1. INCOME TAX
SETTLEMENT COMMISSION
All about filing of APPLICATION
Presented By :-
Deepak Ahuja.
ahujadeepak@outlook.com
+91-8377-838-738
Deepak Ahuja
only for CA-Final students

2. I N D E X
S. No. Particulars Slide No.
1 03
2 04 – 07
3 08 – 12
4 13 – 18
5 19 – 21
6 22 – 25
7 26 – 32
8 32 – 33
9 34 – 36
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3. SETTLEMENT vs APPEAL
 It is a resolution of dispute between
two parties about a legal case.
 The application for settlement can be
made only during the pendency of the
assessment proceedings.
 Only assessee can approach the
settlement authority.
 The proceedings are not open to public.
 A earnest request to higher authority
for revision in decision.
 An appeal can be filed only after
conclusion of assessment proceedings,
against an order of assessment.
 Either of assessee or A.O. can approach
the appellate authority.
 The proceedings may or may not be
open to public.
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4.  It is a quasi judicial body (as per section 245L) and
is a premier Alternative Dispute Resolution (ADR) body in India.
 Set up in 1976 as a result of recommendations made by
Direct Taxes Enquiry Committee (Wanchoo Committee).
 Objective: to settle liabilities in complicated cases, &
avoiding prolonged litigation,
so as to allow a one-time tax evader or an unintending defaulter to make clean
breast of his affairs.
Settlement Commission
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5. The proceedings before the Settlement Commission under Chapter XIXA are
special proceedings aimed at simplifying the procedure for bringing within the
tax-net otherwise undisclosed income by an assessee with the temptation to avoid
prosecution and penalty. These special provisions, therefore, have been made in
the said Chapter in order to bring about an early end to such settlement
proceedings. Different stages envisaged after an assessee makes an application
for settlement of his case come with time limits. The proceedings before the
Settlement Commission have to be completed within the time frame and various
stages envisaged under section 245D also come with various time frames. [Para 20]
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Settlement Commission
Unipon (India) Ltd. v. ITSC, 2014
Gujrat HC
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6. Members
•As many as
CG deems fit
Vice -
Chairman
•As many as
CG deems fit
Chairman
•One
Settlement Commission
- Composition
This commission comprises persons
of integrity and outstanding ability,
having special knowledge in field of
direct taxation.
Section 245B
Currently:
Sh. G.C. Jain
(Addl. Charge)
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7.  A bench shall comprise of
 Chairman / Vice-Chairman
 Two Members
 At present, there are seven functioning benches
 Principal Bench – Delhi (presided by Chairman)
 Additional Benches – Delhi-I, Delhi-II, Mumbai-I,
Mumbai-II, Kolkata & Chennai
Settlement Commission
- Benches Section 245BA
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8. Chapter XIX-A : Settlement of Cases
Income Tax Act, 1961
View Sections
Income Tax Settlement Commission
(Procedure) Rules, 1997
View Rules
Law & Legislature
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9. Chapter XIX-A : Settlement of Cases
Section Description
245A Definitions
245B Income-tax Settlement Commission
245BA Jurisdiction and powers of Settlement Commission
245BB
Vice-Chairman to act as Chairman or to discharge his functions in certain
circumstances
245BC Power of Chairman to transfer cases from one Bench to another
245BD Decision to be majority
245C Application for settlement of cases
245D Procedure on receipt of an application under section 245C
245DD
Power of Settlement Commission to order provisional attachment to protect
revenue
245E Power of Settlement Commission to reopen completed proceedings
245F Powers and procedure of Settlement Commission
245G Inspection, etc., of reports
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10. Chapter XIX-A : Settlement of Cases
Section Description
245H
Power of Settlement Commission to grant immunity from prosecution and
penalty
245HA Abatement of proceeding before Settlement Commission
245HAA Credit for tax paid in case of abatement of proceedings
245I Order of settlement to be conclusive
245J Recovery of sums due under order of settlement
245K Bar on subsequent application for settlement
245L Proceedings before Settlement Commission to be judicial proceedings
245M
Certain persons who have filed appeals to the Appellate Tribunal entitled to
make applications to the Commission - Omitted
Rule Description
44C Form of application for settlement of case and intimation to the A.O.
44D Fee for furnishing copy of report
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11. Income-tax Settlement Commission (Procedure) Rules, 1997
Rule Description
1 Short title and commencement
2 Definitions
3 Language of the Commission
4 Signing of notices, etc
5 Procedure for filing settlement application
6 Report of the Commissioner under sub-section (2B) of Section 245D
7 Preparation of paper books, etc
8 Filing of affidavit
9 Commissioner's further report
9A Applicant's Comments on Commissioner's report under rule 9
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12. Income-tax Settlement Commission (Procedure) Rules, 1997
Rule Description
10 Date and place of hearing of application to be notified
11 Sitting of Bench
12 Powers of Bench
13 Constitution of Special Bench
14 Filing of authorisation
15 Verification of additional facts
16 Proceedings not open to the public
17 Publication of orders of the Special Bench
18 Adjournment of hearings
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Special provisions in respect of settlement applications made before 1st day of
October, 1984
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13. Eligibility
to file an
Application for settlement
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14. An applicant can approach
Income-tax Settlement Commission, if
ELIGIBILITY
sec 245C (1)
An applicant can approach the Income Tax Settlement Commission in respect
of a particular assessment year only if there is assessment proceedings is
pending against him before an Assessing Officer on the date of filing of
application,
i.e no assessment order is passed by the A.O. and the statutory time-limit for
passing of assessment order for that year has not lapsed.
CIT v. Income-tax Settlement Commission, 2012
Delhi HC
C o n d i t i o n - 1
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15. ELIGIBILITY
For the purpose of section 245C (1),
Section Assessment Proceedings Deemed to be initiated from
147 Income Escaping Assessment
Assessment or Reassessment or
Re-computation
Date of issue of notice
u/s 148
254 Case before Appellate Tribunal
Fresh Assessment
Date of Order,
setting aside or cancelling
previous assessment263 / 264
Revision of assessments by
[Principal] Commissioner
153A
Assessment in case of search or
requisition / related persons
Assessment or Reassessment
for years mentioned u/s 153A(1)(b)
Date of issue of notice
u/s 153(1)(a)
Any other than above Assessment or Reassessment
First day of the
assessment year
Explanation to Sec 245A (b)
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16. An applicant can approach
Income-tax Settlement Commission, if
ELIGIBILITY
Proviso to sec 245C (1)
The additional amount of income tax on the income that the applicant intends
to disclose before the Commission for all the assessments years included in the
application exceeds Rupees 10 lakhs.
Whereas, cases involving Search and seizure or requisition assessment
proceedings, this amount shall exceed Rupees 50 lakhs.
C o n d i t i o n - 2
Aggregation should be income and not offering of loss.
CIT vs Express Newspapers Ltd, 1994
Supreme Court
Such tax & interest thereon shall be paid
before filing of application.
Proof shall be attached.
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17. ELIGIBILITY
For the purpose of proviso to section 245C (1),
Additional Tax-payable shall be calculated as follows :-
sec 245A (1A) to (1D)
 In case the applicant has not furnished return prior to date of application,
tax shall be calculated on the income disclosed in the application as if it is the total
income and such tax shall be the additional amount of income tax payable.
 In case applicant has furnished a return prior to date of application,
additional income shall be calculated as under :
Total Income returned A
Add: Income disclosed in settlement application B .
TOTAL C
Additional amount of Income-tax = ( Tax on C - Tax on A )
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18. An applicant can approach
Income-tax Settlement Commission, if
ELIGIBILITY
C o n d i t i o n - 3
sec 245K (2)
Where a person has already made application u/s 245C (1), and
His application has not been rejected u/s 245D (1),
He shall be barred from filing subsequent application for settlement.
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19. Advantage
of filing an
Application for settlement
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20. ADVANTAGE
Settlement Commission holds the power, to grant immunity under : -
 Income-tax Act, 1961 , and
 Wealth-tax Act, 1957,
If applicant fulfils all of the following conditions:-
1. co-operates with the proceedings of the commission,
2. makes true and full disclosure of his income,
3. the manner in which such income has been derived
Subject to conditions, the commission may think fit
from :-
1. Prosecution for any offence
(which have not been instituted before the date of application)
2. Imposition of penalty
sec 245H (1)
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21. ADVANTAGE
Such immunity shall stand withdrawn if : -
The person fails to pay
any sum specified in the order of settlement u/s 245D (4)
within the time specified in such order
sec 245H (1A)
sec 245H (2)
The commission is satisfied that
the person during the course of proceedings had :-
1. concealed matters, material to settlement, or
2. given any false statement
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22. PreparatioN
for an
Application for settlement
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23. A person desirous of settling his case is required to file an application in form
prescribed in six copies.
sec 245C (1)
sec 245C (2)
Application shall be accompanied with the fees prescribed.
The fees prescribed is Rupees 500/- : Rule 44c (3)
The form prescribed is Form 34B. : Rule 44c (1)
sec 245C (3)
Once an application is made, it can not be withdrawn by applicant.
sec 245C (4)
On the date of making application, A.O. shall be intimated in form prescribed.
The form prescribed is Form 34BA. : Rule 44c (4)
Each page of application & annexures thereto shall be signed by the applicant. : Rule 44c (2)
PREPARATION
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24. PAPER BO OK
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 If the applicant submits any documents or statements or other papers, to rely on,
He shall submit in the form of Paper – Book.
.
 Such documents & papers shall be
 Printed : or type-written in double space,
 Attested : by the applicant as true copy.
.
 Paper Book containing such papers shall be properly
 Indexed : giving brief description & the authority before whom filed,
 Numbered : in continuation to the previous paper book, if any,
 Binded : the preferred binding is spiral.
.
 Such paper book shall be submitted in seven copies.
Rule 7
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25. Where a fact, which is not borne out by or is contrary to the
record relating to the case, is alleged in the settlement
application (including the annexure and the statement or other
documents accompanying such annexure), it shall be stated
clearly and concisely and supported by a duly sworn affidavit.
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Filing of Affidavit
Rule 8
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26. Procedure
to file an
Application for settlement
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27. PRO CEDURE
Rule 5
Application can be made Date of application
In person by
• Applicant, or
• His Authorised representative
Same date
By Post
Date on which,
received in the office of commission
Application shall be addressed to :-
The Secretary,
Income-tax Settlement Commission,
Floor -IV, Lok Nayak Bhawan,
MCD Complex, Khan Market,
New Delhi – 110 002
or The Bench
(Within whose jurisdiction his case falls)
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28. A P P L I C A N T
A S S E S S I N G O F F I C E R
Files Application
in form 34B
On the very same day
Intimates A.O.
in form 34BA
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29. Application
made to ITSC
Show Cause
Notice
Rejection /
Acceptance
of Application
within 7 days
within 14 days
ITSC calls for
Commissioner’s
Report
Commissioner’s
Report
Invalidation/ Validation of
application after
comments of Applicant
within 30 days
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within 15 days
sec 245D (1) sec 245D (1) sec 245D (1)
sec 245D (2B) sec 245D (2B) sec 245D (2C)
within 30 days
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30. 30
Rule 9
Once the application has been held as valid
ITSC Commissioner
for further inquiry
hands over the confidential part of application
Commissioner then, within 45 days, presents the records and his opinions in
the form of a report, popularly known as “Rule 9 Report”
Further Report
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31. Before the commencement of hearing,
the applicant shall file, an authorisation.
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Authorised Representation
Rule 14
Applicant can authorise any person to appear before commission.
(in form of Power of Attorney)
If relative state the nature of relationship
If regular employee state the capacity in which employed
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32. Abatement
of proceedings of an
Application for settlement
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33. What will happen of tax already paid,
if proceedings are abated?
sec 245HAA
Where proceedings for an application made u/s 245C(1) are abated as follows :-
Section Reason of Abatement Date of Abatement
245D (1) Rejection of application made u/s 245C (1) Same day
245D (2C) Rejection of application on report of Commissioner u/s 245D (2B) Last day of month
245D (4A) Order of settlement is not passed within prescribed period Day of expiry of period
The Assessing Officer shall allow the credit of Tax & Interest paid :-
1) On or Before the date of application.
2) During the pendency of case before commission.
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34. Judgement
for an
Application for settlement
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35. JUD GEMENT
sec 245D (4)
sec 245D (4A)
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The order of settlement commission is passed under this (sub) section, in
writing. The settlement order provides for
 the terms of settlement (including amount of additional tax and interest thereon)
 the manner of payment
 levy of penalty, or waiver from penalty under the Income Tax Act or the
Wealth Tax Act
The settlement commission shall pass an order u/s 245D (4) within :-
18 Months from end of the month of application
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36. 36
sec 245I
The order of settlement commission is deemed to be conclusive.
The matters stated therein can not be reopened in any proceedings
under IT Act or any another act in force.
JUD GEMENT
Challenging the order of Settlement Commission
It can be challenged in court of law by filling a writ petition only when
 Principles of natural justice violated, or
 Mandatory procedural requirements of law were not complied with.
Deepak Ahuja

37. So think before filing an application
because your acceptance of committing a felony may have repercussions.
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Also, do pay regard to each and every provision so as to settle your dues once and for all
Deepak Ahuja
Note: The proposed amendments by Finance Bill, 2015 have not been incorporated.
Please contact the author for amended presentation after the Finance Bill, 2015 gets Honorable President’s assent.