Section 245E of the Act was inserted in year 1975, amended in 1984, 1987 and the provisions were made inapplicable for applications filed on or after 01-06-2007. The erswhile provisions of section 245E reads as under:

“If the Settlement Commission is of the opinion (the reasons for such opinion to be recorded by it in writing) that, for the proper disposal of the case pending before it, it is necessary or expedient to reopen any proceeding connected with the case but which has been completed under this Act by any income-tax authority before the application under section 245C was made, it may, with the concurrence of the applicant, reopen such proceeding and pass such order thereon as it thinks fit, as if the case in relation to which the application for settlement had been made by the applicant under that section covered such proceeding also.

Provided that no proceeding shall be reopened by the Settlement Commission under this section if the period between the end of the assessment year to which such a proceeding relates and the date of application for settlement under section 245C exceeds nine years. Provided further that no proceeding shall be reopened by the Settlement Commission under this section in a case where an application under section 245C is made on or after the 1st day of June, 2007.”

The provisions of this section empowered the Settlement Commission to reopen the previously completed proceedings in respect of assessment year(s) other than the year(s) for which application was filed by the applicant where it is necessary or expedient for proper disposal of the case.

The section also provided limitation to such powers of the Settlement Commission i.e. reopening must be with the concurrence of the applicant and the power cannot extend to a period beyond nine years (as amended in year 1987) from the end of the assessment year to which such proceeding relates.

However, with the insertion of new scheme of settlement before the Settlement Commission w.e.f. 01-06-2007, this section was made inapplicable for applications filed on or after 01-06-2007.

The inapplicability of this section placed restriction on the Settlement Commission to limit the settlement to the year(s) in respect of which application has been filed by the applicant thereby depriving the applicant from relief in respect of other preceding completed assessment years(s) on the same issue or same modus operandi.


It is suggested that the provisions of erstwhile section 245E be restored in ‘Chapter XIX-A Settlement of Cases’ for proper and justified disposal of cases of applicants.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax) 

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June 2021