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Informist, Wednesday, Sept. 16, 2026

 

NEW DELHI – The Supreme Court Wednesday ruled that assessing officers do not have the power to reassess a taxpayer's income once a settlement order has been passed by the Income Tax Settlement Commission. After the settlement proceedings attain finality, the tax department cannot reassess the income as that would be contrary to the defining expressions in sections 245C, 245D(2), 245D(3), and 245D(4) of the Income Tax Act, 1961, the court said. Once the commission has settled the matter, the decision is final and even the scope for judicial review is limited, it said.

 

An order passed by the settlement commission is conclusive on matters stated therein, the apex court said. No appeal lies against the settlement commission's order, it said. The order can only be challenged under the extraordinary writ jurisdiction of high courts or the Supreme Court on limited grounds, such as procedural violations, lack of jurisdiction, or violation of natural justice, it said.

 

The apex court upheld the Delhi High Court's 2012 order that had quashed the tax department's show-cause notice and reassessment order against Omaxe Ltd. In the reassessment order, the department had disallowed the deduction claimed by Omaxe under Section 80IB(10) of the Income Tax Act, resulting in an addition of INR 656.52 million to its total income for the financial year 2005-06 (Apr-Mar).

 

The tax department can challenge the commission's order on grounds of fraud and misrepresentation, the top court said. The words "fraud and misrepresentation" depend on the circumstances and are to be decided on a case-by-case basis; by making out a case under either head, the commission's order can be reopened, which ultimately leads to the settlement order being declared void, it said. Only then is the normal assessment procedure restored or enabled, not otherwise, it said. If the assessing officer's power to reopen assessment orders is made independent of the commission's order, the finality attached to the commission will be defeated, it said, something the lawmakers had not intended.

 

The case has its genesis from Omaxe filing its returns and claiming a tax deduction in respect of housing projects it had executed. Omaxe had filed an application to settle the cases before the Income Tax Settlement Commission, which passed a final order in 2008. However, the department said Omaxe had claimed deduction as part of an alleged manipulative process and the company was planning to transfer commercial portions of the projects to fully-owned subsidiary companies to maintain the commercial area, thereby enabling the assessee to continue claiming the deduction under Section 80IB of the Income Tax Act.

 

Thereafter, the department issued notices to Omaxe to reopen its income assessment. Omaxe challenged the move and said the settlement order was conclusive and the assessing officer had no jurisdiction to reopen the assessment.

 

Wednesday, shares of Omaxe Ltd. ended at INR 115.07 on the National Stock Exchange, down 2.5% from Tuesday.  End

 

Reported by Surya Tripathi

Edited by Himanshi Gupta

 

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