Income Tax Law / Settlement of Cases

Section 245A of the Income-tax Act, 1961: Definitions and Settlement Cases

Section 245A of the Income-tax Act, 1961 defines the expressions used in Chapter XIX-A, the former settlement-of-cases framework. Its significance today is principally historical and transitional: the Income-tax Settlement Commission ceased operating from 1 February 2021, and eligible pending applications were assigned to Interim Boards for Settlement.

Legal position in 2026: The Income-tax Act, 2025 took effect on 1 April 2026. The official statutory concordance identifies section 245A as redundant, without a direct corresponding section in the 2025 Act. This article explains the 1961 Act provisions relevant to earlier and saved proceedings; it does not suggest that new Settlement Commission applications can now be filed.

Meaning and scope of Section 245A

The introductory words "In this Chapter, unless the context otherwise requires" make the definitions applicable throughout Chapter XIX-A. They do not create an independent entitlement to settlement or override the conditions for an application under section 245C.

Definitions under clauses (a) to (g)

Clause (a): Bench

A Bench means a Bench of the Income-tax Settlement Commission. References to a Bench in transitional proceedings must be read together with the statutory modifications applicable to the Interim Board.

Clause (b): Case

A case means a proceeding for assessment under the 1961 Act relating to one or more assessment years that was pending before an Assessing Officer on the date of an application under section 245C(1). The Explanation specifies when certain proceedings are treated as having commenced or concluded.

Explanation to clause (b): when assessment proceedings begin or end

  • Reassessment or recomputation under section 147: the proceeding is treated as commencing when a notice under section 148 is issued; the Explanation also addresses connected years for which a notice could have been issued in the specified circumstances.
  • Fresh assessment following appellate or revision orders: where an order under section 254, 263 or 264 sets aside or cancels an assessment, the fresh assessment proceeding is treated as commencing on the date of that order.
  • Proceedings under sections 153A and 153C: the specified proceedings commence on issue of the initiating notice and conclude when the assessment is made.
  • Other assessment proceedings: generally commence when a return under section 139 or in response to section 142 is furnished, and conclude upon assessment or expiry of the applicable time limit under section 153(1), as provided by the Explanation.

These rules describe the statutory meaning of a pending case in the former settlement regime. They must be applied using the text and amendments relevant to the particular proceeding.

Clause (c): Chairman

The Chairman is the Chairman of the Income-tax Settlement Commission.

Clause (d): Income-tax authority

An income-tax authority is an authority specified in section 116 of the Income-tax Act, 1961.

Clause (da): Interim Board

An Interim Board means an Interim Board for Settlement constituted under section 245AA. This definition was added in connection with the 2021 transition.

Clause (e): Member

A Member of the Settlement Commission includes its Chairman and Vice-Chairman.

Clause (ea): Member of the Interim Board

A Member of the Interim Board means a member of that Board, distinct from the defined members of the former Settlement Commission.

Clause (eb): Pending application

A pending application is an application filed under section 245C that (i) was not declared invalid under section 245D(2C), and (ii) had not been disposed of by an order under section 245D(4) on or before 31 January 2021. These cumulative conditions are essential to the transitional definition.

Clause (f): Settlement Commission

The Settlement Commission means the Income-tax Settlement Commission constituted under section 245B. Under the changes effective 1 February 2021, the Commission ceased to operate.

Clause (g): Vice-Chairman

The Vice-Chairman is a Vice-Chairman of the Settlement Commission and includes the senior Member of a Bench in the circumstances specified by the clause.

Settlement Commission and Interim Board: the 2021 transition

Under section 245AA, the Central Government may constitute Interim Boards to deal with qualifying pending applications. Each Board has three members of the rank of Chief Commissioner, and differences of opinion are decided by majority. Section 245D(9) adapts specified procedural provisions to pending applications before an Interim Board.

The CBDT Notification No. 91/2021 established Interim Boards, while the e-Settlement Scheme, 2021 sets out electronic procedures for qualifying matters.

Position under the Income-tax Act, 2025

The Income-tax Act, 2025 applies from 1 April 2026, subject to its repeal, savings and transitional provisions. The Income Tax Department's section-mapping navigator labels the old section 245A as redundant; there is no direct replacement definition section for the discontinued Settlement Commission framework. Existing rights, liabilities and proceedings must be assessed under the applicable saving provisions rather than assuming that the former settlement mechanism remains open for fresh applications.

Practical illustration

Suppose an application under section 245C was filed before 1 February 2021, was not declared invalid under section 245D(2C), and had no section 245D(4) order by 31 January 2021. It may fall within the definition of a pending application under clause (eb), subject to the remaining applicable transitional rules. By contrast, a taxpayer cannot treat an assessment initiated in 2026 as a new application eligible for the discontinued Settlement Commission route.

Frequently asked questions

Does Section 245A itself settle an income-tax dispute?

No. It is a definitions provision. The substantive former application and procedure rules were found in sections 245C and 245D.

Can a fresh application be filed before the Settlement Commission in 2026?

No. The Commission ceased operating from 1 February 2021; the Interim Boards were constituted for qualifying pending applications.

What does pending application mean?

It refers to an application under section 245C that meets both conditions in section 245A(eb), including the 31 January 2021 cut-off.

Is there an equivalent Section 245A in the 2025 Act?

The official mapping identifies the old section as redundant and provides no direct counterpart.

Official legislation and references

Updated: 27 October 2026. This article provides general statutory information; application to an individual matter depends on the relevant assessment year, saved proceedings and subsequent legal developments.