The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer has no power to reopen the assessment when an order is passed by the Income Tax Settlement Commission under Section 245D of the Income Tax Act, 1961.
The assessee has filed a return of income and a search and seizure operation was carried out in the case of the assessee. The assessee filed an application under Section 245C(1) of the Income Tax Act for settlement of the case before the Income Tax Settlement Commission. The Income Tax Settlement Commission passed an order under Section 245D(4) of the Income Tax Act settling the matter.
The Revenue Authority issued a notice under Section 148 of the Income Tax Act. The assessee attended the hearing and filed its submissions thereby stating that as per the provisions of Section 245 I of the Income Tax Act, it is settled position that once the Income Tax Settlement Commission has passed a final order of settlement for an assessment 245D(4), the assessment become conclusive and the Assessing Officer has no jurisdiction to open any matter relating to that assessment year under Section 148 of the Income Tax Act.
The Assessing Officer in the assessment order passed under Section 144 read with Section 147 of the Income Tax Act overlooked the decision of the Income Tax Settlement Commission and made an addition of Rs. 21,06,93,932/- on account of income earned by the employing circular inflated purchases thereby taking 3% of amount of circular trading in respect inflated stock which was not disclosed in the return of income. The Commissioner of Income Tax (Appeal) [CIT(A)] partly allowed the appeal of the assessee.
The Departmental Representative submitted that the CIT(A) erred in holding that the additions made by the Assessing Officer in the present order survived after the order of the National Company Law Tribunal (NCLT) and consequently deleted the additions which are incorrect. It was further submitted that CIT(A) was not correct in deleting the addition of Rs. 21,06,93,392/- being 3% of the amount of circular trading/inflated purchases.
The Authorized Representative submitted that once the NCLT passed an order approving the resolution plan, the same is binding on all the authorities including the Central Government and all the dues including the dues not forming part of the resolution plan shall stand extinguished.
It was submitted that once an order has been passed by the Income Tax Settlement Commission under Section 245D of the Income Tax Act, the assessment for the year stands concluded and the Assessing Officer has no power to reopen such assessment. The Authorized Representative relied upon the decision of the Gujarat High Court in the case of Komalkant Fakirchand Sharma vs. DCIT (2019) 417 ITR 11.
The Two-member bench comprising of Suchitra Kamble (Judicial member) and Waseem Ahmed (Accountant member) held that the CIT(A) has rightly held that claims which are part of the resolution plan stood extinguished as well as once the Income Tax Settlement Commission has decided/settled the tax component between the assessee and the revenue, the revenue authorities do not have any power to reopen such assessment. Thus, the appeal filed by the revenue was dismissed.
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