PCIT-1 Vs M D Industries Pvt Ltd (Supreme Court of India)
The Supreme Court of India dismissed the Revenue’s special leave petition and upheld the restoration of income tax appeals by the Income Tax Appellate Tribunal (ITAT), notwithstanding the pendency of settlement proceedings before the Settlement Commission. The Supreme Court first condoned the delay in filing the petition and noted that an identical petition filed earlier by the same Revenue authority had already been dismissed by an order dated 11.07.2025. Relying entirely on that earlier order, the Court dismissed the present petition and disposed of all pending applications.
Read Gujarat HC Judgment in above case: Gujarat HC Restored Income Tax Appeal Despite Pending Settlement Proceedings
In the earlier order, the Supreme Court recorded that the settlement application had not yet been decided and that an order under Section 245D(4) of the Income Tax Act, 1961 was still to be passed. The Court clarified that only where a settlement application is rejected without providing terms of settlement would Section 245HA apply, resulting in revival of appellate proceedings. It rejected the Revenue’s contention that an assessee must abandon the right to contest the assessment on merits merely because a settlement application is rejected. In the peculiar facts of the case, the Court held that the ITAT was justified in condoning the delay, setting aside the order of the Commissioner of Income Tax (Appeals), and restoring the first appeal, while clarifying that the appellate proceedings should be kept in abeyance until disposal of the settlement application.
