Budget 2011- Modification in the conditions for filing an application before the Settlement Commission

The existing provisions contained in the proviso to section 245C(1) allow an application to be made before the Settlement Commission if,—

(i)         the proceedings have been initiated against the applicant under section 153A or under section 153C as a result of search or a requisition of books of account, as the case may be, and the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees;

(ii)        in other cases, if the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees.

It is proposed to expand the criteria for filing an application for settlement by a tax payer in whose case proceedings have been initiated as a result of search or requisition of books of account.

It is, therefore, proposed to insert a new clause (ia) in the proviso to section 245C(1). This stipulates that an application can also be made, where the applicant

(a)        is related to the person [referred to in (i) above] in whose case proceedings have been initiated as a result of search and who has filed an application; and

(b)        is a person in whose case proceedings have also been initiated as a result of search, the additional amount of income-tax payable on the income disclosed in his application exceeds ten lakh rupees.

As a consequence, a tax payer who is the subject matter of a search would be allowed to file an application for settlement if additional income-tax payable on the income disclosed in the application exceeds fifty lakh rupees. Entities related to such a tax payer, who are also the subject matter of search, would now be allowed to file an application for settlement, if additional income-tax payable in their application exceeds ten lakh rupees.

The relationship between the person who makes an application under clause (ia) of the proviso to section 245C(1) and the person mentioned in clause (i) of the proviso is defined by inserting an Explanation in the section.

This amendment will take effect from 1st June, 2011.

Related posts:

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2. Amendment proposed by union budget 2010 in Provisions dealing with Settlement Commission
3. Fees for filing Appeal with CIT (A), ITAT, High Court, for filing Revision petition, For Application with settlement commission and court fees
4. Interest under s. 220(2) is leviable for default in payment of tax from the date of default till the date of admission of application for settlement by Settlement Commission
5. Budget 2011- Power of the Settlement Commission to rectify its orders