Section 245HAA — Credit for Tax Paid in Case of Abatement of Proceedings
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Where an application made on or after 1 June 2007 is rejected under section 245D(1), or is not allowed to be proceeded with/declared invalid/not further proceeded with under the specified sub-sections of section 245D, or no order under section 245D(4) is passed within the specified time, the Assessing Officer is to allow credit for the tax and interest paid on or before the date of the application or during the pendency of the case.
Heading: Credit for tax paid in case of abatement of proceedings.
Finance Act, 2026: Not amended.
Authorities digested: 1 (candour rule — a consequential credit/machinery provision).
A. SECTION COMMENTARY
1. A protective credit on abatement
Section 245HAA is the natural companion to section 245HA. When a settlement falls through — by rejection, invalidity, non-continuation or the Commission's failure to pass a timely order — the applicant will have paid tax and interest on the disclosed income (a condition of pursuing settlement). Section 245HAA ensures that this payment is not lost: the Assessing Officer, taking up the abated case, must allow credit for the tax and interest paid before or during the settlement. It prevents double payment and unjust enrichment of the Revenue.
2. Candour note
The provision is purely consequential machinery and is not, on its own terms, litigated; the contested question (whether a proceeding abated, and whether for reasons attributable to the applicant) is fought under section 245HA, where the credit then follows automatically. No reported decision turning specifically on section 245HAA has been traced; this is stated candidly.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245HAA. Where an application made under section 245C on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245D, or any other application made under section 245C is not allowed to be proceeded with under sub-section (2A) of section 245D or is declared invalid under sub-section (2C) of section 245D or has not been allowed to be further proceeded with under sub-section (2D) of section 245D or an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the Assessing Officer shall allow the credit for the tax and interest paid on or before the date of making the application or during the pendency of the case before the Settlement Commission.
C. AUTHORITIES
Consequential credit provision; candour rule. The governing contest is under section 245HA.
Cluster 1 — Candour / cross-reference
Star Television News Ltd. v. Union of India, (2009) 317 ITR 260 (Bom) [cross-reference]
Held / relevance: Having read down section 245HA so that abatement follows only on the applicant's default, the abatement-and-credit scheme operates fairly; the section 245HAA credit then follows. No decision specific to section 245HAA has been traced; stated candidly.
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 245HAA — Credit for Tax Paid in Case of Abatement of Proceedings
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Where an application made on or after 1 June 2007 is rejected under section 245D(1), or is not allowed to be proceeded with/declared invalid/not further proceeded with under the specified sub-sections of section 245D, or no order under section 245D(4) is passed within the specified time, the Assessing Officer is to allow credit for the tax and interest paid on or before the date of the application or during the pendency of the case.
Heading: Credit for tax paid in case of abatement of proceedings.
Finance Act, 2026: Not amended.
Authorities digested: 1 (candour rule — a consequential credit/machinery provision).
A. SECTION COMMENTARY
1. A protective credit on abatement
Section 245HAA is the natural companion to section 245HA. When a settlement falls through — by rejection, invalidity, non-continuation or the Commission's failure to pass a timely order — the applicant will have paid tax and interest on the disclosed income (a condition of pursuing settlement). Section 245HAA ensures that this payment is not lost: the Assessing Officer, taking up the abated case, must allow credit for the tax and interest paid before or during the settlement. It prevents double payment and unjust enrichment of the Revenue.
2. Candour note
The provision is purely consequential machinery and is not, on its own terms, litigated; the contested question (whether a proceeding abated, and whether for reasons attributable to the applicant) is fought under section 245HA, where the credit then follows automatically. No reported decision turning specifically on section 245HAA has been traced; this is stated candidly.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245HAA. Where an application made under section 245C on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245D, or any other application made under section 245C is not allowed to be proceeded with under sub-section (2A) of section 245D or is declared invalid under sub-section (2C) of section 245D or has not been allowed to be further proceeded with under sub-section (2D) of section 245D or an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the Assessing Officer shall allow the credit for the tax and interest paid on or before the date of making the application or during the pendency of the case before the Settlement Commission.
C. AUTHORITIES
Consequential credit provision; candour rule. The governing contest is under section 245HA.
Cluster 1 — Candour / cross-reference
Star Television News Ltd. v. Union of India, (2009) 317 ITR 260 (Bom) [cross-reference]
Held / relevance: Having read down section 245HA so that abatement follows only on the applicant's default, the abatement-and-credit scheme operates fairly; the section 245HAA credit then follows. No decision specific to section 245HAA has been traced; stated candidly.
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.