e-Settlement Scheme, 2021
e-Settlement Scheme, 2021
The Central Board of Direct Taxes (CBDT) has introduced the e-Settlement Scheme, 2021 vide Notification No. 129/2021-Income Tax dated 1st November 2021 for settlement of tax disputes involving small taxpayers to be processed entirely electronically. In this article, we will look at the e-Settlement Scheme, 2021.
Applicability of e-Settlement Scheme, 2021
The scheme will apply to “pending applications in respect of which the applicant has not exercised the option under sub-section (1) of Section 245M of the Income-tax Act and which has been allotted or transferred by Central Board of Direct Taxes to an interim board”.
“Interim Board” means the Interim Board for Settlement constituted by the Central Government under section 245AA of the Income Tax Act.
Section 245M (1) of the Income Tax Act
Section 245M (1) of the Income Tax Act provides an Option to withdraw the pending application by the taxpayer.
“With respect to a pending application, the assessee who had filed such application may, at his option, withdraw such application within three months from the date of commencement of the Finance Act, 2021 and intimate the Assessing Officer, in the prescribed manner, about such withdrawal”
CBDT vides a Notification No. 5/2021 dated 24.05.2021 has notified the online procedure to exercise the option by an assessee to withdraw his pending application under sub-section (1) of section 245M by Form No. 34BB on e-filing portal.
Click here to know more about Procedure for Online Withdrawal of Pending Application by Form 34BB
Eligible Taxpayer for e-Settlement Scheme, 2021
- The relief under the e-Settlement Scheme was given to taxpayers who were eligible to apply as of January 31, 2021, but could not file the same due to the cessation of the Income Tax Settlement Commission as per the Finance Act 2021.
- The taxpayers who have been permitted to submit the applications by September 30, 2021, before the interim board are also eligible for the scheme.
Allocation of Pending Applications
The Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems) shall devise a process to randomly allocate or transfer the pending applications to the Interim Boards. with the approval of the Central Board of Direct Taxes,
The Interim Board shall conduct e-settlement of pending applications allocated or transferred to it following the provisions of this Scheme.
Click here to know more about the Procedure for Furnishing and Uploading Form No. 34BB
Key Highlights of e-Settlement Scheme, 2021
As mentioned above, under the e-Settlement Scheme, 2021, an ‘interim board’ will decide on applications for settlement. The proceedings before the interim board shall not be open to the public.
- The CBDT announced that all communication between the Interim Board and taxpayers will be exclusively in electronic mode.
- No person other than the applicant, their employee, and concerned officers of the interim board or the income-tax authority or the authorized representatives, without the permission of the interim board, can attend the proceedings even on videoconferencing or video telephony.
- CBDT will establish suitable facilities for videoconferencing including telecommunication application software that supports video telephony at such locations as may be necessary.
- All pleadings before the Interim Board may, at the option of the applicant, be in Hindi or English.
- The board announced that if the applications are found valid, will be deemed as “pending applications” and will not be allowed to be withdrawn.
- There is no need for the applicant or his or her representative to make any personal appearance before the Interim Board or before any Income-tax Authority or any ministerial staff posted with the Interim Board.
Procedure for Settlement tax Disputes
The procedure for settlement of pending applications allotted to an Interim Board is explained below:
- The Interim Board shall intimate the applicant about the allocation or transfer of application.
- The Interim Board will forward the necessary information, document, evidence, report, and additional facts to the Principal Commissioner or the Commissioner and direct it to make further inquiry or investigation and furnish a report within the time allowed under sub-section (3) of section 245D of the Income Tax Act.
- The Interim Board will forward the report to the applicant and request the applicant to submit a written response to the report within the date and time specified or such extended date and time as may be allowed based on an application made on this behalf.
- If the Principal Commissioner or the Commissioner fails to furnish the report within the time, the Interim Board may proceed to pass the order under sub-section (4) of section 245D of the Income Tax Act.
- If the applicant fails to furnish the response within the specified time, the Interim Board may proceed to pass the order under subsection (4) of section 245D of the Income Tax Act.
- The opportunity under the sub-section (4) of section 245D of the Income Tax Act shall be provided by the Interim Board through video conferencing or video telephony
- After hearing the applicant and the Principal Commissioner or the Commissioner, through video conferencing or video telephony, and after examination of all the document and evidence with it, the Interim Board shall pass an order under sub-section (4) of section 245D of the Income-tax Act;
- The order passed shall be delivered to the applicant vide the registered e-mail address along with a copy to the Principal Commissioner or the Commissioner.
- The order passed may be rectified by the Interim Board either suo motu or on an application made by the applicant, the Principal Commissioner, or the Commissioner.
The official notification of CBDT is attached here for reference:
Note: The provisions of Chapter XIX-A of the Income Tax Act shall mutatis mutandis apply to pending applications allotted or transferred, to the Interim Boards