Section 245BB: Vice-Chairman Acting as Chairman of the Settlement Commission
Section 245BB prescribed temporary leadership arrangements for the former Income-tax Settlement Commission when its Chairman's post was vacant or the Chairman could not perform official functions.
Meaning and purpose of Section 245BB
Section 245BB of the Income-tax Act, 1961 dealt with continuity in the office of Chairman of the Income-tax Settlement Commission. The term Chairman referred to the head of the former Commission; Vice-Chairman referred to a statutory member holding that designation; and an Official Gazette notification was the formal government instrument used to authorise a particular Vice-Chairman where required.
The provision distinguished a vacancy, when there was no incumbent Chairman, from a temporary inability, when an incumbent Chairman remained in office but could not discharge duties.
Explanation of the statutory provisions
Section 245BB(1): Vacancy in the office of Chairman
Where the office of Chairman became vacant because of death, resignation or another reason, the Vice-Chairman, or one of the Vice-Chairmen authorised by the Central Government through notification in the Official Gazette, was to act as Chairman until a newly appointed Chairman entered upon office.
This was a temporary succession arrangement. The acting Chairman's role ended when the replacement Chairman formally assumed office. The section did not itself prescribe the substantive procedure for appointing the new Chairman; that must be read with the other provisions of Chapter XIX-A.
Section 245BB(2): Chairman unable to discharge functions
If the Chairman was unable to perform duties because of absence, illness or any other cause, the Vice-Chairman, or a Vice-Chairman duly authorised by the Central Government through an Official Gazette notification, was to discharge the Chairman's functions until the Chairman resumed duties.
Unlike sub-section (1), this situation did not require a permanent vacancy. It covered a temporary interruption in the Chairman's ability to function.
Legislative origin
Section 245BB was inserted by Section 59 of the Finance Act, 1987 (Act 11 of 1987), with effect from 1 June 1987. Its historical text must be interpreted with the law applicable to the relevant period.
Position after the Settlement Commission was discontinued
The Finance Act, 2021 changed the settlement framework with effect from 1 February 2021. The Income-tax Settlement Commission ceased to operate and fresh settlement applications to that former body were discontinued. Section 245AA provided for Interim Boards for Settlement, while Section 245M addressed transitional pending applications, including specified withdrawal options and consequences.
Accordingly, the former Chairman/Vice-Chairman succession rules in Section 245BB should not be treated as the governing composition or leadership rules for Interim Boards. For an existing or historical settlement matter, identify the relevant filing date, status of the application, transitional provision and applicable notifications.
The Income-tax Act, 2025 came into force on 1 April 2026. Its repeal and savings framework must be considered for earlier proceedings; the former Settlement Commission leadership provision should not be assumed to have an identical, currently operative successor provision.
Practical illustrations
Example 1: Chairman's office becomes vacant
Under the former regime, if the Chairman resigned, the Vice-Chairman authorised in accordance with Section 245BB(1) could act as Chairman until the newly appointed Chairman entered office.
Example 2: Temporary illness or absence
If the Chairman remained in office but was temporarily unable to work, Section 245BB(2) permitted the appropriate Vice-Chairman to discharge those functions until the Chairman resumed duties.
Example 3: Pending settlement proceeding after 2021
A taxpayer with a historical settlement application must look to the applicable transitional law and Interim Board process, not simply rely on Section 245BB to identify the present decision-making authority.
Frequently asked questions
What did Section 245BB provide?
It prescribed who could act as Chairman of the Income-tax Settlement Commission when the Chairman's office was vacant or when the Chairman was temporarily unable to perform duties.
Could a Vice-Chairman automatically act during every vacancy?
The provision contemplated the Vice-Chairman, or one of several Vice-Chairmen authorised by Central Government notification, acting until the newly appointed Chairman assumed office.
Can taxpayers file new settlement applications with the former Commission?
No. The Income-tax Settlement Commission ceased operating with effect from 1 February 2021, and fresh applications under the former settlement procedure are not available.
Does Section 245BB govern Interim Boards for Settlement?
No. Section 245BB concerned the former Commission's Chairman. Transitional settlement matters are governed by the applicable provisions concerning Interim Boards, including sections 245AA and 245M, and relevant notifications.
Official legal resources
- Income Tax Department - Income-tax Act, 1961 (consult Chapter XIX-A and historical versions)
- Income Tax Department - official website (notifications and statutory updates)
- India Code - Central legislation (Finance Act, 1987, Finance Act, 2021 and Income-tax Act, 2025)
- e-Gazette of India (official notifications)
This article explains the legal framework for general information. Historical settlement cases may be affected by amendments, notifications, judicial decisions and statutory savings provisions applicable to their dates.