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The Central Board of Direct Taxes (CBDT) has extended the deadline for filing settlement applications till September 30 for eligible taxpayers, Business Standard reported on Tuesday. The move would provide relief to tax payers who were eligible to file applications as on January 31, but could not file the same due to Income Tax Settlement Commission (ITSC). It also comes on the back of various high courts providing interim relief by directing acceptance of applications of settlement even after February 1.

In the pending cases, the taxpayers have the option of withdrawing their applications within the specified time and intimate about the same to the assessing officers.

The central government had constituted the ITSC to dispose off the pending settlement applications as on January 31. From February 1, the ITSC ceased to exist.

ITSC to be replaced by new dispute resolution system

The ITSC was mandated to resolve income tax and wealth tax disputes between the Income Tax department and assessees and had powers to grant immunity from prosecution and also from imposition of penalty.

It was noted by the CBDT that a number of representations have been received that many taxpayers were in the advanced stages of filing their application for settlement before ITSC as on February 1.

The over four decade old body was shut shop in the 2021-22 budget to make way for a new dispute resolution system for small tax payers.

The new system, which is yet to be set up will replace the ITSC and would be made available to assesses with taxable income of up to Rs 50 lakhs in cases where disputed income is up to Rs 10 lakhs.