Assessing Officer Cannot Reopen Assessment Settled by ITSC Under Section 245D(4), Revenue's Remedy Only Under Section 245D(6): Supreme Court in ACIT v. Omaxe Ltd. [2026 INSC 1000]

In Assistant Commissioner of Income Tax & Anr. v. M/s. Omaxe Limited (2026 INSC 1000), the Supreme Court held that a settlement order of the ITSC under Section 245D(4) is conclusive under Section 245-I and cannot be reopened by the Assessing Officer through a reassessment notice under Section 148 to disallow the Section 80IB(10) deduction that formed part of the settled computation (paras 23–25). A Bench of Justice S.V.N. Bhatti and Justice N.V. Anjaria held that the Revenue's remedy lies only before the ITSC under Section 245D(6), which it had already invoked unsuccessfully (paras 24–26).

Status: Delhi High Court judgment dated 13.07.2012 quashing the Section 148 notice dated 30.06.2010 and the reassessment order dated 08.11.2011 for AY 2006-07 upheld; Revenue's appeal dismissed (paras 1, 12, 27).

Headnote: No Reassessment After ITSC Settlement Order

Income Tax Act, 1961 – Chapter XIX-A – Sections 245C, 245D(4), 245D(6), 245F(2), 245-I – Settlement Commission – Finality of settlement order – Reassessment under Sections 147 and 148 – Section 80IB(10) deduction for housing projects – Remedy of Revenue against settlement order – Fraud or misrepresentation.

Held: (i) Chapter XIX-A is a self-contained settlement mechanism; once an application is allowed to proceed, the ITSC assumes exclusive jurisdiction and the regular assessment machinery under Sections 142 to 156 is placed in abeyance (paras 19, 22).

(ii) A case before the ITSC covers the full and true disclosure of income and "the manner in which such income has been derived"; where the assessee's computation includes deductions claimed, the settlement order determines the net income after those deductions (para 23).

(iii) An order under Section 245D(4) is conclusive under Section 245-I; the AO's powers under Sections 143(2), 148, 154 etc. cannot be revived to reassess matters covered by it, as that would defeat the finality Parliament intended (paras 22, 24).

(iv) The Revenue's remedy against a settlement order obtained by fraud or misrepresentation is an application to the ITSC under Section 245D(6); apart from that, only judicial review under Articles 226 and 32/136 is available (paras 22, 24–25).

(v) The Revenue's Section 245D(6) application had been rejected by the ITSC on 16.12.2011, and that order had become final (paras 8–9, 26).

(paras 21–27)

Case Details: ACIT v. Omaxe Ltd. (2026 INSC 1000)

Final Outcome: Revenue's appeal dismissed; High Court judgment quashing the reassessment notice and order upheld.

Case: Assistant Commissioner of Income Tax & Another v. M/s. Omaxe Limited

Neutral Citation: 2026 INSC 1000

Case No.: Civil Appeal No. 9190 of 2013

Court: Supreme Court of India (Civil Appellate Jurisdiction) – Reportable

Date of Decision: 16 September 2026

Bench: Justice S.V.N. Bhatti (author) and Justice N.V. Anjaria

Relevant Acts & Sections: Income Tax Act, 1961 – Sections 80IB(10), 132, 133A, 143(2), 143(3), 147, 148, 154, 245C, 245D(1), 245D(4), 245D(6), 245F(2), 245H, 245HA, 245-I (Chapter XIX-A)

Impugned Order: Judgment of the High Court of Delhi dated 13.07.2012 in Writ Petition (C) No. 7975 of 2011 (para 1)

Counsel: Mr. Arijit Prasad, Senior Counsel, for the Revenue; Ms. Kavita Jha for the Assessee (paras 14–16)

Source: Supreme Court of India (official website)

Key Holdings of the Supreme Court

• Once the ITSC admits a settlement application, it has exclusive jurisdiction, and the regular assessment and reassessment machinery is in statutory abeyance (para 22).
• The ITSC's consideration extends to the assessee's return for the year, including the deductions claimed, because Section 245C requires disclosure of the manner in which income was derived (para 23).
• A settlement order under Section 245D(4) attains finality and is conclusive under Section 245-I; judicial review against it is limited (paras 22–23).
• The AO cannot use Sections 143(2), 148 or 154 to reassess matters covered by the settlement order; Parliament did not envisage this (para 24).
• Allegations of fraud or misrepresentation must be taken to the ITSC under Section 245D(6); the Revenue had done so and lost, and that order is final (paras 24–26).

Brief Facts of the Case

Omaxe Ltd., a real estate company, was searched under Section 132 on 22.09.2005. On 30.11.2006 it filed its return for AY 2006-07 declaring taxable income of Rs. 89,20,76,630 after claiming a deduction under Section 80IB(10) for its housing projects (para 2).

On 31.05.2007 it applied to the ITSC under Section 245C for AY 2000-01 to 2006-07. By its final order dated 17.03.2008 under Section 245D(4), the ITSC accepted an additional income surrender of Rs. 18,00,000 for AY 2006-07 and determined net taxable income at Rs. 89,38,76,630, after allowing the Section 80IB(10) deduction (para 2).

After a survey under Section 133A on 17/18.12.2009, the Revenue alleged that the company planned to transfer commercial portions of projects to subsidiaries to protect its Section 80IB claim, and that the commercial area exceeded the limit in Section 80IB(10)(vi). A notice under Section 148 was issued on 30.06.2010, and a reassessment order dated 08.11.2011 added back Rs. 65,65,17,999 (paras 3, 5).

The Revenue also moved the ITSC under Section 245D(6) to declare the settlement order void for misrepresentation; the ITSC rejected the application on 16.12.2011, finding no misrepresentation and treating the dispute as a legal difference of opinion (paras 8–9). The Delhi High Court quashed the notice and the reassessment order, and the Revenue appealed (paras 6, 12–13).

Issues Before the Supreme Court

1. Whether, despite a settlement order under Section 245D(4), the AO has jurisdiction under Section 148 to reassess an aspect covered by that order (para 21).
2. Whether the Section 80IB(10) deduction was outside the ITSC's settlement because the assessee had not disclosed income on that account (paras 15, 23).
3. What remedy the Revenue has against a settlement order allegedly obtained by misrepresentation (paras 24–26).

Court's Findings and Reasoning

Revenue's case (para 15): The Revenue argued that the ITSC had considered only the income disclosed under Section 245C, not the Section 80IB(10) deduction, so the reassessment did not reopen anything concluded by the ITSC, and that the later survey justified reopening.

Assessee's case (paras 16–16.1): The assessee argued that its computation before the ITSC was after claiming the Section 80IB deduction, that the settlement order attained finality, and that the Revenue's only remedy was under Section 245D(6), which had already failed.

Scheme of Chapter XIX-A (paras 17–22): Surveying Jyotendrasinhji, Express Newspapers, Brij Lal and Kotak Mahindra Bank, the Court described the settlement route as an alternate mechanism that overrides regular assessment once an application is admitted, ends in a conclusive order, and can be reopened only for fraud or misrepresentation under Section 245D(6).

Scope of the settlement (para 23): The Revenue's reading ignored the words "the manner in which such income has been derived" in Section 245C. The ITSC considered the return including deductions, and the Revenue, which filed its report, allowed the deduction while participating.

No parallel reassessment (paras 24–25): Reviving the AO's powers would defeat the finality of the settlement. Describing the bargain as "the crust and the crumb", the Court held that both sides must accept the settlement, and the Revenue must go to the ITSC under Section 245D(6), not to the AO.

Final Outcome and Directions

• The Revenue's appeal is dismissed for want of merit (para 27).
• The High Court's judgment quashing the Section 148 notice dated 30.06.2010 and the reassessment order dated 08.11.2011 for AY 2006-07 stands (paras 1, 12, 27).
• Pending applications are disposed of (para 28).

Legal Principle Laid Down

A settlement order of the Income Tax Settlement Commission under Section 245D(4) is conclusive on the matters it covers, including the deductions forming part of the computation considered by the ITSC. The Assessing Officer cannot reopen that assessment year under Sections 147/148 or use other assessment powers to disturb it. If the Revenue believes the order was obtained by fraud or misrepresentation, its remedy is an application to the ITSC under Section 245D(6), apart from constitutional judicial review.

Precedents Relied Upon

• Jyotendrasinhji v. S.I. Tripathi, (1993) Supp (3) SCC 389 – Relied upon – limited judicial review of Settlement Commission orders. Discussed at para 17.
• CIT, Madras v. Express Newspapers Ltd., (1994) 2 SCC 374 – Relied upon – scope of the ITSC's jurisdiction and disclosure under Section 245C. Discussed at para 18.
• Brij Lal v. CIT, (2011) 1 SCC 1 (Constitution Bench) – Relied upon – Chapter XIX-A is a self-contained code; ITSC orders are final and cannot be reopened under Section 154. Discussed at paras 19, 21.
• Kotak Mahindra Bank Ltd. v. CIT, (2023) 458 ITR 113 (SC) – Relied upon – limited judicial review of ITSC's discretionary orders. Discussed at para 20.
• CIT v. Damani Brothers, (2003) 259 ITR 475 – Relied on by the Revenue before the High Court; distinguished by the High Court. Noted at paras 11–12.

Important Paragraphs of the Judgment

Verbatim extracts from the judgment. For the full text, refer to the judgment PDF below.

Para 21: "This is not a simple holy shower but an opportunity to purge by paying the tax, penalty, and interest as may be determined by the ITSC."

Para 23: "Once the matter is concluded under Section 245D(4), the decision attains finality, and the scope of judicial review, in view of the precedents referred to above, is also limited."

Para 24: "If the jurisdiction of the AO under Sections 143(2), 148, 154, etc., is made independent and available for exercise again, the finality attached to the Settlement Commission will be defeated. Parliament did not envisage this course."

Para 25: "The Revenue and the Assessee must take the Crust and the Crumb together."

Para 25: "The Revenue has to revisit the procedure under Section 245D(6) by making out a case before the ITSC, but not otherwise."

Para 27: "For the reasons stated above, we find no merit in the Appeal. The Appeal fails and is dismissed."

Practical Impact of the Ruling

• For assessees who settled before the ITSC: Matters covered by a Section 245D(4) order, including deductions in the settled computation, cannot be reopened by the AO through Section 148 (paras 23–24).
• For the Revenue: Allegations of suppression or misrepresentation after a settlement must be pursued before the ITSC under Section 245D(6), not through fresh reassessment (paras 24–25).
• For tax practitioners: Disclosure of "the manner in which such income has been derived" brings the whole computation, including deductions, within the settlement (para 23).
• For litigation strategy: Once a Section 245D(6) application is rejected and that order becomes final, a parallel reassessment on the same ground will not survive (paras 9, 26).

FAQs on ITSC Settlement and Reassessment

1. What did the Supreme Court hold in ACIT v. Omaxe Ltd.?

It held that the AO cannot reopen an assessment year settled by the ITSC under Section 245D(4), and dismissed the Revenue's appeal against the High Court judgment quashing the reassessment (paras 24, 27).

2. Was the Section 80IB(10) deduction covered by the settlement?

Yes. The assessee's computation before the ITSC was after claiming the deduction, and the ITSC determined net income on that basis; the Court held the settlement covered the return including deductions (paras 2, 23).

3. What can the Revenue do if it believes the settlement was obtained by misrepresentation?

It can apply to the ITSC under Section 245D(6) to declare the order void for fraud or misrepresentation; if that succeeds, regular assessment is restored (paras 22, 24).

4. Did the Revenue use that remedy here?

Yes. Its application dated 29.10.2010 was rejected by the ITSC on 16.12.2011, which found no misrepresentation, and that order became final (paras 8–9, 26).

5. What does "the crust and the crumb" mean in this judgment?

The Court used it to describe the settlement bargain: the Revenue gets tax on disclosed income and the assessee avoids penalty and prosecution, so both must accept the settlement together and cannot reopen it outside Chapter XIX-A (para 25).

Keywords: 2026 INSC 1000, ACIT v. Omaxe Ltd, Income Tax Settlement Commission, Section 245D(4), Section 245-I finality, reassessment Section 148 after settlement, Section 245D(6) fraud misrepresentation, Section 80IB(10) housing project deduction, Chapter XIX-A, Justice S.V.N. Bhatti, Supreme Court income tax judgment

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Download Judgment PDF – ACIT v. Omaxe Ltd.

Judgment PDF: 2026 INSC 1000 – Assistant Commissioner of Income Tax v. M/s. Omaxe Limited (Civil Appeal No. 9190 of 2013) – Download Judgment PDF

Source: Supreme Court of India (official website).