Shamima Siddique*

A High-Level Alternative Dispute Resolution Body

• Mandated to resolve tax disputes by serving as a neutral mediator.
• Consensus rather than conflict, as the main approach.
• Objective is to allow non-habitual tax offenders to come clean.
• Orders of the Commission are final and conclusive.

Achievements by the Income Tax Settlement Commission

• 35 years of successful performance as apex ADR body for direct tax disputes.
• With 4 benches at Mumbai, New Delhi, Chennai and Delhi, it has resolved over 4500 cases of tax disputes in last 10 yrs and over 15000 cases in its life-time.

Reduction of Tax Compliance costs

• Each case before Commission may involve proceedings for an average number of 6 Assessment years.
• Each assessment year may have assessment and Penalty proceedings and many procedural actions.
• These proceedings are to be defended before various  Appellate authorities, which may take 5-7 years.
• In its life-time Commission could help reduction of at least 1.35 lakhs tax proceedings of various nature.

Achievements:Significant Revenue Collection

• The incremental revenue gain for the Income Tax Department after protracted litigation before various appellate authorities is insignificant.
• On the other hand, the revenue gain through disclosure before the Commission and subsequent enhancement by the Commission is significant.

Revenue Gain through Settlement (Data for the year 2010-2011)

In 400 cases settled by the Commission-

• Returned income was:                                                            Rs. 206 Crores.
• Income finally settled by the Commission was:                     Rs. 595 Crores.
• Net Revenue Gain was:                                                          187%.

Generally, upto 20% of the additions to income made by the Income Tax Authorities get sustained before the appellate authorities/Judiciary.

Time-Bound Conclusive End To Tax Disputes

• Settlement Commission is required to pass settlement order in respect of all proceedings included in an application within 18 months.
• In the regular channel, each proceeding may take several years to conclude.

Assured Upfront Tax Payment

• Before filing settlement application, taxpayer is required to pay full amount of tax and interest on the income disclosed before the Commission.
• In the regular channel, actual full tax collection is not assured till proceedings are sustained by the appellate authorities, which may take 5-7 years.
• Net present value of tax collected very high in case of Settlement Commission.

Vision of Settlement Commission

• 3 new Benches announced by the Finance Minister in 2011. Likely to be set up in New Delhi(2) and Mumbai(1).
• Use of IT to monitor settlement application
• Interactive website (www.itscindia.gov.in) with cause-list.

 The Commission was outcome of the recommendations of  WANCHOO COMMITTEE (1971) which conceived of the Commission as a mechanism for providing room for settlement and compromise for one-time tax evaders or unintended defaulters.

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*Director (Media & Communication)

  SS-185/SF-185/28-11-2011

  RTS/