[Chapter
XIX-A
Settlement of cases
245A. In this Chapter, unless the context otherwise
requires,—
(a) “Bench” means a
Bench of the Settlement Commission;
(b) “case” means any proceeding under this Act for the assessment
or reassessment of any person in respect of any year or years, or by way of
appeal or revision in connection with such assessment or reassessment, which
may be pending before an income-tax authority on the date on which an
application under sub-section (1) of section 245C is made :
Provided that where any
appeal or application for revision has been preferred after the expiry of the
period specified for the filing of such appeal or application for revision
under this Act and which has not been admitted, such appeal or revision shall
not be deemed to be a proceeding pending within the meaning of this clause;
(c) “Chairman” means
the Chairman of the Settlement Commission;
(d) “income-tax
authority” means an income-tax authority specified in section 116;
(e) “Member” means a
Member of the Settlement Commission, and includes the Chairman and a
Vice-Chairman;
(f) “Settlement Commission”
means the Income-tax Settlement Commission constituted under section 245B;
(g) “Vice-Chairman”
means a Vice-Chairman of the Settlement Commission.]
Income-tax Settlement Commission.
245B. (1) The Central Government shall constitute a
Commission to be called the Income-tax Settlement Commission [* * *] for the
settlement of cases under this Chapter.
(2) The
Settlement Commission shall consist of a Chairman [and as many Vice-Chairmen
and other members as the Central Government thinks fit] and shall function
within the Department of the Central Government dealing with direct taxes.
(2A) [* * *]
(3) The
Chairman [, Vice-Chairman] and other members of the Settlement Commission shall
be appointed by the Central Government from amongst persons of integrity and
outstanding ability, having special knowledge of, and, experience in, problems
relating to direct taxes and business accounts:
Provided that, where a member of the Board is
appointed as the Chairman [, Vice-Chairman] or as a member of the Settlement
Commission, he shall cease to be a member of the Board.
[* * *]
[Jurisdiction
and powers of Settlement Commission.
245BA. (1) Subject to the other provisions of this Chapter,
the jurisdiction, powers and authority of the Settlement Commission may be
exercised by Benches thereof.
(2) Subject
to the other provisions of this section, a Bench shall be presided over by the
Chairman or a Vice-Chairman and shall consist of two other Members.
(3) The
Bench for which the Chairman is the Presiding Officer shall be the principal
Bench and the other Benches shall be known as additional Benches.
(4)
Notwithstanding anything contained in sub-sections (1) and (2), the Chairman
may authorise the Vice-Chairman or other Member
appointed to one Bench to discharge also the functions of the Vice-Chairman or,
as the case may be, other Member of another Bench.
(5)
Notwithstanding anything contained in the foregoing provisions of this section,
and subject to any rules that may be made in this behalf, when one of the
persons constituting a Bench (whether such person be the Presiding Officer or
other Member of the Bench) is unable to discharge his functions owing to
absence, illness or any other cause or in the event of the occurrence of any
vacancy either in the office of the Presiding Officer or in the office of one
or the other Members of the Bench, the remaining two persons may function as
the Bench and if the Presiding Officer of the Bench is not one of the remaining
two persons, the senior among the remaining persons shall act as the Presiding
Officer of the Bench :
Provided that if at any stage of the hearing of any
such case or matter, it appears to the Presiding Officer that the case or matter
is of such a nature that it ought to be heard of by a Bench consisting of three
Members, the case or matter may be referred by the Presiding Officer of such
Bench to the Chairman for transfer to such Bench as the Chairman may deem fit.
[(5A) Notwithstanding
anything contained in the foregoing provisions of this section, the Chairman
may, for the disposal of any particular case, constitute a Special Bench
consisting of more than three Members.]
(6) Subject
to the other provisions of this Chapter, the places at which the principal
Bench and the additional Benches shall ordinarily sit shall be such as the
Central Government may, by notification in the Official Gazette, specify [and the Special Bench shall sit at a place to be
fixed by the Chairman.]]
[Vice-Chairman to act as Chairman or to discharge
his functions in certain circumstances.
245BB. (1) In the event of the occurrence of any
vacancy in the office of the Chairman by reason of his death, resignation or
otherwise, the Vice-Chairman or, as the case may be, such one of the
Vice-Chairmen as the Central Government may, by notification in the Official
Gazette, authorise in this behalf, shall act as the
Chairman until the date on which a new Chairman, appointed in accordance with
the provisions of this Chapter to fill such vacancy, enters upon his office.
(2) When the
Chairman is unable to discharge his functions owing to absence, illness or any
other cause, the Vice-Chairman or, as the case may be, such one of the
Vice-Chairmen as the Central Government may, by notification in the Official
Gazette, authorise in this behalf, shall discharge
the functions of the Chairman until the date on which the Chairman resumes his
duties.]
[Power
of Chairman to transfer cases from one Bench to another.
245BC. On the application of the assessee
or the [Chief Commissioner or Commissioner] and after notice to them, and after
hearing such of them as he may desire to be heard, or on his own motion without
such notice, the Chairman may transfer any case pending before one Bench, for
disposal, to another Bench.]
245BD. If the Members of a Bench differ in opinion
on any point, the point shall be decided according to the opinion of the
majority, if there is a majority, but if the Members are equally divided, they
shall state the point or points on which they differ, and make a reference to
the Chairman who shall either hear the point or points himself or refer the
case for hearing on such point or points by one or more of the other Members of
the Settlement Commission and such point or points shall be decided according
to the opinion of the majority of the Members of the Settlement Commission who
have heard the case, including those who first heard it.]
Application
for settlement of cases.
245C. [(1) An assessee
may, at any stage of a case relating to him, make an application in such form
and in such manner as may be prescribed, and containing a full and true
disclosure of his income which has not been disclosed before the [Assessing]
Officer, the manner in which such income has been derived, the additional
amount of income-tax payable on such income and such other particulars as may
be prescribed, to the Settlement Commission to have the case settled and any
such application shall be disposed of in the manner hereinafter provided:
[Provided that no such application
shall be made unless,—
(a) the assessee has furnished the
return of income which he is or was required to furnish under any of the
provisions of this Act; and
(b) the additional amount of income-tax payable on the income
disclosed in the application exceeds [one hundred] thousand rupees.]
(1A) For the
purposes of sub-section (1) of this section and sub-sections (2A) to (2D) of
section 245D, the additional amount of income-tax payable in respect of the
income disclosed in an application made under sub-section (1) of this section
shall be the amount calculated in accordance with the provisions of
sub-sections (1B) to (1D).
[(1B) Where the income disclosed in the
application relates to only one previous year,—
(i) if the applicant has not furnished a return in respect of the total
income of that year (whether or not an assessment has been made in respect of
the total income of that year), then, except in a case covered by clause (iii), tax shall be calculated on the
income disclosed in the application as if such income were the total income;
(ii) if the applicant has furnished a return in respect of the
total income of that year (whether or not an assessment has been made in
pursuance of such return), tax shall be calculated on the aggregate of the
total income returned and the income disclosed in the application as if such
aggregate were the total income;
(iii) if the
proceeding pending before the income-tax authority is in the nature of a
proceeding for reassessment of the applicant under section 147 or by way of
appeal or revision in connection with such reassessment, and the applicant has
not furnished a return in respect of the total income of that year in the
course of such proceeding for reassessment, tax shall be calculated on the
aggregate of the total income as assessed in the earlier proceeding for
assessment under section 143 or section 144 or section 147 and the income
disclosed in the application as if such aggregate were the total income.]
[(1C) The additional amount of income-tax
payable in respect of the income disclosed in the application relating to the
previous year referred to in sub-section (1B) shall be,—
(a) in a case referred to in clause (i) of that sub-section, the
amount of tax calculated under that clause;
(b) in a case
referred to in clause (ii) of
that sub-section, the amount of tax calculated under that clause as reduced by
the amount of tax calculated on the total income returned for that year;
(c) in a case
referred to in clause (iii) of
that sub-section, the amount of tax calculated under that clause as reduced by
the amount of tax calculated on the total income assessed in the earlier
proceeding for assessment under section 143 or section 144 or section 147.]
(1D) Where
the income disclosed in the application relates to more than one previous year,
the additional amount of income-tax payable in respect of the income disclosed
for each of the years shall first be calculated in accordance with the
provisions of sub-sections (1B) and (1C) and the aggregate of the amount so
arrived at in respect of each of the years for which the application has been
made under sub-section (1) shall be the additional amount of income-tax payable
in respect of the income disclosed in the application.
(1E) [***]
(2) Every application
made under sub-section (1) shall be accompanied by such fees as may be
prescribed.
(3) An
application made under sub-section (1) shall not be allowed to be withdrawn by
the applicant.
Procedure on receipt of an application under section
245C.
245D. (1) On receipt of an application under
section 245C, the Settlement Commission shall call for a report from the
Commissioner and on the basis of the materials contained in such report and
having regard to the nature and circumstances of the case or the complexity of
the investigation involved therein, [the Settlement Commission, shall, where it
is possible, by order, reject the application or allow the application to be
proceeded with within a period of one year from the end of the month in which
such application was made under section 245C] :
Provided that an application shall not be rejected
under this sub-section unless an opportunity has been given to the applicant of
being heard :
[Provided further that the Commissioner
shall furnish the report within a period of forty-five days of the receipt of
communication from the Settlement Commission in case of all applications made
under section 245C on or after the 1st day of July, 1995 and if the
Commissioner fails to furnish the report within the said period, the Settlement
Commission may make the order without such report.]
(1A) [Omitted by the Finance
(No. 2) Act, 1991, w.e.f. 27-9-1991.]
(2) A copy
of every order under sub-section (1) shall be sent to the applicant and to the
Commissioner.
[(2A) Subject to the provisions of sub-section
(2B), the assessee shall, within thirty-five days of
the receipt of a copy of the order under sub-section (1) [allowing the
application to be proceeded with], pay the additional amount of income-tax
payable on the income disclosed in the application and shall furnish proof of
such payment to the Settlement Commission.]
[(2B) If the Settlement Commission is
satisfied, on an application made in this behalf by the assessee,
that he is unable for good and sufficient reasons to pay the additional amount
of income-tax referred to in sub-section (2A) within the time specified in that
sub-section, it may extend the time for payment of the amount which remains
unpaid or allow payment thereof by instalments if the
assessee furnishes adequate security for the payment
thereof.]
[(2C) Where the additional amount of
income-tax is not paid within the time specified under sub-section (2A), then,
whether or not the Settlement Commission has extended the time for payment of
the amount which remains unpaid or has allowed payment thereof by instalments under sub-section (2B), the assessee
shall be liable to pay simple interest at fifteen per cent per annum on the
amount remaining unpaid from the date of expiry of the period of thirty-five
days referred to in sub-section (2A).]
[(2D) Where the additional amount of
income-tax referred to in sub-section (2A) is not paid by the assessee within the time specified under that sub-section
or extended under sub-section (2B), as the case may be, the Settlement Commission
may direct that the amount of income-tax remaining unpaid, together with any
interest payable thereon under sub-section (2C), be recovered and any penalty
for default in making payment of such additional amount may be imposed and
recovered, in accordance with the provisions of Chapter XVII, by the [Assessing]
Officer having jurisdiction over the assessee.]
(3) Where an
application is allowed to be proceeded with under sub-section (1), the
Settlement Commission may call for the relevant records from the Commissioner
and after examination of such records, if the Settlement Commission is of the
opinion that any further enquiry or investigation in the matter is necessary,
it may direct the Commissioner to make or cause to be made such further enquiry
or investigation and furnish a report on the matters covered by the application
and any other matter relating to the case.
(4) After examination
of the records and the report of the Commissioner, received under sub-section
(1), and the report, if any, of the Commissioner received under sub-section
(3), and after giving an opportunity to the applicant and to the Commissioner
to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further
evidence as may be placed before it or obtained by it, the Settlement
Commission may, in accordance with the provisions of this Act, pass such order
as it thinks fit on the matters covered by the application and any other matter
relating to the case not covered by the application, but referred to in the
report of the Commissioner under sub-section (1) or sub-section (3).
[(4A)
In every application allowed to be proceeded with under sub-section (1), the
Settlement Commission shall, where it is possible, pass an order under
sub-section (4) within a period of four years from the end of the financial
year in which such application was allowed to be proceeded with.]
[(5) Subject to the provisions of section
245BA, the materials brought on record before the Settlement Commission shall
be considered by the Members of the concerned Bench before passing any order
under sub-section (4) and, in relation to the passing of such order, the
provisions of section 245BD shall apply.]
(6) Every
order passed under sub-section (4) shall provide for the terms of settlement
including any demand by way of [tax, penalty or interest], the manner in which
any sum due under the settlement shall be paid and all other matters to make
the settlement effective and shall also provide that the settlement shall be
void if it is subsequently found by the Settlement Commission that it has been
obtained by fraud or misrepresentation of facts.
[(6A) Where any tax payable in pursuance of an
order under sub-section (4) is not paid by the assessee
within thirty-five days of the receipt of a copy of the order by him, then,
whether or not the Settlement Commission has extended the time for payment of
such tax or has allowed payment thereof by instalments,
the assessee shall be liable to pay simple interest
at fifteen per cent per annum on the amount remaining unpaid from the date of
expiry of the period of thirty-five days aforesaid.]
(7) Where a
settlement becomes void as provided under sub-section (6), the proceedings with
respect to the matters covered by the settlement shall be deemed to have been
revived from the stage at which the application was allowed to be proceeded
with by the Settlement Commission and the income-tax authority concerned, may,
notwithstanding anything contained in any other provision of this Act, complete
such proceedings at any time before the expiry of two years from the end of the
financial year in which the settlement became void.
[(8) For the removal of doubts, it is hereby
declared that nothing contained in section 153 shall apply to any order passed
under sub-section (4) or to any order of assessment, reassessment or recomputation required to be made by the [Assessing]
Officer in pursuance of any directions contained in such order passed by the
Settlement Commission [and nothing contained in the proviso to sub-section (1)
of section 186 shall apply to the cancellation of the registration of a firm required
to be made in pursuance of any such directions as aforesaid.]]
[Power
of Settlement Commission to order provisional attachment to protect revenue.
245DD. (1) Where, during the pendency
of any proceeding before it, the Settlement Commission is of the opinion that
for the purpose of protecting the interests of the revenue it is necessary so
to do, it may, by order, attach provisionally any property belonging to the
applicant in the manner provided in the Second Schedule :
Provided that where a provisional attachment made
under section 281B is pending immediately before an application is made under
section 245C, an order under this sub-section shall continue such provisional
attachment up to the period up to which an order made under section 281B would
have continued if such application had not been made :
Provided
further that where the
Settlement Commission passes an order under this sub-section after the expiry
of the period referred to in the preceding proviso, the provisions of
sub-section (2) shall apply to such order as if the said order had originally
been passed by the Settlement Commission.
(2) Every
provisional attachment made by the Settlement Commission under sub-section (1)
shall cease to have effect after the expiry of a period of six months from the
date of the order made under sub-section (1) :
Provided that the Settlement Commission may, for
reasons to be recorded in writing, extend the aforesaid period by such further
period or periods as it thinks fit, so, however, that the total period of
extension shall not in any case exceed two years.]
Power of Settlement Commission to reopen
completed proceedings.
245E. If the Settlement Commission is of the
opinion (the reasons for such opinion to be recorded by it in writing) that,
for the proper disposal of the case pending before it, it is necessary or
expedient to reopen any proceeding connected with the case but which has been
completed [* * *] under this Act by any income-tax authority before the
application under section 245C was made, it may, with the concurrence of the
applicant, reopen such proceeding and pass such order thereon as it thinks fit,
as if the case in relation to which the application for settlement had been
made by the applicant under that section covered such proceeding also :
[Provided that no proceeding shall be
reopened by the Settlement Commission under this section if the period between
the end of the assessment year to which such a
proceeding relates and the date of application for settlement under section
245C exceeds nine years.]
Powers
and procedure of Settlement Commission.
245F. (1) In addition to the powers conferred on
the Settlement Commission under this Chapter, it shall have all the powers
which are vested in an income-tax authority under this Act.
(2) Where an
application made under section 245C has been allowed to be proceeded with under
section 245D, the Settlement Commission shall, until an order is passed under
sub-section (4) of section 245D, have, subject to the provisions of sub-section
(3) of that section, exclusive jurisdiction to exercise the powers and perform
the functions of an income-tax authority under this Act in relation to the
case.
(3)
Notwithstanding anything contained in sub-section (2) and in the absence of any
express direction to the contrary by the Settlement Commission, nothing
contained in this section shall affect the operation of any other provision of
this Act requiring the applicant to pay tax on the basis of self-assessment [*
* *] in relation to the matters before the Settlement Commission.
(4) For the removal
of doubt, it is hereby declared that, in the absence of any express direction
by the Settlement Commission to the contrary, nothing in this Chapter shall
affect the operation of the provisions of this Act in so far as they relate to
any matters other than those before the Settlement Commission.
(5) [* * *]
(6) [* * *]
[(7) The Settlement Commission shall, subject
to the provisions of this Chapter, have power to regulate its own procedure and
the procedure of Benches thereof in all matters arising out of the exercise of
its powers or of the discharge of its functions, including the places at which
the Benches shall hold their sittings.]
245G. No person shall be entitled to inspect, or
obtain copies of, any reports made by any income-tax authority to the
Settlement Commission; but the Settlement Commission may, in its discretion,
furnish copies thereof to any such person on an application made to it in this
behalf and on payment of the prescribed fee :
Provided that, for the purpose of enabling any person
whose case is under consideration to rebut any evidence brought on record
against him in any such report, the Settlement Commission shall, on an
application made in this behalf, and on payment of the prescribed fee by such
person, furnish him with a certified copy of any such report or part thereof
relevant for the purpose.
Power of Settlement Commission to grant
immunity from prosecution and penalty.
245H. (1) The Settlement Commission may, if it is
satisfied that any person who made the application for settlement under section
245C has co-oper-ated with the Settlement Commission
in the proceedings before it and has made a full and true disclosure of his
income and the manner in which such income has been derived, grant to such
person, subject to such conditions as it may think fit to impose, immunity from
prosecution for any offence under this Act or under the Indian Penal Code (45
of 1860) or under any other Central Act for the time being in force and also [(either
wholly or in part)] from the imposition of any penalty under this Act, with
respect to the case covered by the settlement :
[Provided that no
such immunity shall be granted by the Settlement Commission in cases where the
proceedings for the prosecution for any such offence have been instituted
before the date of receipt of the application under section 245C.]
[(1A) An immunity granted to a person under
sub-section (1) shall stand withdrawn if such person fails to pay any sum
specified in the order of settlement passed under sub-section (4) of section
245D within the time specified in such order or within such further time as may
be allowed by the Settlement Commission, or fails to comply with any other
condition subject to which the immunity was granted and thereupon the
provisions of this Act shall apply as if such immunity had not been granted.]
(2) An
immunity granted to a person under sub-section (1) may, at any time, be
withdrawn by the Settlement Commission, if it is satisfied that such person [*
* *] had, in the course of the settlement proceedings, concealed any
particulars material to the settlement or had given false evidence, and
thereupon such person may be tried for the offence with respect to which the
immunity was granted or for any other offence of which he appears to have been
guilty in connection with the settlement and shall also become liable to the
imposition of any penalty under this Act to which such person would have been
liable, had not such immunity been granted.
Power of Settlement Commission to send a case back to the Assessing
Officer if the assessee does not co-operate.
245HA. [Omitted by the Finance Act,
2002, w.e.f. 1-6-2002.]
Order of settlement to be conclusive.
245-I. Every
order of settlement passed under sub-section (4) of section 245D shall be
conclusive as to the matters stated therein and no matter covered by such order
shall, save as otherwise provided in this Chapter, be reopened in any
proceeding under this Act or under any other law for the time being in force.
Recovery of sums due under order of
settlement.
245J. Any sum specified in an order of settlement
passed under sub-section (4) of section 245D may, subject to such conditions,
if any, as may be specified therein, be recovered, and any penalty for default in
making payment of such sum may be imposed and recovered in accordance with the
provisions of Chapter XVII, by the [Assessing] Officer having jurisdiction over
the person who made the application for settlement under section 245C
Bar on subsequent
application for settlement in certain cases.
245K. Where,—
(i) an order of settlement passed under sub-section (4) of section 245D
provides for the imposition of a penalty on the person who made the application
under section 245C for settlement, on the ground of concealment of particulars
of his income; or
(ii) after the
passing of an order of settlement under the said sub-section (4) in relation to
a case, such person is convicted of any offence under Chapter XXII in relation
to that case; [or]
[(iii) the case of such
person is sent back to the [Assessing] Officer by the Settlement Commission
under section 245HA,]
then, he shall not
be entitled to apply for settlement under section 245C in relation to any other
matter.
Proceedings before
Settlement Commission to be judicial proceedings.
245L. Any proceeding under this Chapter before the
Settlement Commission shall be deemed to be a judicial proceeding within the
meaning of sections 193 and 228, and for the purposes of section 196, of the
Indian Penal Code (45 of 1860).
245M. [Omitted by the Finance Act, 1987, w.e.f. 1-6-1987.]