Section 245C — Application for Settlement of Cases
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Confers the right to apply for settlement at any stage of a case, on full and true disclosure of income not disclosed before the Assessing Officer, the manner in which it was derived, the additional amount of income-tax payable, and such other particulars as prescribed; with monetary thresholds of additional tax (the higher Rs. 50 lakh threshold for search/requisition cases and related persons, Rs. 10 lakh otherwise); a bar on persons related to search cases except on stated conditions; and a closure of the remedy for applications on or after 1 February 2021 (sub-section (5)).
Heading: Application for settlement of cases.
Finance Act, 2026: Not amended.
Operational status: Closed for applications made on or after 1 February 2021 (sub-section (5)); the pre-2021 jurisprudence governs pending applications before the Interim Board and the construction of orders already passed.
Authorities digested: 12 (heavily litigated — full and true disclosure is the lifeline of the section).
A. SECTION COMMENTARY
1. The four pillars of a valid application
Section 245C(1) requires an applicant to disclose, in the prescribed form, four things: (i) income not disclosed before the Assessing Officer; (ii) the manner in which such income has been derived; (iii) the additional amount of income-tax payable on it; and (iv) such other particulars as may be prescribed. The disclosure must be “full and true”. These are not formal requirements but jurisdictional ones: an application that fails any of them is not a valid invocation of the settlement machinery, and an order built on it is liable to be set aside.
2. “Full and true disclosure” — the lifeline
The Supreme Court in Ajmera Housing Corporation held that full and true disclosure of income that had not been disclosed before the Assessing Officer, and of the manner in which it was derived, is a pre-condition for a valid application, and that the scheme does not contemplate successive revisions of the disclosed income; a substantial upward revision is itself evidence that the original application was neither full nor true. The disclosure must be full and true not only at the threshold but at every stage — it is, in the language of the High Courts, the “lifeline” of the settlement process. The satisfaction of the Commission (now the Interim Board) on this score must subsist from section 245D(1) admission through to the section 245D(4) order.
3. “Manner of deriving” the income
Disclosure of the manner in which the undisclosed income was derived is a distinct and substantive requirement; a bald confession of an amount, without an account of how it was earned, does not satisfy section 245C(1). The requirement prevents the settlement route from being used to launder unexplained money without explaining its source.
4. Thresholds and the search-case bar
The proviso to section 245C(1) erects monetary thresholds — the additional income-tax payable on the disclosed income must exceed the prescribed figure (Rs. 50 lakh for search/requisition cases and specified related persons; Rs. 10 lakh in other cases) — and restricts applications by persons connected with a searched person except on stated conditions. The thresholds are jurisdictional filters: an application below them is not maintainable.
5. Confined to the pending assessment
The settlement embraces only the “case”, i.e. the assessment proceeding pending before the Assessing Officer (section 245A). Matters outside that proceeding — for example, a default in deducting tax at source that is not part of the assessment — cannot be brought in (Shaw Wallace, following Express Newspapers). The application cannot be used to settle a liability that is not the subject of a pending assessment.
6. Closure from 1 February 2021
Sub-section (5), inserted by the Finance Act, 2021, bars any application on or after 1 February 2021. The Madras High Court in Jain Metal Rolling Mills read the retrospective cut-off down to 31 March 2021 so that genuinely pending and eligible cases were not extinguished, and the Supreme Court declined to interfere. Beyond that read-down, the substantive remedy is closed; what remains is the disposal of pending applications by the Interim Board.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245C.
(1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided :
Provided that no such application shall be made unless,— (i) in a case where proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, (ia) in a case where— (A) the applicant is related to the person referred to in clause (i) who has filed an application (hereafter in this sub-section referred to as "specified person"); and (B) the proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of the applicant, being a person referred to in section 153A or section 153C, have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, (ii) in any other case, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, and such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assessing Officer on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application.
Explanation.—For the purposes of clause (ia),— (a) the applicant, in relation to the specified person referred to in clause (ia), means,— (i) where the specified person is an individual, any relative of the specified person; (ii) where the specified person is a company, firm, association of persons or Hindu undivided family, any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the specified person, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the specified person or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the specified person; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession,— (A) where the specified person being an individual, or any relative of such specified person, has a substantial interest in the business or profession of that person; or (B) where the specified person being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person; (b) a person shall be deemed to have a substantial interest in a business or profession, if— (A) in a case where the business or profession is carried on by a company, such person is, on the date of search, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and (B) in any other case, such person is, on the date of search, beneficially entitled to not less than twenty per cent of the profits of such business or profession.
(1A) For the purposes of sub-section (1) of this section, the additional amount of income-tax payable in respect of the income disclosed in an application made under sub-section (1) of this section shall be the amount calculated in accordance with the provisions of sub-sections
(1B) to (1D).
(1B) Where the income disclosed in the application relates to only one previous year,— (i) if the applicant has not furnished a return in respect of the total income of that year, then, tax shall be calculated on the income disclosed in the application as if such income were the total income; (ii) if the applicant has furnished a return in respect of the total income of that year, tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income.
(1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in sub-section (1B) shall be,— (a) in a case referred to in clause (i) of that sub-section, the amount of tax calculated under that clause; (b) in a case referred to in clause (ii) of that sub-section, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income returned for that year; (c) [***].
(1D) Where the income disclosed in the application relates to more than one previous year, the additional amount of income-tax payable in respect of the income disclosed for each of the years shall first be calculated in accordance with the provisions of sub-sections
(1B) and
(1C) and the aggregate of the amount so arrived at in respect of each of the years for which the application has been made under sub-section (1) shall be the additional amount of income-tax payable in respect of the income disclosed in the application.
(1E) [***]
(2) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed.
(3) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant.
(4) An assessee shall, on the date on which he makes an application under sub-section (1) to the Settlement Commission, also intimate the Assessing Officer in the prescribed manner of having made such application to the said Commission.
(5) No application shall be made under this section on or after the 1st day of February, 2021.
Sub-sections/words omitted by amendment carry the marker [***].
C. AUTHORITIES
Twelve decisions, grouped by issue: full and true disclosure as the jurisdictional foundation; the boundary of a settleable “case”; invalidity for want of disclosure; and the closure of the remedy.
Cluster 1 — Full and true disclosure: the jurisdictional foundation
The disclosure requirement is a condition precedent and a continuing condition; revision of disclosed income is fatal.
Ajmera Housing Corporation v. CIT, (2010) 326 ITR 642 (SC)
Facts: Following a search, the assessee applied under section 245C disclosing additional income of Rs. 1.94 crore, then revised it to disclose a further Rs. 11.41 crore, with yet further disclosure thereafter.
Held: Full and true disclosure of income not disclosed before the Assessing Officer, and of the manner in which it was derived, is a pre-condition for a valid application under section 245C(1); the scheme does not contemplate revision of the income disclosed in the application. A substantial revision shows that the disclosure in the application was not full and true, going to the root of the Commission's jurisdiction.
Ratio: Disclosure is the foundation of the settlement jurisdiction; it must be full and true in the application itself, and cannot be perfected by later revisions.
Relevance: The leading Supreme Court authority on section 245C; routinely applied to invalidate applications and orders where the disclosure was incomplete or successively revised.
CIT v. Express Newspapers Ltd., (1994) 206 ITR 443 (SC)
Citation: (1994) 206 ITR 443 (SC).
Held: Explained the scope of the “case” capable of settlement and the disclosure obligation; the settlement jurisdiction is confined to the assessment proceeding and predicated on a true disclosure of income not previously disclosed.
Relevance: Early Supreme Court statement tying the maintainability of a settlement application to the boundary of the pending assessment and to genuine disclosure.
Major Metals Ltd. v. Union of India, (2012) 207 Taxman 185 / 251 CTR 385 (Bom)
Facts: The applicant disclosed Rs. 10 lakh for each of two years; the Commission, examining share-premium receipts of two companies, found the transactions not genuine and applied section 68, and levied penalty under section 271(1)(c).
Held: The entire assessment is before the Commission, which completes it as part of the settlement — comprehensiveness, finality and conclusiveness are the three attributes of its function. A disclosure that is a device to shut out further investigation is not full and true; the Commission was justified in invoking section 68 and sustaining penalty.
Relevance: High Court authority that full and true disclosure is tested against the totality of the evidence and that the Commission may look behind a coloured disclosure.
Cluster 2 — Disclosure as a continuing condition; invalidity of the application
Want of full and true disclosure may invalidate the application at the section 245D(2C) stage and beyond.
Kandathil M. Mammen v. Income-tax Settlement Commission, (2022) (Mad)
Citation: Madras High Court, decided 27 June 2022 (W.P. proceedings; reported on case databases).
Held: Where the requirement of full and true disclosure of facts is genuinely in issue, the question whether the application is invalid is to be examined with reference to the disclosure; but a pure question of law that needs adjudication does not, by itself, render the application invalid and should be decided at the section 245D(4) stage.
Relevance: Illustrates the line between an invalid application (failure of disclosure) and a maintainable application raising a legal issue; relevant to section 245C read with section 245D(2C). Cited as a High Court decision.
Pr. CIT v. Income-tax Settlement Commission, (2015) (Del)
Citation: Delhi High Court, decided 8 December 2015 (writ jurisdiction).
Held: Examined the stages at which the Commission may reject or treat an application as invalid for want of full and true disclosure, and the limits of the Revenue's challenge to an order admitting an application.
Relevance: Authority on the interface of section 245C disclosure with the section 245D admission/invalidity stages; cited as a High Court decision.
Held: The Commission was justified in refusing to entertain a settlement application where the matter sought to be settled (a failure to deduct tax at source) did not fall within the assessment proceeding and hence within section 245C(1).
Relevance: Applies Express Newspapers to confine the settleable “case” to the pending assessment; a TDS default outside the assessment cannot be settled.
Cluster 3 — Object, threshold and the privilege of settlement
The settlement is a conditional privilege, not a right at large.
Held: Stated the object of Chapter XIX-A and held that the settlement is hedged with conditions; an appeal for these purposes means its effective pursuit, and the Revenue's objection (in the scheme as it then stood) could bar the Commission's jurisdiction.
Relevance: Foundational on the conditional character of the settlement remedy that section 245C confers.
Jyotendrasinhji v. S.I. Tripathi, (1993) 201 ITR 611 (SC)
Citation: (1993) 201 ITR 611 (SC).
Held / relevance: Explained the integrated scheme from application (section 245C) to conclusive order (section 245-I); the disclosure and settlement form a single package not to be dissected. Full digest under section 245-I.
Cluster 4 — Closure of the remedy (sub-section (5))
The 2021 cut-off and its read-down.
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); SLP dismissed, Union of India v. Velammal Chennai Educational Trust, (2024) 467 ITR 169 (SC).
Held: Read down the retrospective 1 February 2021 date in section 245C(5) to 31 March 2021, preserving cases pending/eligible up to that date for disposal by the Interim Board; a CBDT circular could not curtail the statutory right.
Relevance: The governing authority on the temporal closure of section 245C and the transitional access to settlement.
Union of India v. Velammal Chennai Educational Trust, (2024) 467 ITR 169 (SC)
Held / relevance: Held that a settlement under the Chapter must conform to the mandatory provisions of the Act — the disclosure and computation in the section 245C application cannot escape statutory interest. Full digest under section 245D.
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 245C — Application for Settlement of Cases
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Confers the right to apply for settlement at any stage of a case, on full and true disclosure of income not disclosed before the Assessing Officer, the manner in which it was derived, the additional amount of income-tax payable, and such other particulars as prescribed; with monetary thresholds of additional tax (the higher Rs. 50 lakh threshold for search/requisition cases and related persons, Rs. 10 lakh otherwise); a bar on persons related to search cases except on stated conditions; and a closure of the remedy for applications on or after 1 February 2021 (sub-section (5)).
Heading: Application for settlement of cases.
Finance Act, 2026: Not amended.
Operational status: Closed for applications made on or after 1 February 2021 (sub-section (5)); the pre-2021 jurisprudence governs pending applications before the Interim Board and the construction of orders already passed.
Authorities digested: 12 (heavily litigated — full and true disclosure is the lifeline of the section).
A. SECTION COMMENTARY
1. The four pillars of a valid application
Section 245C(1) requires an applicant to disclose, in the prescribed form, four things: (i) income not disclosed before the Assessing Officer; (ii) the manner in which such income has been derived; (iii) the additional amount of income-tax payable on it; and (iv) such other particulars as may be prescribed. The disclosure must be “full and true”. These are not formal requirements but jurisdictional ones: an application that fails any of them is not a valid invocation of the settlement machinery, and an order built on it is liable to be set aside.
2. “Full and true disclosure” — the lifeline
The Supreme Court in Ajmera Housing Corporation held that full and true disclosure of income that had not been disclosed before the Assessing Officer, and of the manner in which it was derived, is a pre-condition for a valid application, and that the scheme does not contemplate successive revisions of the disclosed income; a substantial upward revision is itself evidence that the original application was neither full nor true. The disclosure must be full and true not only at the threshold but at every stage — it is, in the language of the High Courts, the “lifeline” of the settlement process. The satisfaction of the Commission (now the Interim Board) on this score must subsist from section 245D(1) admission through to the section 245D(4) order.
3. “Manner of deriving” the income
Disclosure of the manner in which the undisclosed income was derived is a distinct and substantive requirement; a bald confession of an amount, without an account of how it was earned, does not satisfy section 245C(1). The requirement prevents the settlement route from being used to launder unexplained money without explaining its source.
4. Thresholds and the search-case bar
The proviso to section 245C(1) erects monetary thresholds — the additional income-tax payable on the disclosed income must exceed the prescribed figure (Rs. 50 lakh for search/requisition cases and specified related persons; Rs. 10 lakh in other cases) — and restricts applications by persons connected with a searched person except on stated conditions. The thresholds are jurisdictional filters: an application below them is not maintainable.
5. Confined to the pending assessment
The settlement embraces only the “case”, i.e. the assessment proceeding pending before the Assessing Officer (section 245A). Matters outside that proceeding — for example, a default in deducting tax at source that is not part of the assessment — cannot be brought in (Shaw Wallace, following Express Newspapers). The application cannot be used to settle a liability that is not the subject of a pending assessment.
6. Closure from 1 February 2021
Sub-section (5), inserted by the Finance Act, 2021, bars any application on or after 1 February 2021. The Madras High Court in Jain Metal Rolling Mills read the retrospective cut-off down to 31 March 2021 so that genuinely pending and eligible cases were not extinguished, and the Supreme Court declined to interfere. Beyond that read-down, the substantive remedy is closed; what remains is the disposal of pending applications by the Interim Board.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245C.
(1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided :
Provided that no such application shall be made unless,— (i) in a case where proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, (ia) in a case where— (A) the applicant is related to the person referred to in clause (i) who has filed an application (hereafter in this sub-section referred to as "specified person"); and (B) the proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of the applicant, being a person referred to in section 153A or section 153C, have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, (ii) in any other case, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, and such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assessing Officer on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application.
Explanation.—For the purposes of clause (ia),— (a) the applicant, in relation to the specified person referred to in clause (ia), means,— (i) where the specified person is an individual, any relative of the specified person; (ii) where the specified person is a company, firm, association of persons or Hindu undivided family, any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the specified person, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the specified person or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the specified person; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession,— (A) where the specified person being an individual, or any relative of such specified person, has a substantial interest in the business or profession of that person; or (B) where the specified person being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person; (b) a person shall be deemed to have a substantial interest in a business or profession, if— (A) in a case where the business or profession is carried on by a company, such person is, on the date of search, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and (B) in any other case, such person is, on the date of search, beneficially entitled to not less than twenty per cent of the profits of such business or profession.
(1A) For the purposes of sub-section (1) of this section, the additional amount of income-tax payable in respect of the income disclosed in an application made under sub-section (1) of this section shall be the amount calculated in accordance with the provisions of sub-sections
(1B) to (1D).
(1B) Where the income disclosed in the application relates to only one previous year,— (i) if the applicant has not furnished a return in respect of the total income of that year, then, tax shall be calculated on the income disclosed in the application as if such income were the total income; (ii) if the applicant has furnished a return in respect of the total income of that year, tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income.
(1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in sub-section (1B) shall be,— (a) in a case referred to in clause (i) of that sub-section, the amount of tax calculated under that clause; (b) in a case referred to in clause (ii) of that sub-section, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income returned for that year; (c) [***].
(1D) Where the income disclosed in the application relates to more than one previous year, the additional amount of income-tax payable in respect of the income disclosed for each of the years shall first be calculated in accordance with the provisions of sub-sections
(1B) and
(1C) and the aggregate of the amount so arrived at in respect of each of the years for which the application has been made under sub-section (1) shall be the additional amount of income-tax payable in respect of the income disclosed in the application.
(1E) [***]
(2) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed.
(3) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant.
(4) An assessee shall, on the date on which he makes an application under sub-section (1) to the Settlement Commission, also intimate the Assessing Officer in the prescribed manner of having made such application to the said Commission.
(5) No application shall be made under this section on or after the 1st day of February, 2021.
Sub-sections/words omitted by amendment carry the marker [***].
C. AUTHORITIES
Twelve decisions, grouped by issue: full and true disclosure as the jurisdictional foundation; the boundary of a settleable “case”; invalidity for want of disclosure; and the closure of the remedy.
Cluster 1 — Full and true disclosure: the jurisdictional foundation
The disclosure requirement is a condition precedent and a continuing condition; revision of disclosed income is fatal.
Ajmera Housing Corporation v. CIT, (2010) 326 ITR 642 (SC)
Citation: (2010) 326 ITR 642 / 193 Taxman 193 / 234 CTR 118 (SC).
Facts: Following a search, the assessee applied under section 245C disclosing additional income of Rs. 1.94 crore, then revised it to disclose a further Rs. 11.41 crore, with yet further disclosure thereafter.
Held: Full and true disclosure of income not disclosed before the Assessing Officer, and of the manner in which it was derived, is a pre-condition for a valid application under section 245C(1); the scheme does not contemplate revision of the income disclosed in the application. A substantial revision shows that the disclosure in the application was not full and true, going to the root of the Commission's jurisdiction.
Ratio: Disclosure is the foundation of the settlement jurisdiction; it must be full and true in the application itself, and cannot be perfected by later revisions.
Relevance: The leading Supreme Court authority on section 245C; routinely applied to invalidate applications and orders where the disclosure was incomplete or successively revised.
CIT v. Express Newspapers Ltd., (1994) 206 ITR 443 (SC)
Citation: (1994) 206 ITR 443 (SC).
Held: Explained the scope of the “case” capable of settlement and the disclosure obligation; the settlement jurisdiction is confined to the assessment proceeding and predicated on a true disclosure of income not previously disclosed.
Relevance: Early Supreme Court statement tying the maintainability of a settlement application to the boundary of the pending assessment and to genuine disclosure.
Major Metals Ltd. v. Union of India, (2012) 207 Taxman 185 / 251 CTR 385 (Bom)
Citation: (2012) 207 Taxman 185 / 251 CTR 385 / 69 DTR 274 (Bom); decided 22 February 2012.
Facts: The applicant disclosed Rs. 10 lakh for each of two years; the Commission, examining share-premium receipts of two companies, found the transactions not genuine and applied section 68, and levied penalty under section 271(1)(c).
Held: The entire assessment is before the Commission, which completes it as part of the settlement — comprehensiveness, finality and conclusiveness are the three attributes of its function. A disclosure that is a device to shut out further investigation is not full and true; the Commission was justified in invoking section 68 and sustaining penalty.
Relevance: High Court authority that full and true disclosure is tested against the totality of the evidence and that the Commission may look behind a coloured disclosure.
Cluster 2 — Disclosure as a continuing condition; invalidity of the application
Want of full and true disclosure may invalidate the application at the section 245D(2C) stage and beyond.
Kandathil M. Mammen v. Income-tax Settlement Commission, (2022) (Mad)
Citation: Madras High Court, decided 27 June 2022 (W.P. proceedings; reported on case databases).
Held: Where the requirement of full and true disclosure of facts is genuinely in issue, the question whether the application is invalid is to be examined with reference to the disclosure; but a pure question of law that needs adjudication does not, by itself, render the application invalid and should be decided at the section 245D(4) stage.
Relevance: Illustrates the line between an invalid application (failure of disclosure) and a maintainable application raising a legal issue; relevant to section 245C read with section 245D(2C). Cited as a High Court decision.
Pr. CIT v. Income-tax Settlement Commission, (2015) (Del)
Citation: Delhi High Court, decided 8 December 2015 (writ jurisdiction).
Held: Examined the stages at which the Commission may reject or treat an application as invalid for want of full and true disclosure, and the limits of the Revenue's challenge to an order admitting an application.
Relevance: Authority on the interface of section 245C disclosure with the section 245D admission/invalidity stages; cited as a High Court decision.
Shaw Wallace & Co. Ltd. v. Settlement Commission, (2003) 263 ITR 285 (Cal)
Citation: (2003) 263 ITR 285 (Cal).
Held: The Commission was justified in refusing to entertain a settlement application where the matter sought to be settled (a failure to deduct tax at source) did not fall within the assessment proceeding and hence within section 245C(1).
Relevance: Applies Express Newspapers to confine the settleable “case” to the pending assessment; a TDS default outside the assessment cannot be settled.
Cluster 3 — Object, threshold and the privilege of settlement
The settlement is a conditional privilege, not a right at large.
CIT v. B.N. Bhattacharjee & Anr., (1979) 118 ITR 461 (SC)
Citation: (1979) 118 ITR 461 (SC).
Held: Stated the object of Chapter XIX-A and held that the settlement is hedged with conditions; an appeal for these purposes means its effective pursuit, and the Revenue's objection (in the scheme as it then stood) could bar the Commission's jurisdiction.
Relevance: Foundational on the conditional character of the settlement remedy that section 245C confers.
Jyotendrasinhji v. S.I. Tripathi, (1993) 201 ITR 611 (SC)
Citation: (1993) 201 ITR 611 (SC).
Held / relevance: Explained the integrated scheme from application (section 245C) to conclusive order (section 245-I); the disclosure and settlement form a single package not to be dissected. Full digest under section 245-I.
Cluster 4 — Closure of the remedy (sub-section (5))
The 2021 cut-off and its read-down.
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); SLP dismissed, Union of India v. Velammal Chennai Educational Trust, (2024) 467 ITR 169 (SC).
Held: Read down the retrospective 1 February 2021 date in section 245C(5) to 31 March 2021, preserving cases pending/eligible up to that date for disposal by the Interim Board; a CBDT circular could not curtail the statutory right.
Relevance: The governing authority on the temporal closure of section 245C and the transitional access to settlement.
Union of India v. Velammal Chennai Educational Trust, (2024) 467 ITR 169 (SC)
Citation: (2024) 467 ITR 169 / 167 taxmann.com 372 (SC).
Held: Dismissed the Revenue's SLP against the Jain Metal Rolling Mills line, leaving the read-down construction of section 245C(5) intact.
Relevance: Apex-level endorsement (by SLP dismissal) of the transitional construction of section 245C(5).
CIT v. Anjum M.H. Ghaswala, (2001) 252 ITR 1 (SC) (Constitution Bench)
Citation: (2001) 252 ITR 1 (SC) (Constitution Bench).
Held / relevance: Held that a settlement under the Chapter must conform to the mandatory provisions of the Act — the disclosure and computation in the section 245C application cannot escape statutory interest. Full digest under section 245D.
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.