Court sets aside assessment orders and recovery based on old orders, requires fresh assessment post-abatement.

The Court allowed the writ petition, setting aside the assessment orders dated 28th March 1995 for certain assessment years and the recovery of demand based on these orders. It was held that the Assessing Officer should have passed fresh assessment orders post-abatement of proceedings before the ITSC. The reliance on the old orders for recovery was deemed impermissible, leading to the Court setting aside the assessment orders and consequential recovery proceedings without any order as to costs.

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Issues Involved:
1. Validity of the assessment orders dated 28th March 1995.
2. Effect of abatement of proceedings before the Income Tax Settlement Commission (ITSC) under Section 245 HA of the Income Tax Act, 1961.
3. Requirement for the Assessing Officer (AO) to pass fresh assessment orders post-abatement.
4. Legality of the recovery of demand based on the assessment orders dated 28th March 1995.

Detailed Analysis:

1. Validity of the assessment orders dated 28th March 1995:
The core issue was whether the assessment orders passed by the AO on 28th March 1995, during the pendency of the Petitioner’s application before the ITSC, were valid. The AO acknowledged the pendency of the application but proceeded with the assessments ex parte due to the case being "barred by limitation." The Court found that these assessment orders were not valid after the abatement of the ITSC proceedings.

2. Effect of abatement of proceedings before the ITSC under Section 245 HA:
The proceedings before the ITSC abated on 31st March 2008, as no final order was passed by the ITSC by that date. Section 245 HA (2) mandates that the AO must dispose of the case as if no application under Section 245C had been made. This implies that the AO should treat the proceedings as pending and proceed afresh, using any material from the ITSC proceedings as per Section 245 HA (3).

3. Requirement for the AO to pass fresh assessment orders post-abatement:
After the abatement, the AO was required to pass fresh assessment orders for the relevant assessment years (AYs) as if the application before the ITSC had never been filed. The Court emphasized that the AO’s failure to pass fresh orders for AYs 1986-87 to 1992-93, except for AY 1993-94, was a mistake and impermissible under Section 245 HA (2).

4. Legality of the recovery of demand based on the assessment orders dated 28th March 1995:
The Court held that the recovery of demand based on the assessment orders dated 28th March 1995 was not permissible. The AO should have passed fresh assessment orders post-abatement, and the reliance on the 1995 orders for recovery was incorrect. The Court set aside the assessment orders dated 28th March 1995 and the consequential recovery proceedings.

Conclusion:
The Court allowed the writ petition, setting aside the assessment orders dated 28th March 1995 for AYs 1986-87, 1989-90, and 1992-93, and the recovery of demand based on these orders. The AO was required to pass fresh assessment orders post-abatement, and the reliance on the old orders was deemed impermissible. The writ petition was allowed without any order as to costs.

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