were quashed, and the petition was allowed in favour of the assessee.

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Issues Involved:
1. Validity of the notice issued under Section 153A of the Income Tax Act.
2. Reopening of assessment for AY 2006-07 under Section 148.
3. Initiation of proceedings under Section 153C following a search in the premises of a third party.
4. Finality of the Settlement Commission's order under Section 245D(4) and its implications.
5. Jurisdiction of the Settlement Commission versus the Assessing Officer.

Issue-wise Detailed Analysis:

1. Validity of the notice issued under Section 153A of the Income Tax Act:
The petitioner challenged the notice issued under Section 153A of the Income Tax Act. The petitioner's premises were searched, and a notice under Section 153A was issued. The petitioner reiterated its returns for the years 2000-2006 under Section 153A. The Settlement Commission was approached, which determined the petitioner's liability for the years 2004-05 to 2006-07. The court examined whether the issuance of a notice under Section 153A was valid, given that the Settlement Commission had already passed an order for the relevant assessment years.

2. Reopening of assessment for AY 2006-07 under Section 148:
The Assessing Officer (AO) issued a notice under Section 148 on 30.6.2010 proposing the reopening of the assessment for AY 2006-07. The petitioner objected, and the objections were rejected by the AO. The final reassessment order was passed on 08.11.2011, which the petitioner challenged. The court had previously quashed the reassessment notice under Section 147 for AY 2006-07 in WP(C) No.7975/2011, emphasizing that the Settlement Commission's order is conclusive and cannot be reopened under Section 148.

3. Initiation of proceedings under Section 153C following a search in the premises of a third party:
Following a search in the premises of Mr. Surinder Modi, the AO recorded a satisfaction note to initiate proceedings under Section 153C against the petitioner for AY 2004-05 to 2009-10. The petitioner objected, stating that the assessments for the years 2004-05 to 2006-07 had already been concluded by the Settlement Commission's order dated 17.03.2008. The Revenue dismissed these objections, leading to the petitioner filing detailed objections against the notice under Section 153C.

4. Finality of the Settlement Commission's order under Section 245D(4) and its implications:
The petitioner argued that under Section 245I, the Settlement Commission's order for AY 2006-07 is final and cannot be disturbed. The court referenced the Supreme Court's decision in Brij Lal v. Commissioner of Income Tax, which held that the Settlement Commission's orders are final and conclusive as to the matters contained therein and cannot be reopened except in cases of fraud or misrepresentation. The court reiterated that the Settlement Commission has exclusive jurisdiction over the matters once it assumes jurisdiction and makes an admission order.

5. Jurisdiction of the Settlement Commission versus the Assessing Officer:
The court analyzed whether the AO could issue notices under Section 153C when the Settlement Commission had already passed an order under Section 245D(4). The court emphasized that the Settlement Commission has the jurisdiction of all Income Tax authorities and its orders are final. The court noted that any non-disclosure or fresh discovery of facts should be addressed by approaching the Settlement Commission for a declaration that its previous order is void due to fraud or misrepresentation. The court rejected the Revenue's argument that the definition of "case" under Section 245A excludes reassessment proceedings under Section 147, emphasizing that once the Settlement Commission completes its proceedings, its order is conclusive.

Conclusion:
The court held that the notice issued to the petitioner under Section 153C cannot be sustained, and quashed the notice and all further proceedings. The court allowed the Revenue to move the Settlement Commission for appropriate relief, setting out relevant facts and circumstances, which the Commission would decide on its merits in accordance with the law. The writ petition was allowed in these terms.

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