Income-tax Act, 1961 | Settlement of cases

Section 245BC: Power of Chairman to Transfer Cases from One Bench to Another

Section 245BC dealt with the power of the Chairman of the erstwhile Income-tax Settlement Commission to transfer a pending settlement case from one Bench to another. The provision is now chiefly relevant to the historical and transitional settlement framework.

Current legal position: The Income-tax Settlement Commission ceased to operate with effect from 1 February 2021. Fresh settlement applications before that Commission were discontinued; qualifying pending applications were dealt with under the transitional provisions for Interim Boards for Settlement. Section 245BC should not be read as a presently available mechanism for moving a new settlement application between Commission Benches.

What did Section 245BC provide?

The provision authorised the Chairman to transfer any case pending before one Bench of the Settlement Commission to another Bench for disposal. The Chairman could exercise this power either following an application by an eligible party or on the Chairman's own motion.

1. Transfer on an application

An application could be made by the assessee or the relevant Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner. The section required notice to the parties and an opportunity for those whom the Chairman desired to hear before deciding the transfer.

2. Transfer on the Chairman's own motion

The Chairman could also initiate a transfer suo motu (on the Chairman's own initiative), without the notice otherwise specified for an application-based transfer. The provision did not itself prescribe a fixed number of days for making or deciding a transfer request.

3. Effect of a transfer

A transfer changed the Bench responsible for disposing of the pending case; it did not, by itself, decide the tax liability or amount of settlement. Other provisions of Chapter XIX-A governed the substantive settlement process.

Section 245BC - statutory provision explained

In substance, the section stated that, on the application of the assessee or the designated senior income-tax authorities, and after giving notice and hearing such persons as the Chairman wished to hear, or on the Chairman's own motion without such notice, the Chairman could transfer a case pending before one Bench to another Bench for disposal.

The provision was inserted by the Finance Act, 1987 (Act 11 of 1987), with effect from 1 June 1987. Later amendments updated the designations of the tax authorities, including changes made through the Income-tax Act's administrative terminology.

Relationship with other settlement provisions

Section 245A: Definitions used in the settlement chapter, including the meaning of a case and the Settlement Commission.
Section 245B: Constitution and composition of the Income-tax Settlement Commission.
Section 245BA: Jurisdiction, powers and composition of the Commission's Benches.
Section 245BB: Acting arrangements when the Chairman's office was vacant or the Chairman was unable to act.
Section 245BD: Decision-making by majority.
Sections 245C and 245D: Applications for settlement and procedures for considering them.

Changes from 2021 and the Income-tax Act, 2025

The Finance Act, 2021 introduced a transitional regime following the discontinuation of the Income-tax Settlement Commission from 1 February 2021. Section 245AA provided for Interim Boards for Settlement, while Section 245M addressed the treatment of pending settlement applications, including eligible withdrawal options under the applicable rules.

The Income-tax Act, 2025, which commenced on 1 April 2026, reorganised the income-tax law. Section 245BC remains important for understanding actions taken under the former Commission structure, but it should not be treated as a fresh, stand-alone transfer remedy under the 2025 Act. The precise treatment of an older matter depends on the relevant savings and transitional provisions, orders and procedural rules.

Illustrative example

Before the 2021 change, if a settlement application was pending before one Bench and a transfer was considered appropriate, the assessee could request the Chairman to move the case to another Bench. The Chairman would consider the application under Section 245BC, after the notice and hearing contemplated by that provision. This example describes the former Commission procedure, not a presently available route for new applications.

Frequently asked questions

What was the purpose of Section 245BC?

It enabled the Chairman of the Income-tax Settlement Commission to transfer a pending settlement case from one Bench to another for disposal.

Who could apply for transfer?

The assessee or the specified Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner could apply. The Chairman could also act on the Chairman's own motion.

Was a hearing compulsory in every transfer?

For an application-based transfer, the section contemplated notice and hearing of such persons as the Chairman desired to hear. It expressly allowed a transfer on the Chairman's own motion without that notice.

Can a new application be filed before the old Settlement Commission?

No. The former Commission ceased operating from 1 February 2021. Historical and transitional matters must be examined under the specific applicable legal framework.

Official legal references

Income-tax Department - Income-tax Act, 1961 (consult Chapter XIX-A and the applicable historical version).
Income Tax Department e-Filing Portal - official taxpayer information and services.
India Code - official central legislation repository; consult the Finance Act, 2021 and Income-tax Act, 2025.

Editorial note: This article distinguishes the historical Section 245BC procedure from later transitional arrangements. For a pending dispute, refer to the text applicable to the relevant date and any case-specific order.