Section 245DD: Power of Settlement Commission to Order Provisional Attachment to Protect Revenue
Section 245DD of the Income-tax Act, 1961 empowered the erstwhile Income-tax Settlement Commission to order provisional attachment of an applicant's property during a pending settlement proceeding where attachment was necessary to protect the interests of revenue. This article explains the legal conditions, duration, relationship with Section 281B and the position after the Settlement Commission's discontinuation.
Meaning and purpose of provisional attachment
Provisional attachment is a temporary protective restraint over specified property intended to prevent dissipation of assets before potential tax liabilities are secured. It is distinct from a final tax recovery or a determination that the property is forfeited. Section 245DD specifically concerned property belonging to the applicant and required an opinion that attachment was necessary to protect revenue during the pendency of proceedings before the Settlement Commission.
Section 245DD(1): Power to attach property
Under sub-section (1), during a proceeding pending before it, the Settlement Commission could, by order, provisionally attach any property belonging to the applicant if it considered such action necessary for protecting revenue. The attachment was to be carried out in the manner prescribed in the Second Schedule to the 1961 Act, which contains procedural rules concerning recovery-related attachment and sale of property.
Existing attachment under Section 281B
The first proviso addressed cases where a provisional attachment under Section 281B was already in force immediately before the applicant made an application under Section 245C. An order under Section 245DD could continue that attachment for the period for which the Section 281B order would otherwise have continued. The second proviso addressed an order made after expiry of that period, making the six-month rule in sub-section (2) applicable as though the order had originally been made by the Settlement Commission.
Section 245DD(2): Six-month period and extension
An attachment made under Section 245DD(1) ordinarily ceased to have effect six months after the date of the order. The Settlement Commission could extend it for additional period or periods, provided that it recorded reasons in writing. The earlier statutory wording limiting the aggregate extension to two years was omitted by the Finance Act, 2007 with effect from 1 June 2008; the historical text on this page therefore does not impose that deleted cap.
Key statutory requirements
- Pending proceeding: a settlement proceeding had to be pending before the Commission.
- Revenue protection: the Commission had to form an opinion that the attachment was necessary to protect the interests of revenue.
- Applicant's property: the power concerned property belonging to the settlement applicant.
- Formal order: the restraint had to be made by order and implemented in the manner provided by the Second Schedule.
- Time limits: the six-month default period applied, subject to extensions supported by written reasons.
Illustration
Suppose a qualifying settlement application was pending before the former Commission and the applicant was proposing to transfer an important asset. If the Commission concluded that an attachment was necessary to protect potential tax recovery, it could issue an order under Section 245DD(1). Without a valid extension, the attachment would cease after six months. This is a historical illustration, not a statement that new settlement applications may now be filed.
Discontinuation of Settlement Commission and transitional proceedings
The Finance Act, 2021 discontinued the Income-tax Settlement Commission with effect from 1 February 2021 and introduced transitional provisions, including Section 245AA concerning Interim Boards for Settlement and Section 245M concerning specified pending applications. The legal treatment of any old attachment depends on the applicable transitional provisions, the relevant order and its continuing validity; Section 245DD should not be read as independently authorising a new settlement application today.
The Income-tax Act, 2025 came into force on 1 April 2026. Questions concerning earlier tax years, saved proceedings and legacy orders require examination of its repeal-and-savings provisions and the applicable earlier law. The provisions in this article are identified by their historical 1961 Act numbering.
Historical statutory text and amendment notes
Read the original Section 245DD text retained from this page
Sub-section (1). Where, during the pendency of any proceeding before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner provided in the Second Schedule.
First proviso. Where a provisional attachment made under section 281B is pending immediately before an application is made under section 245C, an order under this sub-section shall continue such provisional attachment up to the period up to which an order made under section 281B would have continued if such application had not been made.
Second proviso. Where the Settlement Commission passes an order under this sub-section after the expiry of the period referred to in the preceding proviso, sub-section (2) shall apply as if the order had originally been passed by the Settlement Commission.
Sub-section (2). Every provisional attachment made by the Settlement Commission under sub-section (1) shall cease to have effect after six months from the date of the order. The Commission may, for reasons recorded in writing, extend that period by further period or periods.
Amendment history: Section 245DD was inserted by Act 26 of 1988, section 42, effective 1 April 1988. The words imposing a two-year aggregate extension limit were omitted by Act 22 of 2007, section 65, effective 1 June 2008.
Official legislation and tax resources
- India Code: central legislation and statutory text
- Income Tax Department: Acts, rules, circulars and legal material
- e-Gazette of India: statutory notifications
- Income Tax e-Filing portal
Frequently asked questions
What is provisional attachment under Section 245DD?
It was a protective measure allowing the Settlement Commission to provisionally attach an applicant's property during a pending settlement proceeding when necessary to protect revenue.
How long did attachment under Section 245DD last?
An attachment ordinarily ceased after six months from the order, but the Commission could extend it for further periods by recording reasons in writing.
Could a Section 281B attachment continue after a settlement application?
Yes. The first proviso to Section 245DD(1) addressed continuation of an existing Section 281B provisional attachment, subject to the statutory period.
Can a fresh application be filed with the old Settlement Commission in 2026?
No. The Settlement Commission was discontinued with effect from 1 February 2021; transitional provisions govern qualifying earlier applications. The Income-tax Act, 2025 applies from 1 April 2026 subject to applicable savings and transitional rules.
This article provides general legal information. For any live attachment, review the operative order, relevant dates, subsequent extension orders and applicable transitional law.