The Supreme Court has held that an Assessing Officer (AO) cannot reopen or reassess an issue that has already been covered by a final order of the Income Tax Settlement Commission (ITSC). The Court dismissed the Revenue’s appeal concerning Omaxe Limited and upheld the finality attached to the settlement proceedings under Chapter XIX-A of the Income Tax Act, 1961.
The judgment was delivered by Justice S.V.N. Bhatti and Justice N.V. Anjaria on September 16, 2026.
Background
The dispute arose from Assessment Year 2006-07. Omaxe Limited, a real estate company, had filed its income tax return declaring taxable income of about Rs. 89.20 crore and claimed a deduction of approximately Rs. 78.99 crore under Section 80IB(10) of the Income Tax Act for its housing projects.
During the pendency of the assessment, the company approached the ITSC under Section 245C for settlement of its tax liabilities for several assessment years. On March 17, 2008, the Settlement Commission passed its final order and accepted additional income of Rs. 18 lakh for AY 2006-07. After deductions, the total income was determined at Rs. 89.38 crore.
Later, following a survey conducted in December 2009, the Revenue alleged that commercial portions of certain housing projects exceeded the statutory limits prescribed for claiming the Section 80IB(10) deduction. The Assessing Officer subsequently issued a notice under Section 148 proposing reassessment and disallowance of the deduction.
The reassessment ultimately resulted in an addition of Rs. 65.65 crore to Omaxe’s taxable income.
Omaxe challenged the reassessment, arguing that the Settlement Commission’s final order had attained conclusiveness under Section 245-I and that the Assessing Officer had no jurisdiction to reopen matters covered by that settlement.
The Revenue, on the other hand, argued that the Section 80IB(10) deduction had not been specifically adjudicated by the Settlement Commission and therefore remained open to reassessment.
The Revenue had also approached the Settlement Commission under Section 245D(6), seeking to have the earlier settlement order declared void on the ground of alleged misrepresentation. However, the ITSC rejected that application on December 16, 2011. It found that the material relied upon by the Revenue did not establish misrepresentation and treated the dispute regarding the Section 80IB(10) deduction as a legal dispute.
The Supreme Court examined the scheme of Chapter XIX-A and several earlier judgments concerning the powers and finality of the Settlement Commission.
The Court noted that once a settlement application is admitted, the ITSC assumes exclusive jurisdiction over the case. The settlement process is designed to provide a comprehensive mechanism for resolving the taxpayer’s liability, subject to the statutory safeguards available to the Revenue.
The Court further observed that the final settlement order is conclusive regarding matters stated in it. The Revenue does have a statutory remedy where fraud or misrepresentation is established, but that remedy has to be pursued through Section 245D(6).
"The AO’s power to reassess the Settlement Order passed by the ITSC is unavailable."
The Bench also noted that allowing the Assessing Officer to independently reopen a matter covered by the Settlement Commission would undermine the finality contemplated by Chapter XIX-A. In the present case, the Revenue had already invoked Section 245D(6), and its application had been rejected by the ITSC. That order had attained finality.
The Supreme Court held that the Revenue could not use reassessment proceedings under Section 148 to reopen the matter after the Settlement Commission had conclusively dealt with it. The appropriate statutory course, where fraud or misrepresentation is alleged, was the mechanism under Section 245D(6), which the Revenue had already pursued.
Finding no merit in the Revenue’s challenge, the Bench dismissed Civil Appeal No. 9190 of 2013. Pending applications, if any, were also disposed of.
Case Details:
Case Title: Assistant Commissioner of Income Tax & Another v. M/s. Omaxe Limited
Case Number: Civil Appeal No. 9190 of 2013
Judges: Justice S.V.N. Bhatti and Justice N.V. Anjaria
Decision Date: September 16, 2026
