Supreme Court Grants SLP Against High Court Ruling Abating Settlement Proceedings and Permitting Reassessment

Supreme Court Grants SLP Against High Court Ruling Abating Settlement Proceedings and Permitting Reassessment

Issue

Facts

• The case pertains to Assessment Years 2007-08 to 2009-10.
• The assessee filed an application for settlement before the Income Tax Settlement Commission under Chapter XIXA of the Income-tax Act, 1961.
• On the date of filing the settlement application, no assessment proceedings were pending before the Assessing Officer (AO), as the time limit under Section 153 to complete assessments had expired by efflux of time.
• The Settlement Commission rejected the application on the ground that post-2007 amendments require assessment proceedings to be actively pending before the AO to avail the settlement facility.
• The High Court upheld the rejection, ruling that the proceedings abated under Section 245HA(1)(i) and restored the papers to the AO, who was held entitled to issue notices for reopening assessments.
• Aggrieved by the High Court’s decision, the assessee filed a Special Leave Petition (SLP) before the Supreme Court.

Decision

• The Supreme Court granted the Special Leave Petition (SLP) filed by the assessee against the impugned judgment of the High Court.
• The matter was admitted for further hearing on merits, resolving the preliminary issue in favour of the assessee.

Key Takeaways

• Supreme Court Scrutiny: The High Court’s view—that settlement applications automatically abate if filed after the statutory time limit for assessment has lapsed—is now subject to final determination by the Supreme Court.
• Scope of Chapter XIXA Jurisdiction: The legal question of whether actively pending assessment proceedings are an absolute prerequisite for maintaining a settlement application post-2007 remains under judicial review.
• Interim Relief for Taxpayers: Granting the SLP leaves the issue open, temporarily restraining the finality of High Court findings regarding abatement and immediate reassessment issuance.