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of <h1>Settlement Application Pending Needs Order Under Section 245D(4); Section 245HA Applies Only If Rejected Without Terms</h1> The SC held that an application before the Settlement Commission pending decision requires an order under section 245D(4). Section 245HA applies only if ... Application to Settlement Commission - HELD THAT:- It is stated at the Bar that the application before the Settlement Commission has not been decided, and an order u/s 245D(4) on the application is to be passed. It is only if the application for settlement is rejected without providing for terms of settlement that Section 245HA of the 1961 Act will be applicable and the appellate proceedings will stand revived. The stand of the Revenue that the assessee must give up his right to contest the assessment order on merits, if the settlement application is rejected without providing for terms of settlement, is misconceived and must be rejected. In the peculiar facts of the case the Income Tax Appellate Tribunal was justified in condoning the delay, as well as setting aside the order of the Commissioner of Income Tax (Appeals) and restoring the first appeal. Recording the aforesaid, we dismiss the present special leave petition. The Supreme Court addressed an appeal concerning the application of Sections 245D(4) and 245HA of the Income Tax Act, 1961. The Court condoned the delay in filing and noted that the Settlement Commission had yet to decide on the settlement application. It clarified that Section 245HA applies only if the settlement application is rejected without terms of settlement, thereby reviving appellate proceedings. The Court rejected the Revenue's contention that the assessee must forfeit the right to contest the assessment on merits if the settlement application is rejected without terms, deeming this view 'misconceived.' The Court upheld the Income Tax Appellate Tribunal's decision to condone delay, set aside the Commissioner of Income Tax (Appeals) order, and restore the first appeal. The special leave petition was dismissed, with a directive that the Commissioner of Income Tax (Appeals) keep appellate proceedings in abeyance until the Settlement Commission disposes of the application. Pending applications, if any, shall be disposed of accordingly.
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