What comes as a major relief to taxpayers, the Central Board of Direct Taxes (CBDT) issued a statement on Tuesday, giving additional time to said taxpayers to file their applications for tax settlement. This tax settlement is to be done to the Interim Board for Settlement. The entity has given citizens time till September 30 in order to file this. The Central Board of Direct Taxes decided that the only persons who will get the relief are the ones who were eligible to file the application for the settlement on January 31, 2021, for the assessment year for which the application is sought to be filed. Additionally, in the statement, the Central Board of Direct Taxes said that the Finance Act, 2021, has amended the provisions of the Income-Tax Act, 1961 to inter alia provide that the Income-tax Settlement Commission (“ITSC”) shall cease to operate with effect from February 1, 2021.
The statement also added that there could be no application for settlement filed on or after February 1, which was the date on which the Finance Bill, 2021 was laid before the Lok Sabha. This was taken forward in order to dispose off the pending settlement applications as of January 31, 2021. In order to carry this out, the government constituted the Interim Board for Settlement.
The Central Board of Direct Taxes said in the statement, “…The Central Government has constituted Interim Board for Settlement (hereinafter referred to as the ‘Interim Board’), vide Notification no. 91 of 2021 dated 10.08.2021.” According to the release, the taxpayers who are in the pending cases, have the option to withdraw their applications within the specified time and intimate the Assessing Officer about the withdrawal.
“It has been represented that a number of taxpayers were in advanced stages of filing their application for settlement before the ITSC as on 01.02.2021. Further, some taxpayers have approached High Courts requesting that their applications for settlement may be accepted. In some cases, the Hon’ble High Courts have given interim relief and directed acceptance of applications of settlement even after 01.02.2021. This has resulted in uncertainty and protracted litigation,” said the Central Board of Direct Taxes. The entity brought about the extension in an attempt to provide some relief to taxpayers, saying that eligible persons could file by September 30, if they met certain conditions.
The Central Board of Direct Taxes said, “In order to provide relief to the taxpayers who were eligible to file application as on 31.01.2021, 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 30th September, 2021 before the Interim Board if the following conditions are satisfied…”
Taxpayers can file by the given date if as mentioned before, the assessee was eligible to file for the settlement on January 31, 2021 for the assessment years for which the application was sought to be filed. The other condition was that all the relevant proceedings of the assessee were listed as pending as of the date of filing the application for settlement. These applications would then be deemed as ‘pending applications’ under clause (eb) of section 245A of the Act 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 as per the provisions of section 245M of the Act. Further, the taxpayers who have already filed application for settlement on or after 01.02.2021 as per the direction of the various High Courts and who are otherwise eligible to file such application, as per para 3 above, on the date of filing of the said application shall not be required to file such application again. Legislative amendments in this regard shall be proposed in due course,” said the Central Board of Direct Taxes.
Speaking on the matter, Anita Basrur, a Partner at Direct Tax, Sudit K. Parekh & Co. LLP, said, “The amendment in connection with treating submissions made through registered account of taxpayer in Income Tax portal is deemed to be authenticated by Electronic Verification Code (EVC) is a welcome move. The Rule further clarifies that this procedure will also be available to taxpayers where the submissions necessarily have to be authenticated by digital signature. This will ease the process of making submissions. Currently, a number of taxpayers/assessees were facing challenges in authenticating the submissions for scrutiny assessment. This is a welcome and timely move by the Government.”
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