Assessee can file a settlement application before the Settlement Commission. - Income Tax - 1256/CBDT

INSTRUCTION NO. 1256/CBDT Dated : May 8, 1979 Section(s) Referred: Rule 44C Statute: Income - Tax Act, 1961 An assessee can file a settlement application before the Settlement Commission at any stage of proceedings for or in connection with assessment or re-assessment pending before an Income-tax Authority under the Income-tax Act, 1961 and Wealth tax Act, 1957. The application is to be filed in the form and manner prescribed under the rules. Sub-rule (1) of Rule 44C of Income-tax Rules, 1962 provides that the application for settlement shall be in Form No.34-B and sub-rule (3) thereon prescribes that it shall be accompanied with a fee of Rs.500/-.According to column (5) of the Form No.34B, a single application can relate to several assessment years. Similar provision exists in rule 4A (and form DA) of the Wealth-tax Rules, 1957. In other words if several proceedings for assessment relating to an assessee are pending before an Income-tax Authority at any point to time, the assessee can, if he so chooses include all such proceedings in a single application for settlement accompanied by a fee Rs.500/- only. 2. The Settlement Commission has pointed out that there are cases where for want of adequate information either an assessee files a separate settlement application in respect of each assessment proceeding (although all such proceedings may be pending at the same point of time) paying a fee of Rs.500/- for each such application or although he files only one application in respect of all the assessments pending yet he pays, by way of application fee, multiples of Rs.500/- according to the number of pending assessments. In such cases the assessee could as well have filed a single application for the assessment year accompanied by a fee of Rs.500/- only (and another Rs.500/- if he desired to cover Wealth-tax Assessments also). Same fee is thus paid in excess of what is required to be paid by the assessee under the rules. 3. According to the existing procedure the payment by way of fee to the Settlement Commission is made by the assessees in the Reserve Bank of India/authorised public sector banks to the credit of the Income-tax Department as "Miscellaneous fee" by using Income-tax challans viz., Advance-tax challan, self-assessment challan and challan for regular assessment, there being no uniformity being followed in this regard. It is found that this procedure of using advance-tax challans and self-assessment challans is not correct as these challans contain columns for giving the break-up only between Income-tax and surcharge. By depositing the amount under this challan the amount of fee is likely to be misclassified as they may be credited to the head 'Ordinary collections' instead of 'Other collections' . Since 'Other Receipts' in respect of non-companies do not form part of the divisible pool for distribution between Union and the States such misclassification will result in the amounts being included in the Divisible Pool to be distributed between the Centre and the States instead of the whole amount going to the Union. 4. The question of evolving a separate form for payment of fees and other miscellaneous collections is under examination of the Board. Pending finalisation of the matter, it has been decided by the Board that the challan meant for regular assessment should only be used for the payment of fees in respect of the applications to the Settlement Commission. Since the regular assessment challan has got only three foils the assessee may be requested to attach his copy of the challan alongwith the petition to the Settlement Commission and keep an attested copy of the challan for the purpose of the record. 5. As regards the procedure for grant of refund referred to in para 2 above it has been decided that the refund of such amount can be made by the concerned ITO by issuing a refund order for the required amount on the basis of a certificate from the Settlement Commission to be obtained by the assessee and a copy endorsed to the I.T.O. direct by the Commission. It should, however, be ensured that such refunds are classified as "Direct Refunds" under the head to which they are originally credited viz., 'Other Receipts'.