Section 245E — Power of Settlement Commission to Reopen Completed Proceedings
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Enables the Commission, if it is of opinion (reasons recorded) that for proper settlement it is necessary to reopen a completed proceeding connected with the case, to reopen it with the applicant's concurrence, subject to limitation; with a proviso barring reopening of proceedings completed more than the prescribed period before the application, and a proviso disapplying the section to applications made on or after 1 June 2007.
Heading: Power of Settlement Commission to reopen completed proceedings.
Finance Act, 2026: Not amended.
Operational status: Spent for applications on or after 1 June 2007 (proviso); relevant only to the pre-2007 stock and to construction of orders that exercised the power.
Authorities digested: 1 (candour rule — a power rendered inoperative for post-1 June 2007 applications).
A. SECTION COMMENTARY
1. A power to widen the settlement — now switched off
Section 245E allowed the Commission, for the purpose of a proper and comprehensive settlement, to reopen a completed assessment connected with the case, with the applicant's concurrence and within limitation. The object was to let the Commission settle the whole tax position of an applicant rather than an artificially sliced part of it. The Finance Act, 2007 inserted a proviso disapplying the section to applications made on or after 1 June 2007 — consistent with the post-2007 model in which the settlement is confined to the pending case and a one-time disclosure.
2. Why it is largely spent
For every application made on or after 1 June 2007 — which is the entire universe relevant to the Interim Board's residual work and to FA-2025/2026 — section 245E is inoperative. It survives only for the construction of older orders that exercised the reopening power. The provision is therefore digested for completeness, candidly noting its spent character.
3. Candour note
No reported decision of continuing significance turning on section 245E in the post-2007 regime has been traced, the power having been switched off. The cognate principle is that any reopening must be by a reasoned order and within limitation, mirroring the discipline of reassessment.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245E. 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.
C. AUTHORITIES
A power inoperative for applications on or after 1 June 2007; candour rule applies.
Cluster 1 — Candour
Candour — spent power
Position: Section 245E does not apply to applications made on or after 1 June 2007 and is therefore spent for all current purposes. No reported decision of continuing significance under the post-2007 regime has been traced. Any exercise of the power (in the older stock) had to be by a reasoned order, with the applicant's concurrence and within limitation. Stated candidly; no inapposite authority is pressed into service.
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 245E — Power of Settlement Commission to Reopen Completed Proceedings
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Enables the Commission, if it is of opinion (reasons recorded) that for proper settlement it is necessary to reopen a completed proceeding connected with the case, to reopen it with the applicant's concurrence, subject to limitation; with a proviso barring reopening of proceedings completed more than the prescribed period before the application, and a proviso disapplying the section to applications made on or after 1 June 2007.
Heading: Power of Settlement Commission to reopen completed proceedings.
Finance Act, 2026: Not amended.
Operational status: Spent for applications on or after 1 June 2007 (proviso); relevant only to the pre-2007 stock and to construction of orders that exercised the power.
Authorities digested: 1 (candour rule — a power rendered inoperative for post-1 June 2007 applications).
A. SECTION COMMENTARY
1. A power to widen the settlement — now switched off
Section 245E allowed the Commission, for the purpose of a proper and comprehensive settlement, to reopen a completed assessment connected with the case, with the applicant's concurrence and within limitation. The object was to let the Commission settle the whole tax position of an applicant rather than an artificially sliced part of it. The Finance Act, 2007 inserted a proviso disapplying the section to applications made on or after 1 June 2007 — consistent with the post-2007 model in which the settlement is confined to the pending case and a one-time disclosure.
2. Why it is largely spent
For every application made on or after 1 June 2007 — which is the entire universe relevant to the Interim Board's residual work and to FA-2025/2026 — section 245E is inoperative. It survives only for the construction of older orders that exercised the reopening power. The provision is therefore digested for completeness, candidly noting its spent character.
3. Candour note
No reported decision of continuing significance turning on section 245E in the post-2007 regime has been traced, the power having been switched off. The cognate principle is that any reopening must be by a reasoned order and within limitation, mirroring the discipline of reassessment.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245E. 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.
C. AUTHORITIES
A power inoperative for applications on or after 1 June 2007; candour rule applies.
Cluster 1 — Candour
Candour — spent power
Position: Section 245E does not apply to applications made on or after 1 June 2007 and is therefore spent for all current purposes. No reported decision of continuing significance under the post-2007 regime has been traced. Any exercise of the power (in the older stock) had to be by a reasoned order, with the applicant's concurrence and within limitation. Stated candidly; no inapposite authority is pressed into service.
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.