Procedure on receipt of application [Section 245D] :
(1) Admission of Petition [Sub-section (1)]
(i) On receipt of the settlement application, the Settlement Commission shall issue a notice to the applicant, requiring him to explain as to why the application made by him be allowed to be proceeded with, within 7 days from the date of receipt of application.
(ii) After hearing the applicant, the Settlement Commission shall pass an order either rejecting or allowing the application to be proceeded with within 14 days from the date of application.
(iii) Application not disposed off within 14 days shall be treated as admitted.
(2) Copy of every order under section 245D(1) has to be sent to the applicant and to the Principal Commissioner or Commissioner [Sub-section (2)].
(3) Time limit for furnishing report by Principal Commissioner or Commissioner and passing order by the Settlement Commission [Sub-sections (2B) & (2C)]
(i) The Settlement Commission shall call for a report from the Principal Commissioner or Commissioner within 30 days from the date of application.
(ii) The Principal Commissioner or Commissioner is required to furnish the report within 30 days from the receipt of communication from the Settlement Commission.
(iii) The Settlement Commission can also pass an order declaring the application as invalid on the basis of the report of the Principal Commissioner or Commissioner.
(iv) Such order should be passed in writing within 15 days of the receipt of report after giving the applicant an opportunity of being heard.
(v) A copy of the order should be sent to the applicant and the Principal Commissioner or Commissioner.
(vi) However, in a case where the Principal Commissioner or Commissioner has not furnished the report within the prescribed time, the Settlement Commission shall proceed further in the matter without the report of the Principal Commissioner or Commissioner.
(4) Proceedings after admission [Sub-section (3)]
(i) The Settlement Commission may call for records from the Principal Commissioner or Commissioner in respect of an application which has not been declared invalid under sub-section (2C) or an application which has been allowed to be further proceeded with under sub-section (2D).
(ii) After examination of such records, the Settlement Commission may require the Principal Commissioner or Commissioner to make further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case.
(iii) The Principal Commissioner or Commissioner shall furnish the report within a period of 90 days of the receipt of communication from the Settlement Commission.
(iv) If the Principal Commissioner or Commissioner fails to furnish the report within the said period of 90 days, the Settlement Commission may proceed to pass an order under sub – section (4) without such report.
(5) Final order of settlement [Sub-sections (4) and (4A)]
(i) The Settlement Commission may 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.
(ii) Such order should be passed by the Settlement Commission after –
(1) examining the records and report of the Principal Commissioner or Commissioner, if any, received at the time of admission or on investigation or enquiry conducted as per the instructions of the Settlement Commission;
(2) giving an opportunity of being heard to the applicant and the Principal Commissioner or Commissioner;
(3) examining such further evidence as may be placed before it or obtained by it.
(iii) The time limit for passing such order is –
| (1) | In respect of an application made on or after 1.6.2010 | Within 18 months from the end of the month in which the application was made. |
| (2) | In respect of an application made between 1.6.2007 and 31.5.2010 | Within 12 months from the end of the month in which the application was made. |
(6) Before passing any order and subject to the provisions dealing with the jurisdiction of Settlement Commission, the various materials brought on record before the Settlement Commission must be considered by the members of the concerned Bench and in cases where there is any difference of opinion among the members, the opinion of the majority shall prevail and the order of the Settlement Commission must also be expressed in terms of the views of the majority [Sub-section (5)].
(7) All the orders passed by the Settlement Commission under section 245D(4) must provide for the terms of the settlement including any demand by way of tax, penalty, the manner in which any amount due as a result of the settlement should be paid and all other matters which are essential to make the settlement of the case effective [Sub-section (6)].
(8) The order should also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that the settlement order was obtained by fraud or any misrepresentation of facts by the applicant. In cases where the settlement becomes void, the proceeding, in respect of which the settlement order was passed, must 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 complete the proceedings for assessment or re-assessment of income or the levy of penalty, fine, etc., at any time before the completion of two years from the end of the financial year in which the settlement becomes void [Sub-sections (6) & (7)].
(9) Where the tax payable in pursuance of an order passed by the Settlement Commission is not paid by the assessee within 35 days of receipt of a copy of final order, the assessee shall be liable to pay simple interest @ 1¼% for every month or part of a month on the outstanding amount from the date of expiry of 35 days. Such liability will arise even in cases where the Commission extended the time allowed for such payment or permitted payment by installment [Sub-section (6A)].
(10) The Settlement Commission may amend any order passed by it under section 245D(4) to rectify any mistake apparent from the record.
The Settlement Commission may, with a view to rectifying any mistake apparent from the record, amend any order passed by it under section 245D(4), at any time within a period of six months from the end of month in which –
(a) the order was passed; or
(b) an application for rectification has been made by the Principal Commissioner or Commissioner or the applicant, as the case may be.
However, no application for rectification can be made by the Principal Commissioner or the Commissioner or the applicant after the expiry of 6 months from the end of the month in which an order under section 245D(4) is passed by the Settlement Commission.
(11) The time limit for completion of assessments and re-assessments contained in section 153 shall have no application to any order passed by the Settlement Commission or to any order of assessment or re-assessment or recomputation required to be made by the Assessing Officer in pursuance of any directions contained in an order passed by the Settlement Commission [Sub-section (8)].