The Delhi High Court in the case Orchid Infrastructure Developers Pvt. Ltd. Versus PCIT observed and has held that the judgment passed by the Supreme Court of Abhisar Buildwell cannot be construed to be an authority to override the mandate of Section 245-I of the Income Tax Act.
The bench comprising of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav in the case observed that the Supreme Court judgment in the case of Abhisar Buildwell, wherein it is stated that the completed or unabated assessments can be re-opened by the Assessing Officer, AO in exercise of powers u/s 147 and section 148 of the Income Tax Act, which being subject to fulfillment of the conditions mentioned under the provisions.
In the present case, the petitioner or assessee filed a return for the impugned AY 2007-08, wherein declaring the total income of Rs. 12.42 crore. Thus, the returned income was accepted, which being pursuant to the search conducted on the premises of Shri Hari Ram Group. The court issued the notice under section 153A and later, an assessment order was passed making additions. The assssee filed an appeal before CIT(A), who allowed the appeal in part by deleting the disallowance of interest.
Therefore, the assessee filed a settlement application under Chapter XIXA for Assessment Years 2007-08 to 2014-15.
However, the petitioner as well as the respondent department filed cross-appeals against the ICT’s order before ITAT. Thus, the ITAT dismissed the department’s appeal and an appeal was preferred by the department before the High Court.
The ITSC passed the final order as stated under Section 245D(4) on the settlement application preferred by the assessee upon an offer made by the assessee to pay an additional sum for an amount of Rs. 5 lakhs for AY.
The department passed an order giving effect to the settlement order.
The High Court in the case observed and has dismissed the appeal filed by the department.
The order of the ITSC was assailed by the department before the High Court which being on the grounds that the grant of immunity as stated under section 245H and the grant of waiver of interest under section 234A were dismissed by the High Court.
On the other hand, the department filed the special leave petition before the Supreme Court, which was tagged with a batch of similar matters and was subsequently decided in Abhisar Buildwell.
Therefore, the department initiated the proceedings initiates as stated under Section 148A(b) against the assessee, while replying on the judgment passed by the court in the case Abhisar Buildwell and the consequent Circular 1/2023 which is issued by CBDT.
The department in the case observed and has rejected the objections filed by the assessee and passed the order under section 148A(d) upon approval being accorded by the prescribed authority.
The assessee challenged the order and consequential proceedings.
It has also been contended by the assessee before the court that once the ITSC is seized of the assessment of a particular AY, it can only be reopened as per the procedure mentioned in Section 245 of the Act and not in the form of separate proceedings under section 148 of the Act.
The court while considering the facts and circumstances of the case observed and has held that the judgment in Abhisar Buildwell could not be construed to the authority to override the mandate of Section 245-I of the Act. Thus, the Sections 15O and 245-I of the Act are provisions of equal standing and a conflict between the two must be resolved by resorting to the principle of harmonious construction and if the settlement arrived at by the ITSC is allowed to be reopened on grounds other than those expressly provided for, it would effectively render the entire mandate of the ITSC vulnerable, and the commitment to the finality of a settlement would be compromised.
The Counsel, Advocate Abhishek Sameer Rohatgi appeared for the petitioner.
The Counsel, Advocate Abhishek Maratha represented the respondent.
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