Income-tax Act, 1961 | Chapter XIX-A | Historical and transitional provision
Section 245BA: Jurisdiction and Powers of the Income-tax Settlement Commission
Section 245BA explained how the Income-tax Settlement Commission exercised its jurisdiction through principal, additional and special Benches. Since the Commission ceased operating from 1 February 2021, these rules primarily explain the former institutional framework, rather than a presently available route for filing new settlement applications.
What did Section 245BA provide?
The provision governed the allocation and exercise of jurisdiction by Benches of the former Income-tax Settlement Commission. A Bench was a panel of members authorised to hear settlement cases. The principal Bench was presided over by the Chairman; other Benches were additional Benches. A Special Bench could be constituted for a particular case with more than three members.
The Settlement Commission was established under section 245B. Section 245BA concerned the organisation of its Benches, not an independent entitlement to settle a tax dispute.
Section 245BA: Explanation of each subsection
Subsection (1): Jurisdiction exercised by Benches
Subject to Chapter XIX-A, the jurisdiction, powers and authority of the Settlement Commission could be exercised through its Benches. The power was institutional and depended on the other statutory conditions for settlement proceedings.
Subsection (2): Ordinary composition
An ordinary Bench was presided over by the Chairman or a Vice-Chairman and comprised two additional members. Thus, the ordinary statutory composition was three members.
Subsection (3): Principal and additional Benches
The Bench presided over by the Chairman was the principal Bench. Other Benches were designated additional Benches.
Subsection (4): Members serving across Benches
The Chairman could authorise a Vice-Chairman or member appointed to one Bench to discharge the corresponding functions of another Bench. This enabled administrative flexibility.
Subsection (5): Temporary two-member functioning
Where a presiding officer or member was unavailable because of absence, illness, vacancy or another cause, the remaining two members could function as a Bench, subject to applicable rules. If the presiding officer was unavailable, the senior remaining member would preside. If a case warranted hearing by three members, the presiding officer could refer it to the Chairman for transfer to an appropriate Bench.
Subsection (5A): Special Bench
The Chairman could constitute a Special Bench of more than three members to dispose of a particular case, notwithstanding the ordinary Bench-composition provisions.
Subsection (6): Places of sitting
The Central Government could notify the ordinary sitting locations of principal and additional Benches in the Official Gazette. The Chairman determined the sitting place of a Special Bench.
What changed in 2021 and under the Income-tax Act, 2025?
The Finance Act, 2021 discontinued the Income-tax Settlement Commission with effect from 1 February 2021. New settlement applications under section 245C were barred from that date. For qualifying applications already pending, section 245AA provides for Interim Boards for Settlement, each comprising three officers of Chief Commissioner rank, with decisions by majority.
Under section 245D(9), specified procedural provisions apply to applications allotted to Interim Boards with substitutions such as "Interim Board" for "Settlement Commission" and "Bench". These adaptations should not be mistaken for continued operation of the former Benches under section 245BA.
The Income-tax Act, 2025 took effect on 1 April 2026. Section 245BA should not be presented as an operative mechanism for fresh settlement applications under that Act. For proceedings arising under the 1961 Act, the applicable transitional and saving provisions, particularly section 536 of the 2025 Act, must be examined on the facts.
Practical illustrations
Example 1: Former Bench composition. Before discontinuance, a routine settlement case could be heard by a three-member Bench chaired by the Chairman or a Vice-Chairman under subsection (2).
Example 2: Member unavailable. If one member was absent, the remaining two could act within subsection (5), subject to rules; a case requiring a three-member Bench could be referred for transfer.
Example 3: Application pending in January 2021. The applicant should determine whether the application met the statutory definition of a pending application and was assigned to an Interim Board, rather than assume that the former Settlement Commission remains available.
Frequently asked questions
Is the Income-tax Settlement Commission still accepting new applications?
No. The former Commission ceased operating from 1 February 2021, and no new section 245C settlement application could be made on or after that date.
What was a Special Bench under section 245BA?
It was a Bench consisting of more than three members, constituted by the Chairman for a particular case under subsection (5A).
Are Interim Boards the same as the former Settlement Commission Benches?
No. Interim Boards are a distinct statutory transitional mechanism constituted under section 245AA for eligible pending applications.
Does section 245BA govern new income-tax cases in 2026?
It is a historical provision explaining the former Commission. New cases must be considered under the currently applicable law, while older matters may require examination of repeal and savings provisions.
Official statutory sources
- Income Tax Department: Section 245BA, statutory text
- Income Tax Department: Section 245AA, Interim Boards for Settlement
- Income Tax Department: Section 245D, transitional procedures
- Income Tax Department: Income-tax Act, 2025 and transition guidance
Legislative history: Section 245BA was inserted by the Finance Act, 1987 with effect from 1 June 1987. Subsection (5A), authorising a Special Bench of more than three members, was inserted by the Finance (No. 2) Act, 1991 with effect from 1 October 1991. This article is an explanatory guide; the statutory text and transitional provisions control.