Section 245F: Powers and Procedure of the Settlement Commission

Section 245F of the Income-tax Act, 1961 described the statutory powers, exclusive jurisdiction and procedural autonomy of the former Income-tax Settlement Commission. It also preserved specified taxpayer obligations and the jurisdiction of regular income-tax authorities over matters outside a settlement case.

Meaning and scope of Section 245F

Section 245F was part of Chapter XIX-A, which dealt with settlement of cases. A Settlement Commission was a statutory body empowered to settle eligible income-tax disputes upon a qualifying application under section 245C. A case was determined by the definition in section 245A and the applicable provisions at the relevant time.

Explanation of each operative subsection

Section 245F(1): Powers of an income-tax authority

In addition to powers specifically conferred by Chapter XIX-A, the Settlement Commission had all powers vested in an income-tax authority under the 1961 Act. This was a grant of statutory authority for settlement-related functions, not an unrestricted power outside the Act.

Section 245F(2): Exclusive jurisdiction over a settlement case

When an application under section 245C proceeded under section 245D, the Commission exercised exclusive jurisdiction over the relevant case for the prescribed period, subject to section 245D(3) and other statutory qualifications. For applications made on or after 1 June 2007, the historical proviso specified jurisdiction from the application date. Further provisos addressed rejection, invalidity or failure of an application to proceed, and the endpoint of exclusive jurisdiction.

Section 245F(3): Self-assessment tax remains payable

Unless the Commission expressly directed otherwise, the settlement proceedings did not displace the applicant's obligation to pay self-assessment tax on matters before it. Filing an application was not, by itself, a tax-payment exemption.

Section 245F(4): Other matters remain with ordinary authorities

In the absence of a contrary express direction, the settlement chapter did not disturb the operation of the Act in relation to matters other than those before the Commission. Exclusive jurisdiction therefore related to the statutory scope of the case, rather than every tax issue involving the applicant.

Section 245F(5) and (6): Omitted provisions

Subsections (5) and (6) were omitted by the Finance Act, 1987 with effect from 1 June 1987. They should not be described as operative powers in the later historical text.

Section 245F(7): Power to regulate procedure

Subject to Chapter XIX-A, the Commission could regulate its own procedure and the procedure of its Benches, including where they sat. This procedural discretion remained subject to statutory requirements and principles of natural justice.

How the provisions operated together

1. An eligible taxpayer filed a qualifying application under section 245C.
2. The application was examined under section 245D and either permitted to proceed or rejected or declared invalid, as applicable.
3. Section 245F governed the Commission's powers and jurisdiction over the case during the applicable stage.
4. Self-assessment tax and unrelated proceedings remained subject to the Act, unless an express lawful direction applied.
5. A settlement order, where made, was governed by section 245D and related provisions.

Illustration: If an eligible historic settlement application concerned undisclosed business income for specified years, the Commission's exclusive jurisdiction was confined to the case covered by the statute and the application. A separate matter outside that case did not automatically become subject to the Commission merely because it concerned the same taxpayer.

Settlement Commission closure and transitional matters

The Finance Act, 2021 restructured the settlement framework with effect from 1 February 2021. New applications to the former Commission were discontinued. Interim Boards for Settlement were introduced for specified pending applications, with transitional provisions and opportunities governed by the statute and relevant notifications. Whether a historic application remains actionable depends on its filing date, procedural status, transfer and applicable savings provisions.

From 1 April 2026 the Income-tax Act, 2025 is in force. For proceedings spanning the change in legislation, review the commencement, repeal and savings provisions and the governing law for the relevant tax year and proceeding. Section 245F should not be relied on as an independent present-day mechanism to initiate settlement.

Related provisions

Read section 245B (Settlement Commission), section 245BA (jurisdiction), section 245BD (majority decisions), section 245DD (provisional attachment), and section 245E (reopening completed proceedings).

Official legal resources

For the statutory text, amendments, notifications and transition rules, consult India Code, Income Tax Department, e-Gazette of India and the Income Tax e-Filing Portal. Check the version applicable to the relevant proceeding.

Frequently asked questions

Historical text and amendment notes from the original page

The following archival transcription retains the original page's wording and amendment references for legal research. It should be read with subsequent legislative changes and the transitional position described above.

245F Income Tax Act
-  Powers and procedure of Settlement 
Commission
Section 245f of Income Tax Act 1961 -  Powers and procedure of 
Settlement Commission
(1) In addition to the powers conferred on the Settlement Commission under this 
Chapter, it shall have all the powers which are vested in an income-tax 
authority under this Act.
(2) Where an application made under section 245C has been allowed to be 
proceeded with under section 245D, the Settlement Commission shall, until an 
order is passed under sub-section (4) of section 245D, have, subject to the 
provisions of sub-section (3) of that section, exclusive jurisdiction to 
exercise the powers and perform the functions of an income-tax authority under 
this Act in relation to the case:
1 Provided that where an application has been made under section 245C on or 
after the 1st day of June, 2007, the Settlement Commission shall have such 
exclusive jurisdiction from the date on which the application was made:
Provided further that where-
(i) an application made on or after the 1st day of June, 2007, is rejected under 
sub-section (1) of section 245D; or
(ii) an application is not allowed to be proceeded with under sub-section (2A) 
of section 245D, or, as the case may be, is declared invalid under sub-section 
(2C) of that section; or
(iii) an application is not allowed to be further proceeded with under 
sub-section (2D) of section 245D, the Settlement Commission, in respect of such 
application shall have such exclusive jurisdiction upto the date on which the 
application is rejected, or, not allowed to be proceeded with, or, declared 
invalid, or, not allowed to be further proceeded with, as the case may be.
(3) Notwithstanding anything contained in sub-section (2) and in the absence of 
any express direction to the contrary by the Settlement Commission, nothing 
contained in this section shall affect the operation of any other provision of 
this Act requiring the applicant to pay tax on the basis of self-assessment 2 
*** in relation to the matters before the Settlement Commission.
(4) For the removal of doubt, it is hereby declared that, in the absence of any 
express direction by the Settlement Commission to the contrary, nothing in this 
Chapter shall affect the operation of the provisions of this Act in so far as 
they relate to any matters other than those before the Settlement Commission.
3 4 * * * * *
(7) The Settlement Commission shall, subject to the provisions of this Chapter, 
have power to regulate its own procedure and the procedure of Benches thereof in 
all matters arising out of the exercise of its powers or of the discharge of its 
functions, including the places at which the Benches shall hold their sittings.
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1. Ins. by s. 67, ibid. (w.e.f. 1-6-2007).
2. The words "or by way of advance tax" omitted by the 11 of 1987, s. 63 (w.e.f. 
1-6-1987).
3. Subs. by Act 46 of 1986, s. 17, for sub-section (5) (w.e.f. 10-9-1986).
4. Sub-sections (5) and (6) omitted by Act 11 of 1987, s. 63 (w.e.f. 
1-6-1987).

This article provides general legal information and does not replace advice on a specific pending proceeding.