Section 245F — Powers and Procedure of Settlement Commission
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Vests the Commission with all the powers of an income-tax authority under the Act; on an application being allowed to be proceeded with, the Commission has, until the 245D(4) order, exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority in relation to the case; preserves the power to regulate its own procedure; and applies mutatis mutandis to the Interim Board.
Heading: Powers and procedure of Settlement Commission.
Finance Act, 2026: Not amended.
Authorities digested: 5 (the powers conferred here are the engine of the section 245D jurisprudence).
A. SECTION COMMENTARY
1. Exclusive jurisdiction once seized
Section 245F is the source of the Commission's authority. Two ideas matter. First, the Commission has “all the powers which are vested in an income-tax authority under this Act” — it can do, within the case, whatever an Assessing Officer could do. Second, once an application is allowed to be proceeded with under section 245D, the Commission has, until the section 245D(4) order, exclusive jurisdiction over the case; the Assessing Officer is displaced for the duration. This exclusivity is what makes the settlement a single, comprehensive disposal.
2. Powers in aid of settlement, not at large
The powers of an income-tax authority are conferred for the purpose of settling the case, and are exercised subject to the provisions of the Chapter. The Commission acts by settlement, not by regular assessment (Brij Lal); its order must conform to the mandatory provisions of the Act (Ghaswala); and it cannot, after concluding, re-open under section 154 (Brij Lal; Kakadia Builders). The width of section 245F is thus bounded by the finality and mandatory-levy rules of the Chapter.
3. Comprehensiveness
Because the whole case is before it, the Commission completes the entire assessment as part of the settlement (Major Metals); it may examine the genuineness of transactions, apply section 68 and sustain penalty where the disclosure is coloured. Section 245F is the provision that confers the investigative and assessing reach to do so.
4. Procedure and fairness
Section 245F preserves the Commission's power to regulate its own procedure, but that power is subject to natural justice (R.B. Shreeram Durga Prasad) and to the scheme of section 245D. Under the Interim Board regime the section applies mutatis mutandis, so the Board exercises the same powers in disposing of pending applications.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245F.
(1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in an income-tax authority under this Act.
(2) Where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under sub-section (4) of section 245D, have, subject to the provisions of sub-section (3) of that section, exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under this Act in relation to the case :
Provided that where an application has been made under section 245C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made:
Provided further that where— (i) an application made on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245D; or (ii) an application is not allowed to be proceeded with under sub-section (2A) of section 245D, or, as the case may be, is declared invalid under sub-section (2C) of that section; or (iii) an application is not allowed to be further proceeded with under sub-section (2D) of section 245D, the Settlement Commission, in respect of such application shall have such exclusive jurisdiction upto the date on which the application is rejected, or, not allowed to be proceeded with, or, declared invalid, or, not allowed to be further proceeded with, as the case may be.
(3) Notwithstanding anything contained in sub-section (2) and in the absence of any express direction to the contrary by the Settlement Commission, nothing contained in this section shall affect the operation of any other provision of this Act requiring the applicant to pay tax on the basis of self-assessment in relation to the matters before the Settlement Commission.
(4) For the removal of doubt, it is hereby declared that, in the absence of any express direction by the Settlement Commission to the contrary, nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission.
(5) [***]
(6) [***]
(7) The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.
(8) On and from the 1st day of February, 2021, the powers and functions of the Settlement Commission under this section shall be exercised or performed, by the Interim Board and all the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
Words/sub-sections omitted by amendment carry the marker [***].
C. AUTHORITIES
Five decisions on the source, exclusivity and limits of the Commission's powers.
Cluster 1 — Source, exclusivity and limits of the power
Held: The Commission, seized of a case, exercises the powers of an income-tax authority but proceeds by settlement, not regular assessment; mandatory interest applies up to the 245D(1) order; and it cannot re-open a concluded settlement under section 154.
Relevance: Defines the reach and the outer limits of the section 245F power.
Held: The powers of an income-tax authority conferred by section 245F do not extend to waiving the Act's mandatory interest; the order must be in accordance with the Act.
Relevance: The mandatory-provisions limit on the section 245F power.
Held: The Commission cannot use section 154 to re-open a concluded settlement; its powers under section 245F do not include reopening for enhancement of interest.
Relevance: Confirms the finality limit on the section 245F power.
CIT v. Hindustan Bulk Carriers, (2003) 259 ITR 449 (SC)
Held: Until it makes an order under section 245D, the Commission has exclusive jurisdiction to exercise the powers and functions of an income-tax authority in relation to the case (section 245F(2)); mandatory interest must be reckoned within that jurisdiction.
Relevance: Direct authority on the exclusive-jurisdiction limb of section 245F(2).
Major Metals Ltd. v. Union of India, (2012) 207 Taxman 185 (Bom)
Citation: (2012) 207 Taxman 185 (Bom).
Held: Exercising the powers of an income-tax authority, the Commission completes the entire assessment as part of the settlement and may apply section 68 and penalty where the disclosure is not genuine.
Relevance: Illustrates the comprehensiveness of the section 245F power in practice.
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 245F — Powers and Procedure of Settlement Commission
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Vests the Commission with all the powers of an income-tax authority under the Act; on an application being allowed to be proceeded with, the Commission has, until the 245D(4) order, exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority in relation to the case; preserves the power to regulate its own procedure; and applies mutatis mutandis to the Interim Board.
Heading: Powers and procedure of Settlement Commission.
Finance Act, 2026: Not amended.
Authorities digested: 5 (the powers conferred here are the engine of the section 245D jurisprudence).
A. SECTION COMMENTARY
1. Exclusive jurisdiction once seized
Section 245F is the source of the Commission's authority. Two ideas matter. First, the Commission has “all the powers which are vested in an income-tax authority under this Act” — it can do, within the case, whatever an Assessing Officer could do. Second, once an application is allowed to be proceeded with under section 245D, the Commission has, until the section 245D(4) order, exclusive jurisdiction over the case; the Assessing Officer is displaced for the duration. This exclusivity is what makes the settlement a single, comprehensive disposal.
2. Powers in aid of settlement, not at large
The powers of an income-tax authority are conferred for the purpose of settling the case, and are exercised subject to the provisions of the Chapter. The Commission acts by settlement, not by regular assessment (Brij Lal); its order must conform to the mandatory provisions of the Act (Ghaswala); and it cannot, after concluding, re-open under section 154 (Brij Lal; Kakadia Builders). The width of section 245F is thus bounded by the finality and mandatory-levy rules of the Chapter.
3. Comprehensiveness
Because the whole case is before it, the Commission completes the entire assessment as part of the settlement (Major Metals); it may examine the genuineness of transactions, apply section 68 and sustain penalty where the disclosure is coloured. Section 245F is the provision that confers the investigative and assessing reach to do so.
4. Procedure and fairness
Section 245F preserves the Commission's power to regulate its own procedure, but that power is subject to natural justice (R.B. Shreeram Durga Prasad) and to the scheme of section 245D. Under the Interim Board regime the section applies mutatis mutandis, so the Board exercises the same powers in disposing of pending applications.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245F.
(1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in an income-tax authority under this Act.
(2) Where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under sub-section (4) of section 245D, have, subject to the provisions of sub-section (3) of that section, exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under this Act in relation to the case :
Provided that where an application has been made under section 245C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made:
Provided further that where— (i) an application made on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245D; or (ii) an application is not allowed to be proceeded with under sub-section (2A) of section 245D, or, as the case may be, is declared invalid under sub-section (2C) of that section; or (iii) an application is not allowed to be further proceeded with under sub-section (2D) of section 245D, the Settlement Commission, in respect of such application shall have such exclusive jurisdiction upto the date on which the application is rejected, or, not allowed to be proceeded with, or, declared invalid, or, not allowed to be further proceeded with, as the case may be.
(3) Notwithstanding anything contained in sub-section (2) and in the absence of any express direction to the contrary by the Settlement Commission, nothing contained in this section shall affect the operation of any other provision of this Act requiring the applicant to pay tax on the basis of self-assessment in relation to the matters before the Settlement Commission.
(4) For the removal of doubt, it is hereby declared that, in the absence of any express direction by the Settlement Commission to the contrary, nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission.
(5) [***]
(6) [***]
(7) The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.
(8) On and from the 1st day of February, 2021, the powers and functions of the Settlement Commission under this section shall be exercised or performed, by the Interim Board and all the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
Words/sub-sections omitted by amendment carry the marker [***].
C. AUTHORITIES
Five decisions on the source, exclusivity and limits of the Commission's powers.
Cluster 1 — Source, exclusivity and limits of the power
Brij Lal v. CIT, (2010) 328 ITR 477 (SC) (Constitution Bench)
Citation: (2010) 328 ITR 477 (SC); five-Judge Bench.
Held: The Commission, seized of a case, exercises the powers of an income-tax authority but proceeds by settlement, not regular assessment; mandatory interest applies up to the 245D(1) order; and it cannot re-open a concluded settlement under section 154.
Relevance: Defines the reach and the outer limits of the section 245F power.
CIT v. Anjum M.H. Ghaswala, (2001) 252 ITR 1 (SC) (Constitution Bench)
Citation: (2001) 252 ITR 1 (SC) (Constitution Bench).
Held: The powers of an income-tax authority conferred by section 245F do not extend to waiving the Act's mandatory interest; the order must be in accordance with the Act.
Relevance: The mandatory-provisions limit on the section 245F power.
Kakadia Builders Pvt. Ltd. v. ITO, (2019) 412 ITR 128 (SC)
Citation: (2019) 412 ITR 128 (SC).
Held: The Commission cannot use section 154 to re-open a concluded settlement; its powers under section 245F do not include reopening for enhancement of interest.
Relevance: Confirms the finality limit on the section 245F power.
CIT v. Hindustan Bulk Carriers, (2003) 259 ITR 449 (SC)
Citation: (2003) 259 ITR 449 (SC); three-Judge Bench.
Held: Until it makes an order under section 245D, the Commission has exclusive jurisdiction to exercise the powers and functions of an income-tax authority in relation to the case (section 245F(2)); mandatory interest must be reckoned within that jurisdiction.
Relevance: Direct authority on the exclusive-jurisdiction limb of section 245F(2).
Major Metals Ltd. v. Union of India, (2012) 207 Taxman 185 (Bom)
Citation: (2012) 207 Taxman 185 (Bom).
Held: Exercising the powers of an income-tax authority, the Commission completes the entire assessment as part of the settlement and may apply section 68 and penalty where the disclosure is not genuine.
Relevance: Illustrates the comprehensiveness of the section 245F power in practice.
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.