AO cannot do reassessment after assessment by Settlement Commission

Komalkant Faikirchand Sharma Vs DCIT (Gujarat High Court)

Conclusion:  Since there was an order of the Settlement Commission under section 245D(4) in relation to the assessment year in respect of which assessment was sought to be reopened, AO had no jurisdiction to reopen the assessment as once an order had been passed under section 245D by Settlement Commission, assessment for year stood concluded.

Held: Assessee – individual engaged in the business of real estate, transportation and ship-­breaking. A search took place at the premises of assessee therefore, he filed an application under section 245C before the Settlement Commission.  Settlement Commission passed an order under section 245D(4). Thereafter, AO issued notice under section 148 seeking to reopen the assessment. It was held in the facts of the present case, since the Settlement Commission had passed an order under section 245D(4)  in respect of the assessment year in relation to which the assessment was sought to be reopened, AO had no jurisdiction to invoke the provisions of section 147 and reopen an assessment, which had become conclusive. Such concluded assessment could only be reopened in case of fraud or misrepresentation of facts, as contemplated under sub-section (6) of section 245D. The assumption of jurisdiction on the part of AO under section 147 by issuing the impugned notice under section 148 was, therefore, invalid and without authority of law. Though, the reasons recorded for reopening the assessment, AO could have formed the belief that income chargeable to tax has escaped assessment, in this case, since there was an order of the Settlement Commission under section 245D(4) of the Act in relation to the assessment year in respect of which the assessment was sought to be reopened, AO had no jurisdiction to reopen the assessment. The impugned notice under section 148, therefore, could not be sustained.

FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT

1. By this petition under article 226 of the Constitution of India, the petitioner has challenged the notice dated 31.03.2018 issued by the respondent under section 148 of the Income tax Act, 1961 (hereinafter referred to as “the Act”) proposing to reopen the assessment of the petitioner for assessment year 2011-12.

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