Settlement rejected at 245D(2C) requires 245D(4) inquiry into expenses and deeper factual inquiry; Section 156 demands quashed HC held the ITSC erred in rejecting settlement applications at the Section 245D(2C) stage and should have proceeded to Section 245D(4) to examine evidence ...
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Settlement rejected at 245D(2C) requires 245D(4) inquiry into expenses and deeper factual inquiry; Section 156 demands quashed
HC held the ITSC erred in rejecting settlement applications at the Section 245D(2C) stage and should have proceeded to Section 245D(4) to examine evidence supporting claimed expenses and determine taxable unaccounted receipts. Because appellants had disclosed receipts and admitted part as income while claiming deductions, a deeper factual inquiry was required. The writ petitions were allowed and the Commission directed to proceed under Section 245D(4). Consequentially, demand notices issued under Section 156 of the IT Act, 1961 were quashed and set aside.
Rule made returnable forthwith. In view of the order and judgment delivered in W.A. Nos. 3554 to 3556 of 2023 dated 05.06.2025, "Rule is made absolute in all these writ petitions." Consequently, the demand notices issued under Section 156 of the Income Tax Act, 1961, "are also quashed and set aside." Writ petitions are allowed. There shall be no order as to costs. Interim applications are closed. The court's decision operates to annul the impugned tax demand notices and to give final relief in the writ proceedings, relying on the precedent and reasoning articulated in the cited Writ Appeals.
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