Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Empowers the Central Government to constitute one or more Interim Boards for Settlement to dispose of pending applications; each Board has three members of the rank of Chief Commissioner; differences are resolved by majority.
Heading: Interim Boards for Settlement.
Inserted by: Finance Act, 2021, with effect from 1 February 2021 — the provision that operationalises the winding-up of the Settlement Commission.
Finance Act, 2026: Not amended.
Authorities digested: 3 (candour rule — a 2021 machinery provision; the case law concerns the transitional jurisdiction of the Board rather than the constitution of the Board itself).
A. SECTION COMMENTARY
1. Purpose
Section 245AA is the legislative pivot of the 2021 reform that discontinued the Income-tax Settlement Commission. With effect from 1 February 2021 no new application could be made (section 245C(5)); the existing institution was frozen; and the Central Government was authorised to constitute Interim Boards to dispose of the stock of pending applications. The Board is a three-member body of Chief Commissioner-rank officers, nominated by the CBDT, deciding by majority.
2. How the Board acquires its work
The Board does not entertain fresh settlement applications in the ordinary sense; it inherits pending applications. The routing mechanism is in section 245M (option to withdraw; deemed receipt by, and allotment/transfer to, the Board) read with the definition of “pending application”. Once an application is before the Board, the powers and procedure of the erstwhile Commission (sections 245D, 245DD, 245F, 245G and 245H) are exercised by the Board — each of those sections now carries a closing sub-section applying it mutatis mutandis to the Interim Board.
3. The transitional controversy
The principal dispute has not been about the constitution of the Board but about who is eligible to reach it. The retrospective 1 February 2021 cut-off in section 245C(5), coupled with CBDT's administrative extension of the filing window to 30 September 2021, threw up the question whether taxpayers whose cases became eligible between 1 February 2021 and 31 March 2021 were shut out. The Madras High Court in Jain Metal Rolling Mills (below) read the cut-off down to 31 March 2021, and the Supreme Court declined to interfere. Several High Courts followed, directing the Interim Board to entertain such applications.
4. Candour note
Being a 2021 provision, section 245AA has generated little direct authority on its own terms; the litigation is on the boundary of access to the Board (a section 245C(5)/245M question). The decisions below are digested here because they fix the Board's transitional jurisdiction.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245AA.
(1) The Central Government shall constitute one or more Interim Boards for Settlement, as may be necessary, for the settlement of pending applications.
(2) Every Interim Board shall consist of three members, each being an officer of the rank of Chief Commissioner, as may be nominated by the Board.
(3) If the Members of the Interim Board differ in opinion on any point, the point shall be decided according to the opinion of the majority.
C. AUTHORITIES
The authorities concern access to, and the transitional jurisdiction of, the Interim Board.
Cluster 1 — Transitional jurisdiction of the Interim Board
Jain Metal Rolling Mills v. Union of India, (2023) 156 taxmann.com 513 / (2024) 461 ITR 423 (Mad)
Held: Read down the retrospective 1 February 2021 date in section 245C(5) to 31 March 2021, so that cases pending/eligible up to 31 March 2021 could be filed before and disposed of by the Interim Board; the administrative circular could not narrow the statutory right. (Full digest under section 245A / section 245C.)
Relevance: The leading authority defining the universe of applications the Interim Board must dispose of under section 245AA.
Union of India v. Velammal Chennai Educational Trust, (2024) 467 ITR 169 (SC)
Held: The Supreme Court dismissed the Revenue's Special Leave Petition against the Jain Metal Rolling Mills line, leaving the read-down construction undisturbed.
Relevance: Confirms, at the apex level, the transitional reach of the Interim Board's jurisdiction.
Candour — constitution of the Board
Position: No reported decision has been traced testing the constitution of an Interim Board under sub-sections (2)–(3) of section 245AA (composition or majority rule) on the merits. The provision is administrative and self-executing; any challenge would lie under Article 226. This is stated candidly rather than padded with inapposite authority.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Income-tax Settlement Commission ceased to operate for applications made on or after 1 February 2021 (Finance Act, 2021); pending applications stand transferred to the Interim Board for Settlement (section 245AA). Finance Act, 2026 makes no change to any section of Chapter XIX-A. Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XIX-A — SETTLEMENT OF CASES
Section 245AA — Interim Boards for Settlement
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Empowers the Central Government to constitute one or more Interim Boards for Settlement to dispose of pending applications; each Board has three members of the rank of Chief Commissioner; differences are resolved by majority.
Heading: Interim Boards for Settlement.
Inserted by: Finance Act, 2021, with effect from 1 February 2021 — the provision that operationalises the winding-up of the Settlement Commission.
Finance Act, 2026: Not amended.
Authorities digested: 3 (candour rule — a 2021 machinery provision; the case law concerns the transitional jurisdiction of the Board rather than the constitution of the Board itself).
A. SECTION COMMENTARY
1. Purpose
Section 245AA is the legislative pivot of the 2021 reform that discontinued the Income-tax Settlement Commission. With effect from 1 February 2021 no new application could be made (section 245C(5)); the existing institution was frozen; and the Central Government was authorised to constitute Interim Boards to dispose of the stock of pending applications. The Board is a three-member body of Chief Commissioner-rank officers, nominated by the CBDT, deciding by majority.
2. How the Board acquires its work
The Board does not entertain fresh settlement applications in the ordinary sense; it inherits pending applications. The routing mechanism is in section 245M (option to withdraw; deemed receipt by, and allotment/transfer to, the Board) read with the definition of “pending application”. Once an application is before the Board, the powers and procedure of the erstwhile Commission (sections 245D, 245DD, 245F, 245G and 245H) are exercised by the Board — each of those sections now carries a closing sub-section applying it mutatis mutandis to the Interim Board.
3. The transitional controversy
The principal dispute has not been about the constitution of the Board but about who is eligible to reach it. The retrospective 1 February 2021 cut-off in section 245C(5), coupled with CBDT's administrative extension of the filing window to 30 September 2021, threw up the question whether taxpayers whose cases became eligible between 1 February 2021 and 31 March 2021 were shut out. The Madras High Court in Jain Metal Rolling Mills (below) read the cut-off down to 31 March 2021, and the Supreme Court declined to interfere. Several High Courts followed, directing the Interim Board to entertain such applications.
4. Candour note
Being a 2021 provision, section 245AA has generated little direct authority on its own terms; the litigation is on the boundary of access to the Board (a section 245C(5)/245M question). The decisions below are digested here because they fix the Board's transitional jurisdiction.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245AA.
(1) The Central Government shall constitute one or more Interim Boards for Settlement, as may be necessary, for the settlement of pending applications.
(2) Every Interim Board shall consist of three members, each being an officer of the rank of Chief Commissioner, as may be nominated by the Board.
(3) If the Members of the Interim Board differ in opinion on any point, the point shall be decided according to the opinion of the majority.
C. AUTHORITIES
The authorities concern access to, and the transitional jurisdiction of, the Interim Board.
Cluster 1 — Transitional jurisdiction of the Interim Board
Jain Metal Rolling Mills v. Union of India, (2023) 156 taxmann.com 513 / (2024) 461 ITR 423 (Mad)
Citation: (2023) 156 taxmann.com 513 / (2024) 461 ITR 423 (Mad).
Held: Read down the retrospective 1 February 2021 date in section 245C(5) to 31 March 2021, so that cases pending/eligible up to 31 March 2021 could be filed before and disposed of by the Interim Board; the administrative circular could not narrow the statutory right. (Full digest under section 245A / section 245C.)
Relevance: The leading authority defining the universe of applications the Interim Board must dispose of under section 245AA.
Union of India v. Velammal Chennai Educational Trust, (2024) 467 ITR 169 (SC)
Citation: (2024) 467 ITR 169 / 167 taxmann.com 372 / 301 Taxman 319 (SC).
Held: The Supreme Court dismissed the Revenue's Special Leave Petition against the Jain Metal Rolling Mills line, leaving the read-down construction undisturbed.
Relevance: Confirms, at the apex level, the transitional reach of the Interim Board's jurisdiction.
Candour — constitution of the Board
Position: No reported decision has been traced testing the constitution of an Interim Board under sub-sections (2)–(3) of section 245AA (composition or majority rule) on the merits. The provision is administrative and self-executing; any challenge would lie under Article 226. This is stated candidly rather than padded with inapposite authority.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Income-tax Settlement Commission ceased to operate for applications made on or after 1 February 2021 (Finance Act, 2021); pending applications stand transferred to the Interim Board for Settlement (section 245AA). Finance Act, 2026 makes no change to any section of Chapter XIX-A. Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.