Rajasthan HC Quashes Reassessment Notice After Settlement Commission Order, Says Revenue May Proceed Under Section 245D(6)

The petitioners challenged notices dated 28 March 2021 issued under Section 148 of the Income-tax Act, 1961, for assessment year 2014–15.

The Settlement Commission had already passed orders under Section 245D(4) for that assessment year on 29 September 2016.

The petitioners sought to have the notices and consequential proceedings quashed, relying on the Supreme Court’s decision in Assistant Commissioner of Income Tax v. M/s Omaxe Limited, Civil Appeal No. 9190 of 2013, decided on 16 September 2026.

The Revenue accepted that decision’s principle but sought liberty to pursue the remedy available under Section 245D(6).

Section 245D(4) of the Income-tax Act, 1961 provides for the Settlement Commission’s order concluding the settlement proceedings.

Relying on Assistant Commissioner of Income Tax v. M/s Omaxe Limited, the Court applied the principle that, once the Settlement Commission’s order has attained finality, the Assessing Officer cannot use ordinary reassessment powers, including Section 148, to reassess the settled matter; doing so would undermine that finality.

The Revenue’s available remedy, where the statutory grounds are made out, is to approach the Settlement Commission under Section 245D(6), including on grounds of fraud or misrepresentation

The Court found it undisputed that the Settlement Commission had made an order under Section 245D(4) for the same assessment year covered by the Section 148 notices.

Applying the Supreme Court’s ruling in Omaxe Limited, it held that the Revenue could not reopen the settled matter through reassessment proceedings.

The Court nevertheless accepted that Section 245D(6) remained available to the Revenue, subject to its terms

It partly allowed the writ petitions, quashed the notices, and left the Revenue at liberty to proceed under Section 245D(6) in accordance with law