Clarification in respect of Circular No.3 of 2008 dated 12/3/2008 of CBDT

Chap­ter XIX‑A of the Income-tax Act, 1961 con­tains pro­vi­sions relat­ing to set­tle­ment of cas­es by the Income-tax Set­tle­ment Com­mis­sion (ITSC). The pro­vi­sions con­tained in the said chap­ter were amend­ed by Finance Act, 2007 and a Revised Set­tle­ment Scheme was put in place. Explana­to­ry Cir­cu­lar No. 3/2008 dat­ed 12.03.2008 issued by CBDT vide para 61 (com­pris­ing sub paras61.1 to 61.17) deals with Revised Set­tle­ment Scheme.

2. Para 61.2 of Cir­cu­lar No.3 of 2008 reads:- “61.2 under the exist­ing pro­vi­sions, an assessee may make an appli­ca­tion to the Com­mis­sion at any stage of the pro­ceed­ings in his case pend­ing before any Income-tax Author­i­ties. After 31st May, 2007, an assessee can make an appli­ca­tion to the Com­mis­sion only dur­ing the pen­den­cy of the pro­ceed­ings before the Assess­ing Offi­cer. It is fur­ther clar­i­fied that (a) since inti­ma­tion under sec­tion 143(1) is not an assess­ment order, there will be no bar in fil­ing an appli­ca­tion for set­tle­ment sub­se­quent to receipt of an inti­ma­tion under sec­tion 143(1). It is not mate­r­i­al whether time-lim­it for issue of notice under sec­tion 143(2) has expired or not; (b) the assess­ment shall be deemed to have been com­plet­ed only on the date of ser­vice of assess­ment order to the applicant”.
3. It has been inad­ver­tent­ly stat­ed in para 61.2 of Cir­cu­lar No.3 of 2008 that the assess­ment shall be deemed to have been com­plet­ed only on the date of ser­vice of assess­ment order to the appli­cant. This state­ment is not incon­so­nance with the pro­vi­sions con­tained in Expla­na­tion to clause (b) of sec­tion 245A of the Income-tax Act which, inter alia, pro­vides that a pro­ceed­ing for assess­ment of any assess­ment year shall be deemed to have con­clud­ed on the date on which the assess­ment is made.

4. In view of the above, para 61.2 of Cir­cu­lar No.3 of 2008 is replaced with the fol­low­ing with effect from the 1st day of June, 2007:-

“61.2 Under the exist­ing pro­vi­sions, an assessee may make an appli­ca­tion to the Com­mis­sion at any stage of the pro­ceed­ings in his case pend­ing before any Income-tax Author­i­ties. After 31st May, 2007, an assessee can make an appli­ca­tion to the Com­mis­sion only dur­ing the pen­den­cy of the pro­ceed­ings before the Assess­ing Offi­cer. It is fur­ther clar­i­fied that (a) since inti­ma­tion under sec­tion 143(1) is not an assess­ment order, there will be no bar in fil­ing an appli­ca­tion for set­tle­ment sub­se­quent to receipt of an inti­ma­tion under sec­tion 143(1). It is not mate­r­i­al whether time-lim­it for issue of notice under sec­tion 143(2) has expired or not; (b) the assess­ment shall be deemed to have been com­plet­ed on the date on which the assess­ment order is passed.”