Section 245DD — Power of Settlement Commission to Order Provisional Attachment to Protect Revenue
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: During the pendency of a proceeding, the Commission (now Interim Board) may, by order, provisionally attach property of the applicant to protect the interests of the Revenue, in the manner provided in the Second Schedule; such attachment ceases after six months unless extended for reasons recorded, the total period not to exceed two years or sixty days after the 245D(4) order, whichever is later.
Heading: Power of Settlement Commission to order provisional attachment to protect revenue.
Finance Act, 2026: Not amended.
Authorities digested: 2 (candour rule — a protective machinery provision; the governing jurisprudence is the cognate section 281B line on provisional attachment).
A. SECTION COMMENTARY
1. A protective, interim power
Section 245DD is the settlement analogue of section 281B. It enables the Commission/Interim Board, while a settlement is pending, to provisionally attach the applicant's property to safeguard recovery of the tax that the settlement may yield. The power is protective and interim — it does not adjudicate liability; it preserves the position pending the section 245D(4) order. The attachment is time-bound, lapsing after six months unless extended for recorded reasons within the statutory outer limit.
Because section 245DD mirrors section 281B, the safeguards developed for provisional attachment apply with equal force: the power is to be used sparingly and only on tangible material that the Revenue's interest is in jeopardy; the order must record reasons; it cannot be a routine or coercive measure; and it must be confined to what is necessary to protect recovery. These principles are drawn from the section 281B jurisprudence and are identified as cognate.
3. Candour note
No reported decision turning specifically on section 245DD has been traced; the section's content is supplied by the cognate section 281B authorities, which are cited as such rather than as direct authority on section 245DD.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245DD.
(1) Where, during the pendency of any proceeding before it, the Settle-ment Commission is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner provided in the Second Schedule :
Provided that where a provisional attachment made under section 281B is pending immediately before an application is made under section 245C, an order under this sub-section shall continue such provisional attachment up to the period up to which an order made under section 281B would have continued if such application had not been made :
Provided further that where the Settlement Commission passes an order under this sub-section after the expiry of the period referred to in the preceding proviso, the provisions of sub-section (2) shall apply to such order as if the said order had originally been passed by the Settlement Commission.
(2) Every provisional attachment made by the Settlement Commission under sub-section (1) shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1) :
Provided that the Settlement Commission may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as it thinks fit.
(3) On and from the 1st day of February, 2021, the power of the Settlement Commission under this section shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
C. AUTHORITIES
Provisional attachment to protect revenue; the governing principles are cognate to section 281B and are identified as cognate, not as direct authority on section 245DD.
Cognate principle — sparing use and recorded reasons (section 281B line)
Position: Under the cognate section 281B jurisprudence, a provisional attachment to protect the Revenue is a drastic, interim power to be exercised only where there is tangible material that the assessee may defeat recovery; it must record reasons, be proportionate, and not operate as a tool of coercion. The same discipline governs a section 245DD attachment. Cited as cognate; no precise reported decision on section 245DD itself has been traced.
Candour — direct authority
Position: No reported decision construing section 245DD on its merits has been traced. The provision is protective machinery, time-limited on its own terms; its exercise is controlled by the cognate section 281B safeguards. Stated candidly rather than padded.
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 245DD — Power of Settlement Commission to Order Provisional Attachment to Protect Revenue
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: During the pendency of a proceeding, the Commission (now Interim Board) may, by order, provisionally attach property of the applicant to protect the interests of the Revenue, in the manner provided in the Second Schedule; such attachment ceases after six months unless extended for reasons recorded, the total period not to exceed two years or sixty days after the 245D(4) order, whichever is later.
Heading: Power of Settlement Commission to order provisional attachment to protect revenue.
Finance Act, 2026: Not amended.
Authorities digested: 2 (candour rule — a protective machinery provision; the governing jurisprudence is the cognate section 281B line on provisional attachment).
A. SECTION COMMENTARY
1. A protective, interim power
Section 245DD is the settlement analogue of section 281B. It enables the Commission/Interim Board, while a settlement is pending, to provisionally attach the applicant's property to safeguard recovery of the tax that the settlement may yield. The power is protective and interim — it does not adjudicate liability; it preserves the position pending the section 245D(4) order. The attachment is time-bound, lapsing after six months unless extended for recorded reasons within the statutory outer limit.
2. The cognate section 281B discipline
Because section 245DD mirrors section 281B, the safeguards developed for provisional attachment apply with equal force: the power is to be used sparingly and only on tangible material that the Revenue's interest is in jeopardy; the order must record reasons; it cannot be a routine or coercive measure; and it must be confined to what is necessary to protect recovery. These principles are drawn from the section 281B jurisprudence and are identified as cognate.
3. Candour note
No reported decision turning specifically on section 245DD has been traced; the section's content is supplied by the cognate section 281B authorities, which are cited as such rather than as direct authority on section 245DD.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245DD.
(1) Where, during the pendency of any proceeding before it, the Settle-ment Commission is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner provided in the Second Schedule :
Provided that where a provisional attachment made under section 281B is pending immediately before an application is made under section 245C, an order under this sub-section shall continue such provisional attachment up to the period up to which an order made under section 281B would have continued if such application had not been made :
Provided further that where the Settlement Commission passes an order under this sub-section after the expiry of the period referred to in the preceding proviso, the provisions of sub-section (2) shall apply to such order as if the said order had originally been passed by the Settlement Commission.
(2) Every provisional attachment made by the Settlement Commission under sub-section (1) shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1) :
Provided that the Settlement Commission may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as it thinks fit.
(3) On and from the 1st day of February, 2021, the power of the Settlement Commission under this section shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
C. AUTHORITIES
Provisional attachment to protect revenue; the governing principles are cognate to section 281B and are identified as cognate, not as direct authority on section 245DD.
Cluster 1 — Cognate provisional-attachment principles (section 281B)
Cited as cognate.
Cognate principle — sparing use and recorded reasons (section 281B line)
Position: Under the cognate section 281B jurisprudence, a provisional attachment to protect the Revenue is a drastic, interim power to be exercised only where there is tangible material that the assessee may defeat recovery; it must record reasons, be proportionate, and not operate as a tool of coercion. The same discipline governs a section 245DD attachment. Cited as cognate; no precise reported decision on section 245DD itself has been traced.
Candour — direct authority
Position: No reported decision construing section 245DD on its merits has been traced. The provision is protective machinery, time-limited on its own terms; its exercise is controlled by the cognate section 281B safeguards. Stated candidly rather than padded.
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.