Tag Archives: settlement

income tax settlement commission


The Finance Act, 2021 has amended the provisions of the Income-tax Act, 1961 (“the Act”) to inter alia provide that the Income-tax Settlement Commission (“ITSC”) shall cease to operate with effect from 01.02.2021. Further, it has also been provided that no application for settlement can be filed on or after 01.02.2021, which was the date on which the Finance Bill, 2021 was laid before the Lok Sabha. In order to dispose off the pending settlement applications as on 31.01.2021, the Central Government has constituted Interim Board for Settlement (hereinafter referred to as the “Interim Board”), vide Notification no. 91 of 2021 dated 10.08.2021. The taxpayers, in the pending cases, have the option to withdraw their applications within the specified time and intimate the Assessing Officer about such withdrawal.

It has been represented that a number of taxpayers were in advanced stages of filing their application for settlement before the ITSC as on 01.02.2021. Further, some taxpayers have approached High Courts requesting that their applications for settlement may be accepted. In some cases, the Hon’ble High Courts have given interim relief and directed acceptance of applications of settlement even after 01.02.2021. This has resulted in uncertainty and protracted litigation.

In order to provide relief to the taxpayers who were eligible to file application as on 31.01.2021, but could not file the same due to cessation of ITSC vide Finance Act, 2021, it has been decided that applications for settlement can be filed by the taxpayers by 30th September, 2021 before the Interim Board if the following conditions are satisfied:-

  1. The assessee was eligible to file application for settlement on 31.01.2021 for the assessment years for which the application is sought to be filed (relevant assessment years); and
  2. all the relevant assessment proceedings of the assessee are pending as on the date of filing the application for settlement.

Such applications, subject to their validity, shall be deemed to be “pending applications” under clause (eb) of section 245A of the Act and shall be disposed of by the Interim Board as per the provisions of the Act.

It is clarified that taxpayers who have filed such applications shall not have the option to withdraw such applications as per the provisions of section 245M of the Act. Further, the taxpayers who have already filed application for settlement on or after 01.02.2021 as per the direction of the various High Courts and who are otherwise eligible to file such application, as per para 3 above, on the date of filing of the said application shall not be required to file such application again.

Legislative amendments in this regard shall be proposed in due course.

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settlement of running account

SEBI has vide its circular dated 14th June, 2021 slightly modified the settlement of running account of client’s funds lying with the trading member as follows:

5.1. The settlement of running account of funds of the client shall be done by the TM after considering the End of the day (EOD) obligation of funds as on the date of settlement across all the Exchanges, at least once within a gap of 30 /
90 days between two settlements of running account as per the preference of the client.
5.2. In case of client having any outstanding trade position on the day on which settlement of running account of funds is scheduled, a TM may retain funds calculated in the manner specified below:
5.2.1. Entire pay-in obligation of funds outstanding at the end of the day on settlement of running account, of T day & T-1 day.
5.2.2. Margin liability as on the date of settlement of running account, in all segments and additional margins (maximum upto 125% of total margin liability on the day of settlement). The margin liability shall include the end of the day margin requirement excluding the MTM and pay-in obligation, therefore, TM may retain 225% of the total margin liability in all the segments across exchanges. Computation for arriving at retention of excess client funds based on above points would be as under:

^ Excess securities of Rs. 55,000 (i.e. 280000-225000) is not required to be unpledged.
5.2.3. TM will first adjust the value of securities (after applying appropriate haircut) accepted as collateral from the clients by way of ‘margin pledge’ created in the Depository system for the purpose of margin and value of commodities (after applying appropriate haircut) respectively and thereafter TM shall adjust the client funds.
5.2.4. It is clarified that the excess securities (in the form of margin pledge) or any cash equivalent collateral identifiable with the client and deposited with CC, after adjustment of the 225% of margin liability need not be unpledged.
5.3. Client’s running account shall be considered settled only by making actual payment into client’s bank account and not by making any journal entries. Journal entries in client account shall be permitted only for levy / reversal of charges in client’s account.
5.4. For the clients having credit balance, who have not done any transaction in the 30 calendar days since the last transaction, the credit balance shall be returned to the client by TM, within next three working days irrespective of the date when the running account was previously settled.

5.5. In cases where physical payment instrument (cheque or demand draft) is issued by the TM towards the settlement of running account due to failure of electronic payment instructions, the date of realization of physical instrument
into client’s bank account shall be considered as settlement date and not the date of issue of physical instrument.

5.6. Retention of any amount towards administrative / operational difficulties in
settling the accounts of regular trading clients (active clients), shall be
5.7. The Authorized person is not permitted to accept client’s funds and securities. The TM should keep a proper check. Proprietary trading by Authorized person should be permitted only on his own funds and securities and not using any of the client’s fund.
5.8. Once the TM settles the running account of funds of a client, an intimation shall be sent to the client by SMS on mobile number and also by email. The intimation should also include details about the transfer of funds (in case of
electronic transfer – transaction number and date; in case of physical payment instruments – instrument number and date). TM shall send the retention statement along with the statement of running accounts to the clients as per
the existing provisions within 5 working days.
5.9. Client shall bring any dispute on the statement of running account, to the notice of TM within 30 working days from the date of the statement.

This is interesting because my broker sends me margin statement & settlement statement, which i don’t understand heads or tails of it. The whole system is presently opaque and not transparent at all. They should send the information which we lay persons can understand it fully. Never have i got monies settled into my bank account so far. There is something seriously wrong with the system. SEBI should look into it.


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Companies Fresh Start Scheme 2020

MCA has issued a circular dated 30th March, 2020 wherein it has given companies a one time opportunity to file old forms without any additional filing fee between 1st April 2020 and 30th September, 2020. Immunity from launch of prosecution or proceedings for imposing penalty shall be provided only to the extent of delay in filings and not with substantive violation of law. Any other consequential proceedings including proceedings involved interest of shareholders vis-a-vis the company concerned shall not be covered by the immunity.

Where the company has filed an appeal against a notice issued by the ROC for violation of the provisions of the Act with respect to delay in filings, then the company should first withdraw the appeal before filing for immunity under this Scheme. But this is applicable only with respect to statutory filing under the Act and will not apply in cases where company has filed a petition before the NCLT where the company has been struck off under the provisions of section 248 of the Act, due to non conduct of any business activities for two years consecutively, for revival of the company. Also it is not clear where companies have been under strike off due to non filings and their directors DIN disqualified – whether the disqualifications would be removed so that they can do the filings. Ideally that should happen so that companies in the fault can then revive their companies with little cost involved. There are many such companies in that category and it would be great if MCA can redress that aspect.

Where orders have been passed against the company for non filings and penalties levied but the appeals could not be lodged and if the last date for filing appeal falls between March to May 2020 then a period of 120 additional days shall be provided to that company to file its appeal to the relevant authorities. During that 120 days additional period no action shall be taken against the company concerned in so far as it pertains to delay in filing

Companies who have taken advantage of this fresh start scheme have to further file an immunity form called CFSS-2020. This is required to be filed only after closure of the Scheme AND after all the forms have been taken on record or approved by the MCA but not before 6 months from the closure of the scheme. There shall be no immunity in case of appeal pending before any court of law or in respect of management disputes in the company before any court or tribunal. Also there is no immunity where the court has already ordered conviction OR an order imposing penalty has been passed and no appeal has been preferred against such orders before the Scheme has come into force.

This Scheme will not apply in following cases

a) company against which final notice for strike off has already been initiated u/s 248 of the Act;

b) where strike off application has already been made by the company;

c) companies which have been amalgamated under a scheme of amalgamation or compromise under the Act;

d) where company has filed application for obtaining Dormant status for the company under section 455 of the Act;

e) to vanishing companies;

f) to forms for increase in authorised share capital (SH-7) or charge related documents

After the immunity is granted, the ROC/ RD shall withdraw the prosecution proceedings, if any, pending before the concerned court and prosecution for adjudication of penalties u/s 454 of the Act, other than those where the court has already ordered conviction or penalty has been imposed by the court/ tribunal or adjudicating authority.

Further the defaulting inactive companies can, after all the filings have been made uptodate, take advantage of the dormant company provisions or strike off company provisions under the Act.

Click to access Circular12_30032020.pdf




Simultaneously a LLP settlement scheme is also running for delayed filings of form 3 & 4

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LLP settlement scheme

MCA has announced a settlement scheme for Limited Liability Partnerships (LLPs) who have not filed their essential documents like the LLP agreement, addition or deletion of partners, changes in the LLP agreement, the annual filings of solvency, and annual return of LLP. Presently LLPs can file these documents late by making payment of additional fees of Rs.100 per day.

Under the settlement scheme, they can pay these forms i.e. form 3, 4, 8 & 11 by paying additional filing fees of Rs.10/- per day subject to a maximum of Rs.5000/- per form.

The scheme runs from 16th march 2020 to 13th june, 2020.

Once the LLP has filed the documents under the settlement scheme, they shall be freed from any prosecution also.

So ideally, all the LLPs who have not filed their documents for years, this is a boon scheme for them to escape with minimum liability. They should avail of the same urgently.

Copy of the MCA circular can be found at the MCA site.


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SEBI settlement proceedings

Press release issued by SEBI on 19th November, 2014

SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 (Regulations) enables settlement of administrative and civil proceedings under the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956 and

the Depositories Act, 1996. As per the extant practice, settlement of administrative and civil proceedings commences generally after issuance of a formal show cause notice. However, this does not bar any person from suo motu approaching SEBI for settlement, if he is aware of the probable SEBI action. The relevant provisions of the securities laws, i.e., section 15JB of SEBI Act, section 23JA of the Securities Contracts (Regulation) Act, 1956 and section 19-IA of the Depositories Act, 1996 and corresponding regulation 3 of the Regulations entitle a person to approach SEBI even before the initiation of the enforcement proceedings:

This being so, it is noted that the extant practice of providing the first opportunity to settle administrative and civil proceedings only post show cause notice stage results in delay in conclusion of proceedings and resultant wastage of resources. SEBI, has, therefore, decided that in minor violations intimation will be sent about the impending enforcement action to the concerned parties upon approval of the said actions by the competent authority and before a show cause notice is issued. This would enable parties to seek settlement of proceedings or make voluntary submissions even prior to receipt of a detailed show cause notice. If any party avails such an opportunity to respond to such a notice, the proposed proceedings may be settled(unless rejected) or discontinued on the basis of the submissions of the noticee (if any).

The notice of impending enforcement proceedings which will be treated as a show cause notice under regulation 4 of the Regulations, contain the charges and relevant extracts of findings of investigation/inspection. Such notices would only cover minor violations specified under Chapter VI and Column 2 of Table XII of Chapter VII of Schedule II of the Regulations. In these cases, procedure for settlement as specified in the Regulations will be followed.

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