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Extension of time for disposing pending rectification applications by Interim Board for Settlement – Budget 2023

Section 245D of the Act lays down the procedure for Settlement Commission upon receiving an application for settlement by an assessee. The section also provides the timelines to be followed with respect to settlement or disposal of pending applications and also the procedures to be followed in this regard.

2. The Act was amended vide Finance Act, 2021 with retrospective effect from 01.02.2021, abolishing the Settlement Commission. Consequently, the Central Government was enabled to constitute one or more Interim Boards for Settlement (IBS), as an interim measure, for settlement of applications pending with Settlement Commission as on 31.01.2021. Sub-sections (9) to (13) were introduced in section 245D vide Finance Act, 2021 to make provisions for dealing with applications pending before the Settlement Commission.

3. Clause (iv) of sub-section (9) provides that where the time-limit for amending any order or filing of rectification application as per sub-section (6B) expires on or after 01.02.2021, then the period from 01.02.2021 till the constitution of IBS shall be excluded from computing the time-limit, and after such exclusion, if the time-limit available for amending the order or for making application is less than 60 days, such period shall be extended to 60 days. Therefore, as per the provisions of clause (iv) of sub-section (9) of section 245D, the period between 01.02.2021 till 10.08.2021 (when the order constituting IBS was issued) shall be excluded for computing the time-limit.

4. In this regard, grievances have been received from the stakeholders regarding extension of time available to the IBS under the Act, to pass rectification/ amendment orders. As the pending applications only relate to rectification or amendment of mistake apparent from the record, it is proposed that the time-limit available to IBS for passing such orders may be extended in order to dispose the pendency and to avoid any further litigation.

5. Accordingly, clause (iv) of sub-section (9) of section 245D is proposed to be substituted with a new clause to provide that where the time-limit for amending an order or for making an application under sub-section (6B) expires on or after 01.02.2021 but before 01.02.2022, such time-limit shall stand extended to 30.09.2023.

6. This amendment will take effect retrospectively from the lst day of February, 2021.

[Clause 95]

Extract of relevant clause of Finance Bill 2023

Clause 95 of the Bill seeks to amend the section 245D of the Income-tax Act relating to procedure on receipt of an application under section 245C.

It is proposed to substitute clause (iv) of sub-section (9) of the said section so as to provide that where the time-limit for amending any order or filing of rectification application under sub-section (6B) of the said section expires on or after the 1st February, 2021, but before the 1st February, 2022, such time-limit shall be extended to 30th September, 2023.

This amendment will take effect retrospectively from 1st February, 2021.

Extract of Relevant Amendment Proposed by Finance Bill, 2023

95. Amendment of section 245D.

In section 245D of the Income-tax Act, in sub-section (9), for clause (iv), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of February, 2021, namely:–

“(iv) where the time-limit for amending any order or filing of rectification application under sub-section (6B) expires on or after the 1st day of February, 2021, but before the 1st day of February, 2022, such time-limit shall be extended to the 30th day of September, 2023.”.

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Source : Finance Bill 2023 / Union Budget 2023

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