This is just an intorduction to give the basic idea of Income Tax Settlement Commission
Ø Income tax settlement commission is a premier Alternative Dispute Resolution (ADR) body in India. Its mandate is to resolve tax disputes in respect of Indian Income Tax & Wealth Tax Laws between two disputing parties, Income Tax Department on one side and litigating tax payer on the other.
Ø The settlement mechanism allows taxpayers to disclose additional Income before it over and above what has been already disclosed before the Income tax Department.
Ø It also has powers to grant immunity from levy of penalty or institution of proceeding for prosecution under the Income Tax Act, 1961.
Ø No such immunity is available where the proceedings for prosecution were initiated before filing of settlement application
Who can approach the Settlement Commission?
Ø For cases involving Search and seizure assessment proceedings, the additional amount of income tax to be disclosed is at least Rs 50 Lakhs.
Ø For other cases the additional amount to be disclosed is at least Rs.10 Lakhs.
Ø No assessment order should have been passed by the concerned income tax authority for the assessment year for which the commission has been approached and the statutory time-limit for passing of assessment order for that year has not lapsed. An assessment order is considered to be passed on the date it is served on the Tax Payer.
Can the immunity granted be withdrawn?
An immunity granted by the Commission is liable to be withdrawn where the Commission subsequently finds that the applicant had concealed material facts or given false evidence during the settlement proceedings.
What is the time taken by Settlement Commission to pass the order?
Ø The application filed is considered admitted and allowed to be proceeded with if it is not rejected by the Commission within 14 days under section 245D (1).
Ø If the application is not rejected by the Commission within 14 days, it is deemed to have been admitted by it.
Ø The Settlement Commission has to pass the Settlement order within 18 months of accepting the application.
What are the advantages of approaching the Settlement Commission?
1. The Settlement Commission makes a comprehensive settlement. By one order, it settles simultaneously the assessee's liability in respect of tax, penalty and interest for the years for which the assessee seeks it, and the Commission admits the case for settlement.
2. Settlement of tax liability by the Commission is final and conclusive, both for the assessee and the Revenue. Money, time and cost of effort involved in protracted litigation is saved.
3. On settlement, the cost of liability is less. The assessment is reasonable and not high-pitched. Further, the Commission grants immunity from interest, penalty and also from prosecution.
4. Once the Commission admits a case for settlement, it has the exclusive jurisdiction in respect of that case. It is the single window facility. The assessee does not have to go to various Income-Tax authorities.
5. The Commission makes or authorises only relevant inquiries, limited to the purpose of the settlement. The assessee is spared of roving inquiries.
6. The Commission does not call the assessee too many times for hearings; the settlement process is also not delayed after hearing. The assessee is not called separately for assessment and penalty proceedings.
7. The Commission in its order of settlement allows the assessee to capitalise in his books of account the amount of undisclosed income in respect of which tax liability is fixed by the Commission and paid by the assessee.
8. Settlement proceedings before the Commission are not open to public.Thus, an assessee who has admittedly evaded tax in the past, is not inhibited in disclosing all relevant details before the Commission.
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