Can the Income Tax Department Reopen Assessments After a Settlement Commission Order? Supreme Court Clarifies

The Supreme Court held that once the Income Tax Settlement Commission (ITSC) passes a final settlement order under Section 245D(4) of the Income Tax Act, the Assessing Officer cannot reopen the concluded assessment by issuing a notice under Section 148. The Court reaffirmed that Chapter XIX-A constitutes a self-contained code, and the finality attached to a settlement order under Section 245-I cannot be defeated through independent reassessment proceedings. 

The Court explained that the settlement mechanism is intended to achieve finality in respect of matters covered by the settlement order. Once the Income Tax Settlement Commission has passed a final order under Section 245D(4), the Assessing Officer cannot independently reopen matters concluded by that order through reassessment proceedings under Section 148. 

The Court further held that where the Revenue believes that the settlement was obtained through fraud or misrepresentation, its remedy lies in approaching the ITSC under Section 245D(6), rather than issuing a notice under Section 148. In the present case, the Revenue had already invoked Section 245D(6), but the ITSC rejected its application. 

Accordingly, the Supreme Court affirmed the limited scope for reopening matters concluded by the ITSC and emphasised that permitting the Assessing Officer to independently reassess such matters would defeat the legislative purpose and finality of the settlement mechanism. 

Source update: Assistant Commissioner of Income Tax v. Omaxe Limited 

Last Updated on 9 October, 2026