CBDT allows taxpayers to file applications by September 30 for settlement of pending cases

New Delhi: The finance ministry on Tuesday said income taxpayers can file applications before the interim board for settlement of pending tax cases at the Income Tax Settlement Commission (ITSC) level by September 30.

The Finance Act, 2021, has amended the provisions of the Income Tax Act, 1961, to provide that the ITSC shall cease to operate with effect from February 1, 2021. Further, it has also been provided that no application for settlement can be filed on or after February 1, which was the date on which the Finance Bill, 2021, was laid before the Lok Sabha.

To dispose of the pending settlement applications as of January 31, 2021, the government had constituted the Interim Board for Settlement. The taxpayers, in the pending cases, have the option to withdraw their applications within the specified time and intimate the assessing officer about such withdrawal.

Following this, the ministry had received representations that a number of taxpayers were in the advanced stages of filing their application for settlement before the ITSC as of February 1. Further, some taxpayers have approached high courts requesting that their applications for settlement may be accepted. In some cases, the high courts have given interim relief and directed acceptance of applications of settlement even after February 1. 2021. This has resulted in uncertainty and protracted litigation, the ministry said.

"In order to provide relief to the taxpayers who were eligible to file an application as on January 31, 2021, but could not file the same due to cessation of ITSC vide Finance Act, 2021, it has been decided that applications for settlement can be filed by the taxpayers by September 30, 2021, before the Interim Board," the ministry said in a statement.

This would be, however, subject to the condition that the assessee was eligible to file the application for settlement on January 31, 2021, for the assessment years for which the application is sought to be filed. It is also subject to the condition that all the relevant assessment proceedings of the assessee are pending as of the date of filing the application for settlement.

Such applications, subject to their validity, shall be deemed to be 'pending applications' and shall be disposed of by the Interim Board as per the provisions of the Act.

"It is clarified that taxpayers who have filed such applications shall not have the option to withdraw such applications.

"Further, the taxpayers who have already filed an application for settlement on or after February 1, 2021, as per the direction of various high courts and who are otherwise eligible to file such application...On the date of filing of the said application shall not be required to file such application again," the ministry said.

Legislative amendments in this regard shall be brought in due course.