Inclusion of Search Cases & minimum threshold of additional Income Tax payable.
Entire scheme of the eligibility, powers and procedure before the settlement commission was overhauled by Finance Act, 2007, w.e.f. 1.6.2007. In the overhauled scheme, search / requisition cases covered by the provisions of section 153A of the Act were not allowed to take benefit of the settlement commission. It also excluded the cases of related persons whose documents were seized as provided for in Section 153C of the Act.
To enable assessees, in whose case the search action has been taken to avail of the benefit of settlement commission, the definition of “case” u/s. 245A(b) is amended to include also the search / requisition cases, provided the settlement application is filed on or before completion of assessment in such cases. It also removes the prohibition in cases where the AO has to proceed u/s. 153C of the Act.
Under the existing provisions, application can be admitted by the settlement commission, only if additional income tax payable on the income disclosed in the application exceeds Rs. 3 Lacs. It is proposed to enhance this limit to Rs. 10.00 lacs for a case being eligible to be proceeded with before the Settlement
Commission. In search cases (i.e. cases u/s. 153A as well as u/s. 153C), the said limit is further raised to Rs. 50.00 lacs of additional tax payable.
Time limit for passing order of settlement
Under the existing provisions, Settlement commission shall pass an order in respect of application made on or after 1st day of June, 2007, within 12 months from end of the month in which application was made.
It is proposed to extend the time limit to 18 months from end of the month in which the application is filed. However, this extended time limit shall apply only for settlement application made on or after 1st day of June 2010.
Provisions similar to the above provisions are made in the Wealth Tax Act, 1957 for enabling settlement under the Wealth Tax Act, 1957 in search cases. Amendments are proposed in Sections 22A and 22D of the said Act.
The amendments proposed are with effect from 01-06-2010.
This clearly indicates the Government’s bias towards the richer defaulters having defrauded the tax authorities of Rs. 50 lakhs or more so that they alone can alone enjoy the exclusive privilege of approaching the (now)almost-extinct Commission. Those who, for good reasons or bad, have failed to pay anything less as tax-those who actually need the benefit more-are dwnied this which is in contravention of the Constitution under which all are equal under the law. In fact, in this case, the amendmend ought to have done the opposite-.e., those who defraud the tax to the extent of Rs. 50 lakhs and more should have been barred from this benefit. The targetted benrficiaries clearly belong to particular elite classes! Miscarriage of justice by the policy makers?