Circular 16/2014

Circular No. 16 /2014

What this is

Circular 16/2014 was issued by the Central Board of Direct Taxes on 17 November 2014. Its subject is Circular No. 16 /2014.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Corrects paragraph 61.2 of Circular No. 3 of 2008, the explanatory circular on the Revised Settlement Scheme in Chapter XIX-A. The earlier paragraph had said that an assessment is deemed complete only on the date the assessment order is served on the applicant. That is replaced, with effect from 1 June 2007, so that the assessment is deemed to have been completed on the date on which the assessment order is passed. The rest of paragraph 61.2 stands, including that an intimation under section 143(1) is not an assessment order and so does not bar a settlement application, whether or not the time for a notice under section 143(2) has expired.

Why it was issued

The statement in paragraph 61.2 of Circular No. 3 of 2008 was inadvertent and out of line with the Explanation to clause (b) of section 245A, which provides that a proceeding for assessment is deemed to have concluded on the date on which the assessment is made.

Who it reaches

Applicants to the Income-tax Settlement Commission whose assessment order was passed but not yet served
Assessees who filed a settlement application after receiving an intimation under section 143(1)
Assessing Officers and Commissioners contesting the maintainability of a settlement application

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.143	s.270
s.245A	no counterpart recorded

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

Circular No. 16 /2014
F.No.142/14/2007-TPL(Part)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
****
Dated: 17th November, 2014
SUB:- Clarification in respect of Circular No.3 of 2008 dated 12/3/2008 of
CBDT – reg.

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 paras
61.1 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 in
consonance 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."

(Gaurav Kanaujia)
Director (TPL-IV)

Copy to:-
1. PS to FM/ OSD to FM/ OSD to MoS(R).
2. PS to Secretary (Revenue).
3. The Chairman, Members and all other officers in CBDT of the rank
of Under Secretary and above.
4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax –
with a request to circulate amongst all officers in their regions/
charges.
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG
(NADT)/ Pr. DGIT (L&R).
6. Media Co-ordinator and Official spokesperson of CBDT.
7. DIT(IT)/ DIT(RSP&PR)/ DIT(Audit)/ DIT(Vig.)/ DIT(Systems)/
DIT(O&MS)/ DIT(Spl. Inv.).
8. The Comptroller and Auditor General of India (30 copies).
9. Joint Secretary and Legal Advisor, Ministry of Law and Justice, New
Delhi.

What to watch

The change is retrospective to 1 June 2007, so it can defeat an application filed in the gap between the passing of the order and its service.
The window for a settlement application now closes on the date the assessment order is passed, not on the date it reaches the assessee.
The section 143(1) limb is untouched: an intimation is still not an assessment order.
This corrects one paragraph of Circular No. 3 of 2008 only; the remaining sub-paragraphs 61.1 to 61.17 continue as they were.

Where you meet it

On an objection to the maintainability of an application before the Settlement Commission, where the date of the assessment order decides whether the proceeding was still pending before the Assessing Officer.

What it names

It mentions. Circular No. 16/2014, Circular No. 3/2008

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 10/2025 — Relaxation of time limit for processing of returns of income filed electronically which were incorrectly invalidated by 28 July 2025
Circular No. 7/2025 — Relaxation of time limit for processing of valid returns of income filed electronically pursuant to order u/s 119(2)(b) 25 June 2025
Notification No. 56/2022 [F.No. 225/91/2022/ITA-II] — [To BE Published in the Gazette of INDIA Part II section 3 Subsection (ii) Extraordinary] 28 May 2022
Circular No. 21/2021 — One time relaxation for verification of all income tax returns e filed for the assessment year 2020 21 which are pending 28 December 2021
Notification No. 25/2021 [F. No. 187/3/2020-ITA-I] / SO 1437(E) — New Delhi, the 31st March, 2021 31 March 2021
Notification No. 26/2021 [F. No. 370142/33/2020-TPL] / SO 1438(E) — Ministry of Finance 31 March 2021

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.