ACIT & Another Vs Omaxe Limited (Supreme Court of India)
AO cannot reopen an assessment year already concluded by Settlement Commission; finality covers the returned income as well as deductions claimed: Supreme Court
Settlement application covering AY 2006-07
The Supreme Court has held that once the Income Tax Settlement Commission passes a final order under Section 245D(4), the Assessing Officer cannot reopen the concluded assessment under Sections 147 and 148 in respect of a matter covered by the settlement proceedings.
The finality of the settlement is not confined merely to the additional income offered by the assessee. Once the settlement application is admitted, the Commission considers the entire case for the relevant assessment year—including the returned income, additional income and deductions claimed while computing taxable income.
The Court consequently upheld the Delhi High Court’s order quashing the reassessment notice and reassessment order disallowing Omaxe Limited’s deduction under Section 80-IB(10).
Settlement application covering AY 2006-07
Omaxe Limited, a real-estate company, filed its return for AY 2006-07 declaring taxable income of approximately ₹89.21 crore after claiming a deduction of about ₹79 crore under Section 80-IB(10) in respect of its housing projects.
During the pendency of the regular assessment, the company approached the Settlement Commission under Section 245C for AYs 2000-01 to 2006-07. For AY 2006-07, it offered additional income of ₹18 lakh.
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