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Settlement Commission

kritika (student) (41 Points)

24 October 2017

Can application be made to Set Com if case is pending before CIT(A) or ITAT?

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Sathish (CA Job) (175 Points)
Replied 24 October 2017

Hi Kritika

As per Sec 245C(1), an assessee may at any stage of a case relating to him make an application to settlement commission. For this purpose, the definition of case is provided in 245A(b). To give a historical background, the definition of case prior to 31-05-2007 included even appellate proceedings. However, Finance Act 2007 amended the said section to exclude the appellate proceedings from the definition of case. Hence the case which is pending before CIT (Appeals) or ITAT will not fall under the ambit of case u/s 245A(b) to be applied before Settlement Commission.

Regards

K Sathish

1 Like

kritika (student) (41 Points)
Replied 25 October 2017

thank you so much :)

kritika (student) (41 Points)
Replied 25 October 2017

and what about advance ruling?

Sathish (CA Job) (175 Points)
Replied 25 October 2017

Hi Kritika

I am not quite sure about your question on Advance Ruling. But still I presume the question can be the following:

1) Whether Settlement Commission can be approached for a question pending with AAR?

There is no such situation practically. The reason is the concept of Advance Ruling is introduced to have the consensus between the assessee and the revenue authorities even before a transaction is proposed to be undertaken. However, Settlement Commission is altogether a different concept whereby an assessee have an one time option to confess fully and truely the income which has not been disclosed earlier before the Assessing Officer. So Settlement Commission is essentially a case where income has accrued / arised to the assessee but the same is not disclosed whereas AAR is a case where a binding rule is obtained regarding the treatment of income even before its accrual.

2) Whether AAR (Authority of Advance Ruling) can be approached for a case pending with CIT(A) or ITAT

This is another possible question of yours which I could think of based on the first question and which I am right it should be. The answer lies in Sec 245R of the Income Tax Act, which states that AAR shall not allow an application where the question raised in the application is already pending with any Income Tax Authority, ITAT or any court. The exception to this rule is where a application is made by the Notified Resident Applicant (At present the Notified Resident Applicant comprises only Public Sector companies). Hence only a public sector company can make an application to AAR even if the question raised is already pending with Appellate authorities or Court.

Thanks and Best Regards

K Sathish