SC: Rejection of Settlement Application Does Not Affect Assessee’s Right to Contest Assessment

The Supreme Court clarified that rejection of a settlement application under the Income Tax Act does not extinguish or dilute the assessee’s right to challenge the assessment order on merits. The Court explained that the settlement mechanism is an alternate forum, not a substantive bar on statutory appeals or objections. It held that procedural failure or non-acceptance by the Settlement Commission cannot be interpreted as acceptance of tax liability. The ruling protects taxpayers from being unfairly penalized for exploring settlement options. It reinforces principles of natural justice, ensuring that assessment orders remain open to scrutiny based on facts and law.