Income tax settlement commission

At present, the commission provides immunity under various legislation to defaulters who confess to having evaded taxes during the past years and seek a one-time settlement to get immunity under the Income Tax Act, IPC and other

central Acts.

Once these amendments are passed, taxpayers who want to avoid trouble and prolonged litigation would not be able to approach ITSC for relief.

ITSCBA president K P Garg told The Indian Express: 8220;These amendments would not serve any purpose as they would make the commission a parking lot for retiring bureaucrats from the I-T department. Once these amendments become law, the commission would not have any fresh work after May 31 this year.8221;

According to the fiscal reform committee of the Institute of Chartered Accountants of India, 8220;Clause 53 proposes to restrict the scope of application to be made to the Settlement Commission. Accordingly, an applicant will not be eligible to file an application in case a search has been carried out.8221;

Its suggestion: 8220;Search cases may be allowed to file applications for settlement in case there is complexity.8221; However, the committee remained silent on amendments under clause 57 and 59.

End users of this facility seem to agree. According to a FICCI post-Budget memorandum, 8220;The underlying objective of setting up the Settlement Commission was that an errant tax payer at any stage of his pending proceedings should be given an option to correct himself. Under the proposed regime, only in view of few cases the assessee would have the option to approach the

commission.8221;.

A senior Income Tax official has a different view: 8220;These amendments propose minor changes which would not curtail powers of the commission. And as far as Clause 59 is concerned, I don8217;t think an applicant should get immunity under all central legislations simply because he approaches the settlement commission.8221;

However, it is a fact that prosecution for offences under the I-T Act is done under the IPC. For example, prosecution for giving false information is done under section 195.

Every year, union government spends more than Rs 5 crore for running four benches of the commission, which was set up in 1976 with an objective to reduce prolonged litigation and increase revenue recovery, after considering the Wanchoo Committee report.

After almost 20 years of its functioning, the then Union finance minister constituted a review group in December 1995 for assessing the performance of the commission, which lauded its performance.

Another review committee, constituted in July 2005 to look into the functioning of ITSC, has also praised its work.

Clause for concern

8226; Amendment to Clause 53a would change the definition of 8220;case8221; Section 245 A-b. This will put some cases out of ITSC8217;s purview, including income escaping assessment Section 147, notice for escaped assessment Section 148, revision case Section 263, appeals Section 246A, set aside cases and search cases Sections 153A, B, C. After the amendment, an assessee can approach ITSC only if the case is pending before an Assessing Officer for the current assessment year.

8226; Clause 57 would amend Section 245E, which enables ITSC to reopen completed cases in the interest of revenue, for the six years previous to the settlement. The amendment proposes withdrawal of this power and empowers assessing officers to do so based on the information of ITSC.

8226; Clause 59 proposes to take away powers of ITSC to provide immunity Section 245H to an applicant under the Income Tax Act, IPC and other central Acts. After this amendment, ITSC would be able to provide immunity under I-T Act and Wealth Tax Act.