Notice under Section 245D(4A)

Section 245D(4A):

“(4A) An order under sub-section (4) shall be passed—

(a) Concerning an application made under sub-section (1) on or after the 1st day of June 2007 but before the 1st day of June 2010, within twelve months from the end of the month the application was made.

(b) In respect to an application made on or after the 1st day of June 2010, within eighteen months from the end of the month the application was made.”

Understanding the Time Limit

The time limit for the Settlement Commission to pass an order under Section 245D(4A) can be summarised as follows:

1. Application Made Between 1st June 2007 and 31st May 2010:
   • The order must be passed within twelve months from the end of the month the application was made.
2. Application Made on or After 1st June 2010:
   • The order must be passed within eighteen months from the end of the month the application was made.

Example:

If an application for settlement under the given regulations is submitted on 15th July 2022, the Settlement Commission is required to issue the order by 31st January 2024, which is eighteen months from the end of July 2022.

Purpose:

Section 245D(4A) aims to ensure that the Settlement Commission resolves cases promptly. This provision provides certainty and finality to the taxpayer and the revenue authorities by establishing a clear time frame to complete the settlement process.

Legal Implication:

It is essential to understand that failing to pass the order within the specified timeframe has serious consequences. It results in the settlement application being deemed rejected, and the case reverts to the regular assessment or reassessment process. This could lead to regular scrutiny and assessment by the tax authorities, something taxpayers should strive to avoid.

Legal Recourse:

1. Filing Objections: If a taxpayer receives a notice under Section 245D(4A), they can file objections with the Settlement Commission challenging the basis of the proceedings.
2. High Court: If the Settlement Commission’s order does not favour the taxpayer, they can approach the High Court for judicial review of the decision on the grounds of law or procedural lapses.
3. Supreme Court: The taxpayer can approach the Supreme Court for significant questions of law.

Penalties and Prosecution:

1. Penalties:
   • Under Section 271(1)(c), a penalty for concealment of income or furnishing inaccurate particulars can range from 100% to 300% of the tax sought to be evaded.
   • The Settlement Commission may levy additional penalties as part of the settlement terms.
2. Prosecution:
   • Under Section 276C, if the taxpayer wilfully attempts to evade tax, they may face rigorous imprisonment ranging from six months to seven years, along with a fine.
   • Under Section 277, making false statements or delivering false accounts can lead to imprisonment ranging from three months to seven years and a fine.

What to Do If Notice Is Received:

1. Review the Notice:
   • Carefully review the notice to understand the reasons for the settlement proceedings and the documents or information required.
2. Consult a Tax Professional:
   • Seek advice from a qualified tax consultant or chartered accountant to understand the implications and prepare a response.
3. Prepare Documentation:
   • Gather all relevant documents, records, and evidence to support your case.
4. File a Response:
   • Respond to the notice within the stipulated time frame, providing all required information and documentation.
5. Attend Hearings:
   • If required, attend any hearings scheduled by the Settlement Commission and present your case clearly and accurately.
6. Keep Records:
   • Maintain copies of all correspondences, submissions, and notices for future reference.

Conclusion

Understanding the time limits and legal implications of settlement proceedings under Section 245D(4A) is crucial for taxpayers seeking to resolve their cases through the Settlement Commission. Prompt and appropriate action, including seeking professional advice, is essential to effectively manage the settlement process and ensure compliance with the legal requirements. Additionally, awareness of the potential penalties and prosecution risks can help taxpayers prepare adequately and avoid severe consequences.