Jurisdiction over pending settlement applications and sealed-cover communication do not invalidate assessment orders already communicated.

Under the Income-tax Act, assessment orders passed while settlement applications were pending were not rendered void where valid applications had not yet vested exclusive jurisdiction in the Settlement Commission or Interim Board and interim orders merely allowed the assessments to proceed subject to further orders. The Court also held that communication of the assessment orders had already occurred, and a direction to keep the demand in sealed cover was only a protective interim measure that did not invalidate the orders or require fresh service within one year. The challenge to jurisdiction, limitation, and communication therefore failed, leaving the assessment and recovery actions undisturbed.

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Issues: (i) Whether the assessment orders passed during the pendency of the settlement applications were without jurisdiction because exclusive jurisdiction had vested in the Settlement Commission or Interim Board; (ii) Whether the assessment orders or the consequential demand could fail on the ground that they were not kept in sealed cover or were not re-communicated within the limitation period.

Issue (i): Whether the assessment orders passed during the pendency of the settlement applications were without jurisdiction because exclusive jurisdiction had vested in the Settlement Commission or Interim Board.

Analysis: The statutory scheme under Sections 245A(b), 245C, 245D, 245F and 245HA of the Income-tax Act, 1961 was examined along with the effect of the Finance Act, 2021 and the subsequent reading down of the filing cut-off in the earlier Division Bench decision. The Court held that, on the dates when the assessment orders were passed, the petitioners had not made valid applications under the statutory regime then in force, and exclusive jurisdiction had not vested in the Settlement Commission or Interim Board in a manner that displaced the regular assessing officers. The interim orders merely permitted receipt of applications and allowed the assessments to proceed subject to further orders, and the later challenge to the assessment orders in the writ petitions had not resulted in their being set aside.

Conclusion: The assessment orders were not void for want of jurisdiction and the challenge on that ground failed, in favour of Revenue.

Issue (ii): Whether the assessment orders or the consequential demand could fail on the ground that they were not kept in sealed cover or were not re-communicated within the limitation period.

Analysis: The Court held that the orders had in fact been communicated, and the contempt proceedings only kept the demand and enforcement in abeyance while protecting limitation for any challenge. The direction to keep the order in sealed cover was treated as an interim protective arrangement; it did not undo the passing or service of the assessment orders. The plea that the orders became ineffective for want of re-communication or fresh service within one year was therefore rejected.

Conclusion: The limitation and communication challenge was rejected, in favour of Revenue.

Final Conclusion: The writ petitions were held to be unsustainable, and the impugned assessment and recovery actions were left undisturbed.

Ratio Decidendi: Where assessment orders are passed pursuant to interim judicial permission and the orders are already communicated, later abatement or protective directions do not extinguish the validity of the assessments or require fresh communication to preserve them; the assessee remains bound by the statutory and inter-partes consequences of the interim orders.

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