Guidelines for Admitting Settlement Applications issued by CBDT

1. The Central Board of Direct Taxes (CBDT) has issued the order extending the period for admitting applications for settlement up to September 30, 2021 (filed after January 31, 2021) on behalf of the Interim Board and treat such applications as valid and process them as “pending applications”, to avoid genuine hardship to assessees.

2. The Board in the exercise of its power under clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961 (the Act), in order to avoid genuine hardship to assessees authorizes the Commissioner of Income-tax, posted as Secretary to the Settlement Commission prior to February 1, 2021, to admit an application for settlement on behalf of the Interim Board filed after January 31, 2021, which is the date mentioned in sub-section (5) of section 245C of the Act for filing such application, and before September 30, 2021, and treat such applications as valid and process them as “pending applications” as defined in clause (eb) of section 245A of the Act.

3. As per the order, the relaxation is available to the applications filed by the assessees who were eligible to file applications for settlement on 31/01/2021 for the assessment years for which the application is sought to be filed (relevant assessment years); and where the relevant assessment proceedings of the assessee are pending as on the date of filing the application for settlement.

4. The Finance Act, 2021 has amended the provisions of the Act to inter alia provide that the Income-tax Settlement Commission (ITSC) shall cease to operate with effect from 01/02/2021. Further, it has also been provided that no application for settlement can be filed on or after 01/02/2021, which was the date on which the Finance Bill, 2021 was laid before the Lok Sabha. In order to dispose of the pending settlement applications as of 31/01/2021, the Central Government has constituted an Interim Board for Settlement (Interim Board), vide notification No. 91 of 2021 dated 10/08/2021.

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