Section 245K — Bar on Subsequent Application for Settlement
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Bars a person from approaching the Commission a second time in the contingencies specified — where a settlement order has provided for imposition of penalty on the ground of concealment, or the person was convicted of an offence after settlement, or the case was sent back to the Assessing Officer; and bars any further application by a person (and related persons/entities) once an application has been made under section 245C, making settlement a once-in-a-lifetime relief; with the definition of related persons including the karta of an HUF.
Heading: Bar on subsequent application for settlement.
Finance Act, 2026: Not amended.
Authorities digested: 2 (candour-leaning — a structural ‘once-only’ bar; little merits litigation).
A. SECTION COMMENTARY
1. Settlement is a once-in-a-lifetime relief
Section 245K closes the door on repeat use of the settlement mechanism. Two distinct bars operate. The first (sub-section (1)) disentitles a person who has already had a settlement that recorded concealment-penalty, or who was convicted of an offence after a settlement, or whose case was sent back — i.e. those who abused or failed the process. The second (sub-section (2)) bars any further application by a person, and by related persons and entities, once an application has been made under section 245C — converting settlement into a single, once-in-a-lifetime opportunity for an applicant and his connected group.
2. Object — to prevent serial settlements
The object is to prevent the machinery from being used as a recurring shelter. A taxpayer cannot settle, return to old ways, and settle again; nor can a group rotate applications among its members and related entities to launder successive tranches of undisclosed income. The bar is therefore both personal and group-wide, with the related-person definition (including the karta of an HUF) drawn widely to prevent circumvention.
3. Candour note
Section 245K is structural and largely self-executing; its application is generally a matter of record (has the person, or a related person, applied before?). Little merits litigation has gathered around it, and no reported decision of significance turning specifically on section 245K has been traced. The bar is read with the object of the Chapter as stated by the Supreme Court in B.N. Bhattacharjee — settlement as a conditional, non-recurring privilege.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245K.
(1) Where— (i) an order of settlement passed under sub-section (4) of section 245D provides for the imposition of a penalty on the person who made the application under section 245C for settlement, on the ground of concealment of particulars of his income; or (ii) after the passing of an order of settlement under the said sub-section (4) in relation to a case, such person is convicted of any offence under Chapter XXII in relation to that case; or (iii) the case of such person was sent back to the Assessing Officer by the Settlement Commission on or before the 1st day of June, 2002, then, he or any person related to such person (herein referred to as related person) shall not be entitled to apply for settlement under section 245C in relation to any other matter.
(2) Where a person has made an application under section 245C on or after the 1st day of June, 2007 and if such application has been allowed to be proceeded with under sub-section (1) of section 245D, such person or any related person shall not be subsequently entitled to make an application under section 245C.
Explanation.—For the purposes of this section, "related person" with respect to a person means,— (i) where such person is an individual, any company in which such person holds more than fifty per cent of the shares or voting rights at any time, or any firm or association of persons or body of individuals in which such person is entitled to more than fifty per cent of the profits at any time, or any Hindu undivided family in which such person is a karta; (ii) where such person is a company, any individual who held more than fifty per cent of the shares or voting rights in such company at any time before the date of application before the Settlement Commission by such person; (iii) where such person is a firm or association of persons or body of individuals, any individual who was entitled to more than fifty per cent of the profits in such firm, association of persons or body of individuals, at any time before the date of application before the Settlement Commission by such person; (iv) where such person is a Hindu undivided family, the karta of that Hindu undivided family.
C. AUTHORITIES
Structural ‘once-only’ bar; the governing object is the conditional, non-recurring character of the settlement privilege.
Cluster 1 — Object of the bar
CIT v. B.N. Bhattacharjee, (1979) 118 ITR 461 (SC) [object]
Held / relevance: Settlement is a conditional privilege, not a right at large; the Chapter is hedged with conditions. This object underlies the once-only bar in section 245K. Cited for the object of the Chapter; no decision specific to section 245K has been traced.
Position: No reported decision construing section 245K on its merits has been traced. Its application is ordinarily a question of record (a prior application by the person or a related person). Stated candidly rather than padded with inapposite citation.
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 245K — Bar on Subsequent Application for Settlement
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Bars a person from approaching the Commission a second time in the contingencies specified — where a settlement order has provided for imposition of penalty on the ground of concealment, or the person was convicted of an offence after settlement, or the case was sent back to the Assessing Officer; and bars any further application by a person (and related persons/entities) once an application has been made under section 245C, making settlement a once-in-a-lifetime relief; with the definition of related persons including the karta of an HUF.
Heading: Bar on subsequent application for settlement.
Finance Act, 2026: Not amended.
Authorities digested: 2 (candour-leaning — a structural ‘once-only’ bar; little merits litigation).
A. SECTION COMMENTARY
1. Settlement is a once-in-a-lifetime relief
Section 245K closes the door on repeat use of the settlement mechanism. Two distinct bars operate. The first (sub-section (1)) disentitles a person who has already had a settlement that recorded concealment-penalty, or who was convicted of an offence after a settlement, or whose case was sent back — i.e. those who abused or failed the process. The second (sub-section (2)) bars any further application by a person, and by related persons and entities, once an application has been made under section 245C — converting settlement into a single, once-in-a-lifetime opportunity for an applicant and his connected group.
2. Object — to prevent serial settlements
The object is to prevent the machinery from being used as a recurring shelter. A taxpayer cannot settle, return to old ways, and settle again; nor can a group rotate applications among its members and related entities to launder successive tranches of undisclosed income. The bar is therefore both personal and group-wide, with the related-person definition (including the karta of an HUF) drawn widely to prevent circumvention.
3. Candour note
Section 245K is structural and largely self-executing; its application is generally a matter of record (has the person, or a related person, applied before?). Little merits litigation has gathered around it, and no reported decision of significance turning specifically on section 245K has been traced. The bar is read with the object of the Chapter as stated by the Supreme Court in B.N. Bhattacharjee — settlement as a conditional, non-recurring privilege.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
245K.
(1) Where— (i) an order of settlement passed under sub-section (4) of section 245D provides for the imposition of a penalty on the person who made the application under section 245C for settlement, on the ground of concealment of particulars of his income; or (ii) after the passing of an order of settlement under the said sub-section (4) in relation to a case, such person is convicted of any offence under Chapter XXII in relation to that case; or (iii) the case of such person was sent back to the Assessing Officer by the Settlement Commission on or before the 1st day of June, 2002, then, he or any person related to such person (herein referred to as related person) shall not be entitled to apply for settlement under section 245C in relation to any other matter.
(2) Where a person has made an application under section 245C on or after the 1st day of June, 2007 and if such application has been allowed to be proceeded with under sub-section (1) of section 245D, such person or any related person shall not be subsequently entitled to make an application under section 245C.
Explanation.—For the purposes of this section, "related person" with respect to a person means,— (i) where such person is an individual, any company in which such person holds more than fifty per cent of the shares or voting rights at any time, or any firm or association of persons or body of individuals in which such person is entitled to more than fifty per cent of the profits at any time, or any Hindu undivided family in which such person is a karta; (ii) where such person is a company, any individual who held more than fifty per cent of the shares or voting rights in such company at any time before the date of application before the Settlement Commission by such person; (iii) where such person is a firm or association of persons or body of individuals, any individual who was entitled to more than fifty per cent of the profits in such firm, association of persons or body of individuals, at any time before the date of application before the Settlement Commission by such person; (iv) where such person is a Hindu undivided family, the karta of that Hindu undivided family.
C. AUTHORITIES
Structural ‘once-only’ bar; the governing object is the conditional, non-recurring character of the settlement privilege.
Cluster 1 — Object of the bar
CIT v. B.N. Bhattacharjee, (1979) 118 ITR 461 (SC) [object]
Held / relevance: Settlement is a conditional privilege, not a right at large; the Chapter is hedged with conditions. This object underlies the once-only bar in section 245K. Cited for the object of the Chapter; no decision specific to section 245K has been traced.
Candour — direct authority on section 245K
Position: No reported decision construing section 245K on its merits has been traced. Its application is ordinarily a question of record (a prior application by the person or a related person). Stated candidly rather than padded with inapposite citation.
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.