Procedure for Filing Settlement Application
- Settlement application is to be filed only in the prescribed Form No.34-B notified under the Income Tax Rules, 1962.
- The form has to be signed by the applicant himself.
- The Form has to be properly filled up. An incomplete Form is liable to be rejected.
- In order to be admitted by the Commission, full amount of tax is to be paid alongwith interest payable till the date of admission
- The application can be made personally or by post. The applicant or his authorized representative can make application in person. Application can also be sent by registered post addressed to the Secretary. However in case of a postal application, the date of receipt in the Commission shall be treated as date of application.
- The application can be made either to the Secretary at the headquarters of the Commission at New Delhi or to the Secretary of the Additional Bench within whose jurisdiction his case falls or to an authorized officer of the Commission.
- In order to be admitted by the Commission, an application should be accompanied by the proof of payment of additional Tax (including interest under section 234A, 234B and 234C on it till the date of filing of application).
- The application is to be accompanied by a copy of self (-) attested challans and other documents as evidence in support of payment of tax and interest by the applicant.
- The settlement application shall be presented in person or by registered post to the Secretary or an authorised officer of the Bench within whose jurisdiction the case falls. A settlement application sent by post shall be deemed to have been presented on the day on which it is received in the office of the Commission.
- An authorized representative can also make application in person. An “authorised representative” means a person authorised by the applicant in writing to appear on his behalf, being:
- A person related to the applicant in any manner, or a person regularly employed by the applicant; or
- Any officer of a Scheduled Bank with which the applicant maintains a current account or have other regular dealings; or
- any legal practitioner who is entitled to practice in any civil court in India; or
- an accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949), and includes, in relation to any State, any person who by virtue of the provisions of sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), is entitled to be appointed to act as an auditor of companies registered in that State.
- Any person who has passed any accountancy examination recognised in this behalf by the Board, or
- any person who has acquired such educational qualifications as prescribed by the Board.
- In case there is any defect of the above nature, the application is returned to the applicant pointing out the defects, for re-submission after removing the same. If the application does not suffer from any of the defects mentioned above, the same is entered in the register and a distinctive file number (also called a registration No.) is allotted and the applicant is informed about it through letter. It is then closely scrutinised in accordance with the check-list devised for the purpose.
- If the application does not suffer from any of the defects mentioned above, the same is entered in the register and a distinctive file number (also called a registration No.) is allotted by the technical section of the concerned Bench of the Commission. The applicant is informed about it through letter.
An application can be rejected by the Commission during the course of proceedings under section 245D (1) within 14 days of filling of the Settlement application. If the application is not rejected by the Commission within 14 days, it is deemed to have been admitted by it.
- The Commission can reject the application, if the applicant does not satisfy the 3 essential conditions namely:
- to disclose an additional amount of income tax before the Commission, which is at least Rupees ten lakhs (Rs. 50 Lakhs for specific person on the case of Search and Seizure cases);
- the applicant should not have made another settlement application, after 1st June 2007, which has been allowed to be proceeded with; and
- no assessment order should have been passed by the concerned income tax authority for the assessment year for which you are approaching the Commission and the statutory time-limit for passing of assessment order for that year has not lapsed.
- Further, an application not accompanied by the proof of payment of full amount of additional tax and interest and the prescribed fee of Rs. 500/- is also liable to be rejected. A copy of the application is to be sent to the concerned income tax Authority on the date of application in the prescribed form no. 34 BA, failing which also it may be rejected.
- After the application has been admitted, the Commission calls for the report of the Commissioner of Income Tax under section 245D (2B). The Commission may treat an application as valid by passing an order under Section 245D (2C), If the report of the Commissioner is not received within the period of 30 days from the day the letter from the Commission is received by the Commissioner, or on the basis of satisfaction of the Commission, on the basis of the report of the Commissioner. The order of the Commission is to be passed within 15 days of the expiry of the period of 30 days given to the Commissioner for submitting the report.
- The Commission is required to give an opportunity before rejecting the application under section 245D (1).
After the application has been admitted, the Commission calls for the report of the Commissioner of Income Tax under section 245D (2B). The Commission may treat an application as valid by passing an order under Section 245D (2C), If the report of the Commissioner is not received within the period of 30 days from the day the letter from the Commission is received by the Commissioner, or on the basis of satisfaction of the Commission, on the basis of the report of the Commissioner. The order of the Commission is to be passed within 15 days of the expiry of the period of 30 days given to the Commissioner for submitting the report.
The Commission is required to give an opportunity to the applicant before treating the application as invalid under Section 245D (2C).
Once an application has been held as valid, the Commission forwards the application along with annexures to the Commissioner calling for his report under Rule 9 . This report is to be submitted by the Commissioner within 45 days. The Commission can allow further time, if needed by the Commissioner depending upon the facts of the case. Upon receipt of the Rule 9 Report, a copy of the same is sent to the applicant by post for submitting rejoinder on such report. A copy of rejoinder sent by the applicant is shared with the Commissioner.
The officers of the Commission then issue notice and fix hearing on a particular day and at a specified time. On the day of hearing, the applicant or his authorised representative and the Commissioner of Income Tax (or Assessing Officer) or his representative, namely Commissioner of Income Tax (Departmental Representative) appear before the Bench of the Settlement Commission. The Commission may ask the parties to further produce documents and submission. It may also ask the Commissioner to carry out further inquiry
After considering both sides, the Commission then passes the final settlement order under Section 245D (4), in writing. The settlement order provides for the terms of settlement which includes determining the amount of additional tax and interest thereon and the manner of payment. It also provides for levy of penalty, or waiver from penalty under the Income Tax Act or the Wealth Tax Act. The Settlement order under Section 245D (4) can be rectified by the Commission to correct mistakes apparent from records within 6 months of the order. However, where the effect of the rectification is to alter the tax liability of the applicant, due opportunity has to be given to the applicant as also the Commissioner.