It has been held by a Special Bench Decision of the Settlement Commission that the Settlement Commission has the power to waive interest in exceptional circumstances, such as financial hardship. There are no general guidelines, laid down by the Special Bench.

As far as the levy of interest, u/s 234A,B & C, for shortfall of Advance tax is concerned, if an Order of Intimation u/s 143(1))(a) has been made, then the interest is calculated up to that date and not up to the stage of the Final Order of Settlement.

It is advisable that the assessee approaches the Settlement Commission before the assessment is completed.

As far as interest u/s 220(2) is concerned, with regard to the non-payment of demand, raised by the Income-tax Department, the Settlement Commission has held that all assessments interest will be charged up to the date of Application if no assessment has been made before the date of application. If the assessment is already completed before the date of application, then interest, u/s 220(2), is charged up to the date of the admission order.

(It is to be noted that the Income Tax Department has challenged these Special Bench decisions and Special Leave Petition (SLPs) are admitted in the Supreme Court).