Income-tax Act, 1961 | Chapter XIX-A

Section 245L: Proceedings Before Settlement Commission as Judicial Proceedings

Section 245L treats proceedings before the Income-tax Settlement Commission as judicial proceedings for specified criminal-law purposes. This article explains the provision, its historical application, and the legal position following the 2021 settlement reforms and the Income-tax Act, 2025.

Current-law context: The Settlement Commission stopped accepting new applications from 1 February 2021. The Income-tax Act, 2025 took effect on 1 April 2026; Section 245L of the 1961 Act has no direct counterpart in the new Act. It remains relevant when examining proceedings governed by the earlier settlement framework and applicable savings provisions.

Text of Section 245L of the Income-tax Act, 1961

Any proceeding under this Chapter before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196, of the Indian Penal Code (45 of 1860).

The historical statutory wording is reproduced above. The Income Tax Department's consolidated text notes that, by Notification S.O. 2790(E) dated 16 July 2024, the reference to the Indian Penal Code is to be read as a reference to the Bharatiya Nyaya Sanhita, 2023.

Meaning and legal effect

A judicial proceeding is a proceeding given legal recognition for specified purposes, including offences affecting the administration of justice. Section 245L does not make the Settlement Commission an ordinary criminal court or apply every rule of a court trial. Rather, it attaches the consequences expressly identified in the provision to proceedings under Chapter XIX-A.

Relevant criminal-law provisions

Former IPC Section 193: punishment for giving or fabricating false evidence.
Former IPC Section 228: intentional insult or interruption to a public servant sitting in a judicial proceeding.
Former IPC Section 196: corruptly using evidence known to be false.
Bharatiya Nyaya Sanhita, 2023: the corresponding subjects are addressed in Sections 229, 267 and 233, respectively, subject to the applicable statutory and transitional rules.

Practical implications

Statements, documents and evidence submitted in a settlement proceeding can carry legal consequences beyond the determination of tax liability. A party should ensure that disclosures and supporting records are accurate and should not assume that the settlement process permits false evidence or deliberate disruption.

Whether any criminal-law provision applies in a particular case depends on the date of the conduct, the nature of the proceeding, and the applicable substantive and procedural law.

Settlement Commission reforms and the Income-tax Act, 2025

The Finance Act, 2021 ended the filing of fresh settlement applications before the former Settlement Commission and provided for the handling of specified pending applications through an Interim Board. Historical Section 245L must therefore be read with the transitional provisions governing such cases.

The Income-tax Act, 2025, effective from 1 April 2026, does not reproduce Section 245L as a separate settlement-specific provision. Its Section 257 addresses the judicial character of proceedings before income-tax authorities generally. Section 257 is principally comparable to former Section 136 of the 1961 Act; it should not be described as a direct renumbering of Section 245L.

Official statutory sources

Conclusion

Section 245L provided that proceedings before the Settlement Commission were judicial proceedings for specified offences involving false evidence and interruption of proceedings. Its continued relevance is chiefly historical and transitional. For proceedings under the Income-tax Act, 2025, readers should examine Section 257 and the applicable provisions of the Bharatiya Nyaya Sanhita, 2023.

This article is general legal information and not a substitute for advice on the facts of a particular case.