Section 245E and Section 245F of Income Tax Act, 1961
Section 245E concerns the former power of the Income-tax Settlement Commission to reopen certain completed proceedings connected with a settlement case. Section 245F sets out the powers, jurisdiction and procedure of the Settlement Commission and, under the post-2021 transitional framework, the Interim Board for Settlement.
Section 245E - Power to reopen completed proceedings
Section 245E historically enabled the Settlement Commission, for proper disposal of a case pending before it, to reopen a connected proceeding that had already been completed by an income-tax authority before the settlement application was made. The Commission was required to record its reasons in writing and obtain the applicant's concurrence.
Nine-year limitation
The first proviso barred reopening where the period between the end of the relevant assessment year and the date of the settlement application exceeded nine years.
Applications made on or after 1 June 2007
The second proviso is decisive for the practical scope of Section 245E: no proceeding may be reopened under this section where the application under Section 245C was made on or after 1 June 2007. Accordingly, the reopening power is principally relevant to older settlement applications.
Section 245F - Powers and procedure of Settlement Commission
Section 245F provides that, in addition to the powers specifically conferred under Chapter XIX-A, the Settlement Commission has the powers vested in an income-tax authority under the Income-tax Act for matters within the settlement framework.
Exclusive jurisdiction
Where a settlement application was allowed to proceed under Section 245D, the Commission had exclusive jurisdiction, subject to the statutory qualifications, to exercise the powers and perform the functions of an income-tax authority in relation to that case until an order under Section 245D(4). For applications made on or after 1 June 2007, the provision specified exclusive jurisdiction from the date of the application, subject to the consequences of rejection, invalidity or non-continuation prescribed by Section 245D.
Self-assessment obligations
Section 245F does not, in the absence of an express direction to the contrary, displace provisions requiring the applicant to pay tax on the basis of self-assessment in relation to matters before the settlement authority.
Matters outside the settlement case
In the absence of an express direction to the contrary, Chapter XIX-A does not affect the operation of the Income-tax Act in relation to matters other than those before the settlement authority.
Power to regulate procedure
Section 245F also empowers the settlement authority, subject to Chapter XIX-A, to regulate its own procedure and the procedure of its Benches in matters arising from the exercise of its powers and discharge of its functions, including places at which Benches hold sittings.
Interim Board from 1 February 2021
Section 245F(8), inserted by the Finance Act, 2021 with retrospective effect from 1 February 2021, provides that the powers and functions of the Settlement Commission under Section 245F are exercised or performed by the Interim Board. The provisions of Section 245F apply to the Interim Board with necessary modifications.
| Provision | Meaning and effect |
|---|---|
| Section 245E | Historical power to reopen specified completed proceedings, subject to written reasons, applicant concurrence and statutory limitations. |
| Section 245E second proviso | No reopening under Section 245E where the Section 245C application was made on or after 1 June 2007. |
| Section 245F(1) | Additional powers corresponding to powers vested in an income-tax authority. |
| Section 245F(2) | Exclusive jurisdiction in relation to the settlement case, subject to Section 245D and the statutory provisos. |
| Section 245F(7) | Power to regulate procedure and procedure of Benches. |
| Section 245F(8) | From 1 February 2021, Section 245F powers and functions are exercised or performed by the Interim Board. |
Position before Bharatiya Sakshya Adhiniyam, 2023
The Bharatiya Sakshya Adhiniyam, 2023 concerns evidence law and does not itself determine the settlement authority's jurisdiction under Sections 245E and 245F. For proceedings from the period before its commencement, evidentiary questions must be considered under the law then applicable, while settlement jurisdiction and procedure are governed by the Income-tax Act, 1961 and the relevant transitional amendments.