Finality of ITSC orders u/ss 245D(4) and 245-I bars reassessment u/ss 147/148, except for fraud or misrepresentation

HC held that once an order under Section 245D(4) is passed by the ITSC for a particular assessment year, it attains finality under Section 245-I and the assessment for that year cannot be reopened under Sections 147/148, except on the limited grounds of fraud or misrepresentation within Chapter XIX-A. The legislative scheme governing the ITSC is self-contained and intended to preclude parallel or conflicting assessments. As the ITSC had already settled the relevant assessment year covering the very issues raised, the Assessing Officer lacked jurisdiction to issue reassessment notices. The HC accordingly quashed the impugned notice, corrigendum and reassessment order.

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Issues Involved:
1. Scope of Interference in ITSC Orders: Determination of the scope of interference in the order of Income Tax Settlement Commission (ITSC) in light of the interplay between Section 245-I and Section 150 of the Income Tax Act, 1961.
2. Reopening of Assessment Proceedings: Legality of reopening assessment proceedings under Section 148 of the Act after a settlement order by ITSC.
3. Finality of ITSC Orders: Whether the ITSC's order dated 16.09.2016 is final and conclusive for the concerned Assessment Year (AY) 2007-08.
4. Applicability of Section 150: Whether Section 150(1) of the Act authorizes the reopening of assessment proceedings based on findings or directions in court orders.

Summary:

Scope of Interference in ITSC Orders:
The petitioner challenged the reopening of assessment proceedings for AY 2007-08, arguing that the issues were already settled by the ITSC's order dated 16.09.2016. The court examined whether the ITSC's order is conclusive and prevents reopening under Section 148 of the Act. The petitioner contended that once ITSC is seized of an assessment, it can only be reopened as per the procedure in Section 245 of the Act.

Reopening of Assessment Proceedings:
The petitioner argued that the issues on which the respondent seeks to reopen the assessment were duly considered by the ITSC, and therefore, the respondent lacks authority to reopen the assessment. The respondent countered that the issues were not considered by the ITSC and thus, the reopening is justified.

Finality of ITSC Orders:
The court noted that the ITSC's order is final and conclusive as per Section 245-I of the Act, which states that no matter covered by such order shall be reopened in any proceeding under the Act or any other law, except in cases of fraud or misrepresentation. The court observed that the issues raised by the respondent were indeed considered by the ITSC, and the finality of the ITSC's order cannot be disturbed unless there is fraud or misrepresentation.

Applicability of Section 150:
The respondent relied on Section 150(1) of the Act and the Supreme Court's decision in Abhisar Buildwell P. Ltd. to justify the reopening. The court, however, found that the reliance on Section 150(1) and the Abhisar Buildwell decision does not override the mandate of Section 245-I. The court emphasized that Sections 150 and 245-I are of equal standing, and a harmonious construction must preserve the essence of both provisions.

Conclusion:
The court quashed the impugned notice and corrigendum dated 30.11.2023, and the impugned order of the same date, holding that the reopening of the assessment proceedings was unjustifiable and unsustainable. The writ petition was allowed, reinforcing the finality of the ITSC's order for the concerned AY.

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