E-Settlement Scheme, 2021

E-Settlement Scheme, 2021

In order to settle the previous pending applications of settlement cases of income tax made to the settlement commission, the Central Board of Direct Taxes (CBDT) has introduceda new Scheme under Section 245D(11) and Section 245D(12) of the Income Tax Act, 1961 called as the E-Settlement Scheme, 2021 vide notification No.129/2021/F.NO. 370142/52/2021-TPL (Part-IV) dated 1st November, 2021.

Relief under the E-Settlement Scheme, 2021:

The new e-settlement scheme, 2021 has come as a major relief for all those taxpayers that were eligible for filing their application for income tax settlement as on 31st January but could not file it due to the cessation under Finance Act, 2021 of the Income Tax Settlement Commission. They were provided with an extension date of 30th September, 2021 up to which the taxpayers can submit their application before the interim board.

The Scope of the E-Settlement Scheme, 2021:

As per its publication date in the Official Gazette, the e-settlement scheme came into effect on 1stNovember, 2021. As for its applicability it has been stated by the CBDT that it will be applicable to all those pending income tax settlement applications where the taxpayer or applicant has not exercised his/her option available under Section 245M (1) of the Income Tax Act, 1961 and which have been transferred to an interim board of settlement commission by the CBDT.

The key points of the E-Settlement Scheme, 2021:

The key highlights of the E-settlement Scheme of 2021 launched by the CBDT and Income Tax Department are as follows making it one of its kind scheme and a new-gen solution for the taxpayers-

  1. Under this scheme the applications for settlement will be decided by an interim board to whom, the case will be transferred by CBDT.
  1. The general proceedings will not be open to the public as proceeding before the interim board.
  1. The communication will be exclusively through the online or electronic mode between the applicant and the interim board.
  1. Only the concerned officer of the tax department or interim board, the taxpayer and their employees or any other authorized representative will be allowed to attend the settlement proceedings. No other person can attend the same through the video telephony or video conferencing without the prior permission of the interim board.
  1. The CBDT has also clarified that in order to file settlement application for particular assessment year, a taxpayer must be eligible for the same as on 31st January, 2021 for that assessment year as well as the Income tax assessment proceedings of the applicant must be pending on the day of making the application.
  1. Also, a proper and suitable video conferencing facility including the software of telecommunication application for supporting the video telephony in locations of necessities has been established by the taxation authorities.
  2. The pleadings can be any language either in Hindi or in English as chosen by the applicant before the Interim Board.
  1. If the applications are found to be valid, then they shall be deemed as pending applications cannot be withdrawn by the applicant as per the new e-settlement scheme, 2021.
  1. No personal appearance before the interim board or Income Tax Department is required by the applicant or their representative. Therefore, this is in same line as Faceless Income Tax Assessment.
  1. The orders or ruling portions given will be published with names and other particulars modifications as deemed fit and as directed by the discretion of the Interim Board.This is a welcome move by CBDT and will provide relief to taxpayers who want to file application for settlement of cases and will reduce Income Tax assessment and litigation.