Income-tax Act, 1961 | Chapter XIX-A
Section 245I of the Income-tax Act, 1961: Order of Settlement to Be Conclusive
Section 245I gives statutory finality to matters decided in a settlement order made under Section 245D(4), subject to exceptions expressly provided in Chapter XIX-A.
Text of Section 245I: Order of Settlement to Be Conclusive
Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.
Official text: Income Tax Department - Section 245I.
Meaning and Legal Effect of Section 245I
The expression conclusive means that the settlement order is intended to settle finally the matters actually stated and covered by it. The provision restricts their reopening in proceedings under the Income-tax Act or another law, except where Chapter XIX-A itself permits a different result.
Scope of finality
- Qualifying order: The protection relates to an order under Section 245D(4), not every communication or interim procedural order.
- Matters covered: Finality attaches to matters stated in and covered by the settlement order; it does not automatically decide unrelated questions.
- Statutory qualification: The words "save as otherwise provided in this Chapter" preserve the exceptions and mechanisms under Chapter XIX-A.
Exceptions and Limitations
Section 245I must be read with other provisions of Chapter XIX-A. In particular:
- Section 245D(6): A settlement may become void if it is subsequently found to have been obtained by fraud or misrepresentation of facts, subject to the statutory requirements.
- Section 245D(6B): Rectification of a mistake apparent from the record may be available within the applicable statutory framework and time limits.
- Section 245H: Immunity from prosecution or penalty is governed by its own conditions and provisions for withdrawal; finality under Section 245I should not be confused with unconditional immunity.
- Judicial review: The statutory finality clause does not itself eliminate constitutional judicial review, although the scope of court interference is limited by applicable law.
Practical point: Whether a later action is prohibited depends on the wording of the settlement order, the precise matter covered, and any applicable statutory exception.
Position After the Settlement Commission Was Discontinued
The Income-tax Settlement Commission ceased to operate with effect from 1 February 2021 following the Finance Act, 2021. Section 245AA provides for Interim Boards for Settlement to deal with qualifying pending applications. Section 245D(9) adapts specified procedural provisions to applications allotted to an Interim Board.
Section 245I remains important for understanding the finality of settlement orders issued under the Chapter XIX-A framework. These transitional arrangements should not be interpreted as reopening the former general facility for filing fresh settlement applications.
Related Sections and Official Legal Sources
- Section 245D - Procedure on receipt of settlement application
- Section 245AA - Interim Boards for Settlement
- Section 245A - Definitions for Chapter XIX-A
- Section 245M - Transitional provisions for pending applications
- CBDT Circular No. 1/2024 - Explanatory notes including Interim Board provisions
Frequently Asked Questions
Can a matter covered by a settlement order be reopened?
As a general rule, Section 245I prohibits reopening a matter covered by an order under Section 245D(4), except as otherwise provided in Chapter XIX-A.
Does Section 245I protect matters not covered by the order?
No. Its finality is confined to the matters stated in and covered by the particular settlement order.
Is Section 245I the same as immunity from prosecution?
No. Section 245I addresses conclusiveness of the settlement order; immunity from prosecution and penalty is separately governed by Section 245H.