Amended and updated notes on section 245DD of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Power of Settlement Commission to order provisional attachment to protect revenue.
Chapter XIXA (Sections 245A to 245L) of the Income Tax Act 1961 deals with the provisions related to settlement of cases. Section 245DD of IT Act 1961 provides for Power of Settlement Commission to order provisional attachment to protect revenue.
Recently, we have discussed in detail section 245D (Procedure on receipt of an application under section 245C) of IT Act 1961. Today, we learn the provisions of section 245DD of Income-tax Act 1961. The amended provision of section 245DD is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 245DD of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-245DD: Power of Settlement Commission to order provisional attachment to protect revenue
Section 245DD(1) of Income Tax Act
Where, during the pendency of any proceeding before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner provided in the Second Schedule:
Provided that where a provisional attachment made under section 281B is pending immediately before an application is made under section 245C, an order under this sub-section shall continue such provisional attachment up to the period up to which an order made under section 281B would have continued if such application had not been made :
Provided further that where the Settlement Commission passes an order under this sub-section after the expiry of the period referred to in the preceding proviso, the provisions of sub-section (2) shall apply to such order as if the said order had originally been passed by the Settlement Commission.
Section 245DD(2) of Income Tax Act
Every provisional attachment made by the Settlement Commission under sub-section (1) shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1) :
Provided that the Settlement Commission may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as it thinks fit.
Section 245DD(3) of Income Tax Act
On and from the 1st day of February, 2021, the power of the Settlement Commission under this section shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
[Sub-section(3) of section 245DD newly inserted w.e.f. 1-February-2021 by the Finance Act 2021]