2011 (3) TMI 1610 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) post Settlement Commission's order.
2. Validity of additions made by AO based on seized documents after Settlement Commission's order.

Summary:

1. Jurisdiction of the Assessing Officer (AO) post Settlement Commission's order:

In these appeals, the Revenue questioned whether the AO had the jurisdiction to make fresh assessment orders after the Settlement Commission had passed an order u/s 245D(4) of the Income-tax Act, 1961. The AO argued that the Settlement Commission's order dated 31st March 2008 suffered from defects as it did not bifurcate the undisclosed income assessee-wise and did not specify the income pertaining to each assessment year. The AO issued a show cause notice to the assessee regarding matters not placed before the Settlement Commission, which the assessee did not respond to, leading the AO to complete the assessments u/s 153A read with Section 144/245F(4).

The ld.CIT(A) allowed the appeal of the assessee, directing the AO to delete the additions made based on the seized documents, citing the decision of the Hon'ble jurisdictional High Court in the case of Smt. Neeru Agarwal vs. Union of India [2010] 187 Taxman 198 (All.). The High Court held that after the Settlement Commission passes an order, no power vests in the AO or any other authority to issue notices or make further assessments for the period and income covered by the Settlement Commission's order, except in cases of fraud or misrepresentation of facts.

2. Validity of additions made by AO based on seized documents after Settlement Commission's order:

The AO made additions/disallowances based on seized documents, arguing that the Settlement Commission did not provide an opportunity to the Revenue to present its case, thus violating principles of natural justice. However, the ld.CIT(A) observed that the Settlement Commission's order had not been challenged by the Department and was final and binding as per Section 245-I of the Act. The ld.CIT(A) concluded that the AO had no jurisdiction to make fresh assessments or additions based on the seized documents after the Settlement Commission's order.

The ITAT upheld the ld.CIT(A)'s decision, emphasizing that the Settlement Commission's order is conclusive and binding, and the AO was not justified in presuming that all matters and materials were not placed before the Settlement Commission. The ITAT dismissed all the appeals filed by the Revenue, confirming that the AO had no authority to frame another assessment order for the period covered by the Settlement Commission's order.

The order pronounced in the open Court on 17.3.11.