Procedure on receipt of an application under section 245C
Section 245D of the Income-tax Act, 1961 deals with procedure on receipt of an application under section 245C. On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applican The Act came into force on 01 Apr 1962. Repealed by the Income-tax Act, 2025 with effect from 1 April 2026, but conduct before that date is still charged, tried and appealed under it.
(1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an order in writing, reject the application or allow the application to be proceeded with:
Provided that where no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with. (1A) [Omitted by the Finance (No.
2) Act, 1991, w.e.f. 27-9-1991.] (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Principal Commissioner or Commissioner. (2A) Where an application was made under section 245C before the 1st day of June, 2007, but an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, has not been made before the 1st day of June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31st day of July, 2007.
Explanation.—In respect of the applications referred to in this sub-section, the 31st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under sub-section (1). (2B) The Settlement Commission shall,—
(i) in respect of an application which is allowed to be proceeded with under sub-section (1), within thirty days from the date on which the application was made; or (ii) in respect of an application referred to in sub-section (2A) which is deemed to have been allowed to be proceeded with under that sub-section, on or before the 7th day of August, 2007, call for a report from the Principal Commissioner or Commissioner, and the Principal Commissioner or Commissioner shall furnish the report within a period of thirty days of the receipt of communication from the Settlement Commission. (2C) Where a report of the Principal Commissioner or Commissioner called for under sub-section (2B) has been furnished within the period specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the Principal Commissioner or Commissioner:
Provided that an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard:
Provided further that where the Principal Commissioner or Commissioner has not furnished the report within the aforesaid period, the Settlement Commission shall proceed further in the matter without the report of the Principal Commissioner or Commissioner:
Provided also that where in respect of an application, an order, which was required to be passed under this sub-section on or before the 31st day of January, 2021, has not been passed on or before the 31st day of January, 2021, such application shall deemed to be valid. (2D) Where an application was made under sub-section (1) of section 245C before the 1st day of June, 2007 and an order under the provisions of sub- section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, allowing the application to have been proceeded with, has been passed before the 1st day of June, 2007, but an order under the provisions of sub-section (4), as they stood immediately before their amendment by the Finance Act, 2007, was not passed before the 1st day of June, 2007, such application shall not be allowed to be further proceeded with unless the additional tax on the income disclosed in such application and the interest thereon, is, notwithstanding any extension of time already granted by the Settlement Commission, paid on or before the 31st day of July, 2007.
(3) The Settlement Commission, in respect of—
(i) an application which has not been declared invalid under sub-section (2C); or (ii) an application referred to in sub-section (2D) which has been allowed to be further proceeded with under that sub-section, may call for the records from the Principal Commissioner or Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Principal Commissioner or Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case, and the Principal Commissioner or Commissioner shall furnish the report within a period of ninety days of the receipt of communication from the Settlement Commission:
Provided that where the Principal Commissioner or Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under sub-section (4) without such report.
(4) After examination of the records and the report of the Principal Commissioner or Commissioner, if any, received under—
(i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the Principal Commissioner or Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Principal Commissioner or Commissioner. (4A) The Settlement Commission shall pass an order under sub-section (4),—
(i) in respect of an application referred to in sub-section (2A) or sub-section (2D), on or before the 31st day of March, 2008;
(ii) in respect of an application made on or after the 1st day of June, 2007 but before the 1st day of June, 2010, within twelve months from the end of the month in which the application was made;
(iii) in respect of an application made on or after the 1st day of June, 2010, within eighteen months from the end of the month in which the application was made.
(5) Subject to the provisions of section 245BA, the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench before passing any order under sub-section (4) and, in relation to the passing of such order, the provisions of section 245BD shall apply.
(6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresenta-tion of facts. (6A) Where any tax payable in pursuance of an order under sub-section (4) is not paid by the assessee within thirty-five days of the receipt of a copy of the order by him, then, whether or not the Settlement Commission has extended the time for payment of such tax or has allowed payment thereof by instalments, the assessee shall be liable to pay simple interest at one and one-fourth per cent for every month or part of a month on the amount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid. (6B)The Settlement Commission may, with a view to rectifying any mistake apparent from the record, amend any order passed under sub-section (4)—
(a) at any time within a period of six months from the end of the month in which the order was passed; or (b) at any time within the period of six months from the end of the month in which an application for rectification has been made by the Principal Commissioner or the Commissioner or the applicant, as the case may be:
Provided that no application for rectification shall be made by the Principal Commissioner or the Commissioner or the applicant after the expiry of six months from the end of the month in which an order under sub-section (4) is passed by the Settlement Commission:
Provided further that an amendment which has the effect of modifying the liability of the applicant shall not be made under this sub-section unless the Settlement Commission has given notice to the applicant and the Principal Commissioner or Commissioner of its intention to do so and has allowed the applicant and the Principal Commissioner or Commissioner an opportunity of being heard.
(7) Where a settlement becomes void as provided under sub-section (6), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the income-tax authority concerned, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void.
(8) For the removal of doubts, it is hereby declared that nothing contained in section 153 shall apply to any order passed under sub-section (4) or to any order of assessment, reassessment or recomputation required to be made by the Assessing Officer in pursuance of any directions contained in such order passed by the Settlement Commission and nothing contained in the proviso to sub-section (1) of section 186 shall apply to the cancellation of the registration of a firm required to be made in pursuance of any such directions as aforesaid.
(9) On and from the 1st day of February, 2021, the provisions of sub-sections (1), (2), (2B), (2C), (3), (4), (4A), (5), (6) and (6B) shall apply to pending applications allotted to Interim Board with the following modifications, namely:—
(i) for the words "Settlement Commission", wherever they occur, the words "Interim Board" shall be substituted;
(ii) for the word "Bench", the words "Interim Board" shall be substituted;
(iii) for the purposes of this section, the date referred to in sub-section (2) of section 245M shall be deemed to be date on which the application was made under section 245C and received by the Interim Board;
(iv) where the time-limit for amending any order or filing of rectification application under sub-section (6B) expires on or after the 1st day of February, 2021, but before the 1st day of February, 2022, such time-limit shall be extended to the 30th day of September, 2023.
(10) On and from the 1st day of February, 2021, the provisions of sub-sections (6A) and (7) shall have effect as if for the words "Settlement Commission", the words "Settlement Commission or Interim Board of Settlement" had been substituted.
(11) The Central Government may by notification in the Official Gazette, make a scheme, for the purposes of settlement in respect of pending applications by the Interim Board, so as to impart greater efficiency, transparency and account-ability by—
(a) eliminating the interface between the Interim Board and the assessee in the course of proceedings to the extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale and functional specialisation;
(c) introducing a mechanism with dynamic jurisdiction.
(12) The Central Government may, for the purposes of giving effect to the scheme made under sub-section (11), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the said notification:
Provided that no such direction shall be issued after the 31st day of March, 2023.
(13) Every notification issued under sub-section (11) and sub-section (12) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.
Power of Settlement Commission to order provisional attachment to protect revenue.
Section 245D, The Income-tax Act, 1961 (Act 43 of 1961).
Now in the Income-tax Act
No provision of the Income-tax Act is textually close to this one. No counterpart in the new Act
Measured by comparing the text of the two provisions, not taken from an official correspondence table — there is no machine-readable one. See both texts side by side before relying on it.
Both regimes are live. The repealed enactment still governs what happened while it was in force. We never redirect one to the other.
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 36
- Finance Act s. 20 Amendment of section 245D
- Finance Act s. 28 Amendment of section 245D
- Finance Act s. 33 Amendment of section 245D
- Finance Act s. 42 Insertion of new section 245DD
- Finance Act s. 66 Amendment of section 245
- Finance Act s. 44 Amendment of section 245D
- Finance Act s. 95 Scheme not to apply in certain cases
- Finance Act s. 95 Amendment of section 245D
- Finance Act s. 64 Amendment of section 245D
- Finance Act s. 47 Amendment of section 245D
- Finance Act s. 30 Amendment of section 245D
- Finance Act s. 59 Amendment of section 245D
and 24 more
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Brij Lal vs Commnr. of Income Tax, Jalandhar
Court's Decision & Legal Precedent
Sections 234A, 234B and 234C of the Income Tax Act, 1961 are applicable to proceedings of the Settlement Commission under Chapter XIX-A to the extent indicated in the judgment, specifically that these interest provisions are applicable up to the date of the order under section 245D(1) allowing the settlement application and not beyond to the date of the final settlement order under section 245D(4). The Settlement Commission cannot reopen its concluded proceedings by invoking section 154 of the Act to levy interest under section 234B, as section 154 is inapplicable to Chapter XIX-A proceedings which have their own finality regime under section 245I.
On this section: Procedure on receipt of settlement application; establishes two distinct stages—section 245D(1) allowing or rejecting application, and section 245D(4) passing settlement order; key provision for determining terminal point of interest
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Brij Lal vs Commnr. of Income Tax, Jalandhar
Court's Decision & Legal Precedent
Sections 234A, 234B and 234C of the Income Tax Act, 1961 are applicable to proceedings of the Settlement Commission under Chapter XIX-A to the extent that they govern the computation of interest on undisclosed income disclosed in settlement applications. However, the terminal point for levy of interest under section 234B is the date of the order under section 245D(1) (admission of settlement application) and not the date of the order under section 245D(4) (final settlement order). The Settlement Commission cannot reopen its concluded proceedings by invoking section 154 of the Act to levy interest under section 234B that was not levied in the original proceedings, as section 154 is not applicable to Chapter XIX-A proceedings and section 245I makes settlement orders final and conclusive.
On this section: Central provision: Section 245D(1) establishes admission stage; section 245D(4) establishes final settlement order stage; section 245D(2A) requires payment of additional tax within 35 days; section 245D(2C) provides for interest if payment not made; section 245D(6) establishes finality of settlement order; section 245D(6A) provides for interest on unpaid tax after section 245D(4) order; section 245D(7) establishes revival of proceedings if settlement becomes void
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C. I. T. , Jalpaiguri vs Om Prakash Mittal
Court's Decision & Legal Precedent
The Income Tax Settlement Commission possesses the statutory power under Section 245D(6) to declare a settlement order void on the grounds that it was obtained by fraud or misrepresentation of facts. Such power is not limited to suo motu action by the Commission but can be invoked by the revenue (CIT) by filing an application with material substantiating fraud or misrepresentation. The examination of fraud or misrepresentation does not constitute review of the earlier Commission decision or appellate reconsideration by a subsequent Bench, but rather determination of a mandatory statutory condition precedent to the validity and finality of the settlement order. The foundation of the settlement scheme under Chapter XIX-A is the requirement of 'full and true disclosure' in the application under Section 245C. If an order is obtained by fraud or misrepresentation of facts, the fundamental premise of true disclosure is absent, and the order cannot stand as valid. Therefore, the Commission's jurisdiction under Section 245D(6) to examine and determine fraud or misrepresentation is not merely permissive but necessary to give effect to the statutory condition that every settlement order must provide for its voidness upon such subsequent findings.
On this section: Procedure on receipt of application - Commission calls for CIT report and may reject or allow application to be proceeded with. Establishes that Commission is not bound to proceed with any application
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 245D
What have the courts held on Section 245D of the Income-tax Act?
Brij Lal vs Commnr. of Income Tax, Jalandhar (21 Oct 2010) is the leading judgment on this section among those set out below: Procedure on receipt of settlement application; establishes two distinct stages—section 245D(1) allowing or rejecting application, and section 245D(4) passing settlement order; key provision for determining terminal point of interest. Another 2 judgments on this section are set out below, all of them from the Supreme Court. They run from 2005 to 2010.
How do I find court cases under Section 245D of the Income-tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Income Tax Act 245D, section 245D Income Tax Act, section 245D of the Income-tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Brij Lal vs Commnr. of Income Tax, Jalandhar (21 Oct 2010).
What should I read with Section 245D of the Income-tax Act, and has it changed?
Its own text turns on section 153 (Time limit for completion of assessment, reassessment and recomputation), section 245BA (Jurisdiction and powers of Settlement Commission), section 245BD (Decision to be by majority), section 245C (Application for settlement of cases), and on 1 further provision, so none of them can safely be read on its own. 36 other provisions in this corpus refer back to it.
When did Section 245D of the Income-tax Act come into force?
Section 245D of the Income-tax Act, cited as Income Tax Act 245D, came into force on 01 Apr 1962, having been enacted on 13 Sep 1961. It is no longer in force.
Other sections of this Act
- 10. Incomes not included in total income30885 words
- 2. Definitions11419 words
- 80HHF. Deduction in respect of profits and gains from export or transfer of film software, etc7148 words
- 80-IB. Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings5474 words
- 155. Other amendments5451 words
- 139. Return of income5400 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Recovered from the consolidated text published by the Income Tax Department, as amended by the Finance Act, 2026. India Code holds no record of this Act in any form. This page is not a substitute for legal advice.