Section 245K and Section 245L of Income Tax Act, 1961
Section 245K prescribed a bar on subsequent applications for settlement in specified cases and defined who was a related person for that purpose. Section 245L treated proceedings before the Settlement Commission as judicial proceedings for specified offences under the Indian Penal Code, 1860.
Section 245K - Bar on subsequent application for settlement
Section 245K restricted repeated access to the settlement mechanism. The statutory bar could extend not only to the person who made the original application under Section 245C but also to a person related to that applicant as defined in the Explanation to Section 245K.
Bar under Section 245K(1)
The applicant and a related person were not entitled to apply for settlement under Section 245C in relation to another matter where any of the specified statutory circumstances existed, including:
- an order under Section 245D(4) imposed penalty for concealment of particulars of income;
- after the settlement order, the applicant was convicted of an offence under Chapter XXII in relation to that case; or
- the applicant's case had been sent back to the Assessing Officer by the Settlement Commission on or before 1 June 2002.
Bar under Section 245K(2)
Where a person made an application under Section 245C on or after 1 June 2007 and that application was allowed to proceed under Section 245D(1), that person and any related person were barred from subsequently making another application under Section 245C.
Meaning of related person under Section 245K
| Applicant | Related person |
|---|---|
| Individual | A company in which the individual holds more than 50 per cent of shares or voting rights at any time; a firm, association of persons or body of individuals in which the individual is entitled to more than 50 per cent of profits at any time; or a Hindu undivided family of which the individual is karta. |
| Company | An individual who held more than 50 per cent of shares or voting rights in the company at any time before the date of its settlement application. |
| Firm, association of persons or body of individuals | An individual who was entitled to more than 50 per cent of its profits at any time before the date of the settlement application. |
| Hindu undivided family | The karta of that Hindu undivided family. |
Section 245L - Settlement proceedings deemed judicial proceedings
For the legal position before implementation of the Bharatiya Sakshya Adhiniyam, 2023 and the corresponding new criminal laws, Section 245L provided that a proceeding under Chapter XIX-A before the Settlement Commission was 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, 1860.
Section 193 IPC - False evidence
Section 193 of the Indian Penal Code dealt with punishment for giving or fabricating false evidence, including enhanced consequences where the false evidence was given or fabricated in a judicial proceeding.
Section 196 IPC - Using evidence known to be false
Section 196 dealt with corruptly using or attempting to use as true or genuine evidence which the person knew to be false or fabricated.
Section 228 IPC - Insult or interruption to public servant in judicial proceeding
Section 228 dealt with intentional insult to, or interruption of, a public servant while that public servant was sitting in a stage of a judicial proceeding.
Why Section 245L mattered
By expressly deeming Settlement Commission proceedings to be judicial proceedings for the specified IPC provisions, Section 245L attached statutory consequences to false evidence, use of false evidence and intentional insult or interruption during those proceedings. This reinforced the formal and adjudicatory character of settlement proceedings.
Sections 245K and 245L at a glance
| Provision | Subject | Effect |
|---|---|---|
| Section 245K(1) | Specified disqualifying events | Barred the applicant and related persons from another settlement application in the stated circumstances. |
| Section 245K(2) | Application on or after 1 June 2007 | Once allowed to proceed under Section 245D(1), a subsequent Section 245C application by the person or a related person was barred. |
| Section 245K Explanation | Related person | Defined relationships using shareholding, voting rights, profit entitlement and HUF karta status. |
| Section 245L | Judicial proceedings | Applied the judicial-proceeding deeming rule for Sections 193, 228 and 196 IPC under the pre-new-criminal-law position. |