E-Settlement Scheme for Small Taxpayers

Ashish M. Shaji

10 Nov, 2021

Recently CBDT (Central Board of Direct Taxes) announced the introduction of the e-settlement scheme, 2021. This scheme is aimed to settle pending applications transferred to the settlement commission. This scheme will apply to the pending applications in respect of which the applicant hasn’t exercised the option under Section 245M (1) of the Act and which has been allotted/transferred by the CBDT to an interim board.

E-Settlement Scheme: Role of Interim Board

The role of the interim board is to conduct e-settlement of the pending applications allocated/transferred to it under para 3, as per the provisions of this scheme. The interim board will have the income tax authority, ministerial staff, executive or consultant to help interim board members, as considered necessary by the CBDT^[1].

Procedure for Settlement under the Scheme

The step by step procedure for settlement of pending applications allotted/transferred to an interim board is mentioned below:

• The interim board will intimate the applicant regarding the allocation or transfer;
• The interim board will call for the records from the principal commissioner or commissioner and can forward the crucial information, document, evidence, report and additional facts as provided in para 7 to the Principal Commissioner or the Commissioner and direct it to make or cause to make further enquiry/investigation and furnish report as per Section 245D (3) of the Act within the time allowed.
•  If the principal commissioner or the Commissioner fails to furnish the report as provided in clause (ii), within the time, then the interim board can pass the order under Section 245D (4) of the Act, without waiting for that report;
• When the report as provided under clause (ii) is furnished by the principal commissioner or the commissioner, the interim board cal forward the report to the applicant and request him/her to provide the written response to such report within the prescribed date and time or such extended date and time as allowed on the basis of an application made in this behalf;
• If the applicant fails to furnish response as provided in clause (iv) within the prescribed time period or within the extended time, then the interim board can pass the order under Section 245D (4) of the Act, without waiting for that response;
• The opportunity specified in Section 245D (4) of the Act will be provided by the interim board through video conferencing or video telephony;
• Before providing the opportunity as specified under clause (vi), the interim board will forward the response specified under clause (iv), if received from the applicant to the principal commissioner or the commissioner;
• At the time of hearing of application, the authorized representative appearing for the applicant will file before the commencement of hearing a document authorizing him to appear for the applicant and in case he is applicant’s relative, the document will state the nature of his relationship with the applicant or if he is a person employed regularly by the applicant, the capacity at which he is employed at that time;
•  The interim board can adjourn the hearing of the application or any matter arising thereon on terms as it thinks fit & at any stage of the proceedings;
• After hearing is conducted through video conferencing or video telephony and after the examination of all the information, document, record, report & evidence with it, the interim board will pass the order under Section 245D (4) of the Act;
• The order passed under clause (x) will be delivered to the applicant vide the registered mail ID along with the copy to the principal commissioner or the commissioner;
• The order passed under clause (x) can be corrected by the interim board under Section 245(D) (6B) of the Act either suo motu or on an application made by the applicant or principal commissioner or the commissioner;
• The provisions under Chapter XIX-A of the Act will mutatis mutandis apply to the pending applications allotted/transferred, to the interim boards.

Other essential points about e-settlement scheme

• If in the course of proceedings before the interim board any facts not in the settlement application are sought to be relied upon, it would be submitted to the interim board in writing and will be verified in the same way as provided for in the application for settlement.
• The proceedings before the interim board will not be open to the public and no one can, without the permission of interim board, remain present during the proceedings, even in video conferencing or video telephony.
• The opportunity to hear through video conferencing or video telephony will be facilitated by income tax authority as authorized by the interim board.
• The applicant will not have to appear personally or through an authorized representative in connection with any proceedings under this scheme to the interim board or before any income tax authority or ministerial staff posted with the interim board.

Conclusion

Now the tax disputes involving small taxpayers can be processed entirely easily and electronically. Central Board of Direct Taxes has notified about the e-settlement scheme of 2021 which will settle pending applications transferred to the settlement commission.

Read our article:CBDT claims India will gain from OCED global tax deal