Introduction on Settlement Commission :

The Wanchoo Committee felt that in the administration of fiscal laws, where the primary objective is to raise revenue, there has to be room for compromise and settlement. A rigid attitude would not only inhibit a one-time tax evader or an unintending defaulter from making a clean breast of his affairs but would also unnecessarily strain the investigational resources of the Department in cases of doubtful benefit to revenue, while needlessly proliferating litigation and holding up collections. Even in the United Kingdom, the “confession‟ method has been in vogue since 1923. In the U.S. Law also, there is a provision for compromise with the tax payer as to his tax liabilities. A provision of this type facilitating settlement in individual cases will have this advantage over general disclosure schemes. Hence the Committee recommended the setting up of a high level settlement machinery. Accordingly, Chapter XIXA incorporating the recommendations of the Wanchoo Committee was enacted by Taxation Laws (Amendment) Act, 1975 with effect from April 1, 1976. The provisions relating to Settlement Commission are discussed below.

1. The Central Government has constituted a Settlement Commission. It shall consist of a Chairman and as many Vice-Chairmen and other members as the Central Government thinks fit. Where a member of the Central Board of Direct Taxes is appointed as the chairman or a member of the commission, he ceases to be a member of the Board.

2. The Chairman, Vice-Chairman and other members of the Settlement Commission are to be appointed by the Central Government from amongst persons of integrity and outstanding ability, having special knowledge of, and experience in, problems relating to direct taxes and business accounts.

3. The Commission functions within the Department of Revenue and Banking of the Central Government.