CBDT vide Notification No. 26/2022 dated 05.04.2022 in G.S.R 274(E) through Income-tax (Seventh Amendment) Rules, 2022 notifies the Constitution of Dispute Resolution Committee in accordance with the provisions of section 245MA of the Income-tax Act, 1961 (‘Act’).
Further, The Board has notified e-Form No. 34BC for electronic filing of an application for settlement of the dispute before the DRC.
Finance Act, 2021 introduced a new chapter XIX-AA in the Act consisting of section 245MA for constituting Dispute Resolution Committee (“DRC”) for specified persons who may opt for dispute resolution under the said section and who fulfil specified conditions mentioned in the said section.
While presenting the Union Budget 2021 Finance Minister Nirmala Sitaraman announced the setting up of the Dispute Resolution Committee.
Finance Bill, 2021 has proposed to constitute Dispute Resolution Committee (“DRC”) for small and medium taxpayers and to abolish the age-old Settlement Commission with immediate effect. The interesting fact about DRC is that it is introduced as a faceless institution.
For reducing litigation and to give an impetus to dispute resolution for small taxpayers, a Dispute Resolution Committee is proposed to be constituted. A taxpayer having taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh shall be eligible to approach the Committee. For ensuring efficiency, transparency and accountability, the procedure of the Committee will be conducted in a faceless manner.
Consequently, the Settlement Commission shall be discontinued from 01.02.2021. However, the pending cases shall be decided by an Interim Board if opted by the applicant.
Section 245MA has the following features-
(i) The Central Government shall constitute one or more Dispute Resolution Committee (DRC).
(ii) This committee shall resolve disputes of such persons or class of person which shall be specified by the Board. The assessee would have an option to opt for or not opt for the dispute resolution through the DRC.
(iii) Only those disputes where the returned income is fifty lakh rupee or less (if there is a return) and the aggregate amount of variation proposed in specified order is ten lakh rupees or less shall be eligible to be considered by the DRC.
(iv) If the specified order is based on a search initiated under section 132 or requisition made under section 132A or a survey initiated under 133A or information received under an agreement referred to in section 90 or section 90A,of the Act, such specified order shall not be eligible for being considered by the DRC.
(v) Assessee would not be eligible for benefit of this provision if there is detention, prosecution or conviction under various laws as specified in the proposed section.
(vi) Board will prescribe some other conditions in due course which would also need to be satisfied for being eligible under this provision.
(vii) The DRC, subject to such conditions as may be prescribed, shall have the powers to reduce or waive any penalty imposable under this Act or grant immunity from prosecution for any offence under this Act in case of a person whose dispute is resolved under this provision.
(viii) The Central Government has also been empowered to make a scheme by notification in the Official Gazette for the purpose of dispute resolution under this provision. The scheme shall impart greater efficiency, transparency and accountability by eliminating interface to the extent technologically feasible, by optimising utilisation of resources and introducing dynamic jurisdiction.The Central Government may, for the purposes of giving effect to the scheme, by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no such direction shall be issued after the 31st day of March, 2023. Every such notification shall, as soon as may be after the notification is issued, be laid before each House of Parliament.
Now, with this notification, CBDT has constituted the Dispute Resolution Committee for every region of Principal Chief Commissioner of Income-tax.
Each DRC shall have three members and shall be appointed by the Central Government for a period of three years.
The decision of the Dispute Resolution Committee shall be by majority.
An application to the Dispute Resolution Committee shall be made in Form No. 34BC by the person, who opts for dispute resolution under section 245MA of the Act which shall be accompanied by a fee of Rs. 1,000.
The DRC shall have the power to reduce or waive penalty imposable or grant immunity from prosecution or both under the Act. However, no immunity shall be granted by the Dispute Resolution Committee in a case where the proceedings for the prosecution for an offence have been initiated before the date of receipt of the application.
Read the full text of Notification No. 26/2022 dated 05.04.2022 on Constitution of Dispute Resolution Committee
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th April, 2022
G.S.R 274(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section 245MA read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement.— (1) These rules may be called the Income-tax (Seventh Amendment) Rules, 2022.
(2) They shall come into force with effect from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), after PART IX-A, the following PART shall be inserted, namely:–
‘PART IX-AA DISPUTE RESOLUTION COMMITTEE
44DAA. Constitution of Dispute Resolution Committee.– (1) The Central Government shall constitute a Dispute Resolution Committee for every region of Principal Chief Commissioner of Income-tax for dispute resolution, as provided under the Chapter XIX-AA of the Act.
(2) Each Dispute Resolution Committee shall consist of three members, as under:–
(a) two members shall be retired officers from the Indian Revenue Service (Income-tax), who have held the post of Commissioner of Income-tax or any equivalent or higher post for five years or more; and
(b) one serving officer not below the rank of Principal Commissioner of Income-tax or Commissioner of Income-tax as specified by the Board.
(3) The members shall be appointed by the Central Government for a period of three years.
(4) The Central Government may fix a sum to be paid as fee to a member, who is retired officer, on a per case basis, along with a sitting fee, so decided by the Board.
(5) The decision of the Dispute Resolution Committee shall be by majority.
(6) The Central Government may, by recording reasons in writing and after giving an opportunity of being heard, remove any member from the Dispute Resolution Committee.
44DAB. Application for resolution of dispute before the Dispute Resolution Committee.– (1) An application to the Dispute Resolution Committee shall be made in Form No. 34BC by the person, who opts for dispute resolution under section 245MA of the Act in respect of dispute arising from any variation in the specified order in his case and who fulfills the specified conditions.
(2) Every application in connection with resolution of dispute shall be accompanied by a fee of one thousand rupees.
44DAC. Power to reduce or waive penalty imposable or grant immunity from prosecution or both under the Act.– (1) The Dispute Resolution Committee shall, upon receipt of intimation as per clause (xix) of sub-paragraph (1) of paragraph 4 of the e-Dispute Resolution Scheme, 2022, and subject to such conditions as it may think fit to impose for the reasons to be recorded in writing, grant to the person who made the application for dispute resolution under section 245MA of the Act, waiver of penalty imposable or immunity from prosecution or both, in respect of the order which is the subject matter of resolution, if it is satisfied that such person has,––
(i) paid the tax due on the returned income in full if available; and
(ii) co-operated with the Dispute Resolution Committee in the proceedings before it.
(2) Notwithstanding anything contained in sub-rule (1), no immunity shall be granted by the Dispute Resolution Committee in a case where the proceedings for the prosecution for an offence have been initiated before the date of receipt of the application, as referred to in clause (i) of sub-paragraph (1) of paragraph 4 of the e-Dispute Resolution Scheme, 2022.
(3) An immunity granted to a person under sub-rule (1) shall stand withdrawn, if such person fails to comply with any of the conditions subject to which the immunity was granted and thereupon the provisions of the Act shall apply as if such immunity or waiver had never been granted.
44DAD. Definitions
For the purposes of this sub-chapter,–
(i) “Dispute Resolution Committee” means the Dispute Resolution Committee constituted under section 245MA of the Act;
(ii) the “specified order” in relation to a dispute under section 245MA of the Act means:–
(a) a draft order as referred to in sub-section (1) of section 144C of the Act;
(b) an intimation under sub-section (1) of section 143 of the Act or sub-section (1) of section 200A of the Act or sub-section (1) of section 206CB of the Act, where the assessee or the deductor or the collector objects to the adjustments made in the said order;
(c) an order of assessment or reassessment, except an order passed in pursuance of directions of the Dispute Resolution Panel;
(d) an order made under section 154 of the Act having the effect of enhancing the assessment or reducing the loss; or
(e) an order made under section 201 of the Act or an order made under sub-section (6A) of section 206C of the Act and in respect of which the following conditions are satisfied, namely:––
(A) the aggregate sum of variations proposed or made in such order does not exceed ten lakh rupees;
(B) the return has been furnished by the assessee for the assessment year relevant to such order and the total income as per such return does not exceed fifty lakh rupees; and
(C) the order in the case of the assessee is not based on,–
(I) search initiated under section 132 of the Act or requisition made under section 132A of the Act in the case of the assessee or any other person; or
(II) survey carried out under section 133A of the Act; or
(III) information received under an agreement referred to in section 90 or 90A of the Act.
Explanation: For the purposes of clause (e) of sub-rule (ii), the variation in the specified order relating to default in deduction or collection of tax at source, shall refer to the amount on which tax has not been deducted or collected in accordance with the Act.
(iii) the “specified conditions” in relation to a person who opts for dispute resolution under section 245MA of the Act, means a person in respect of whom:–
(A) the conditions mentioned in sub-clause (I) of clause (a) of the Explanation to the section 245MA of the Act are satisfied;
(B) proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015) have not been initiated for the assessment year for which resolution of dispute is sought.
(iv) the “specified person” for the purposes of section 245MA of the Act shall be a person who fulfills the specified conditions.
3. In the principal rules, in the Appendix-II, after Form No.34BB, the following FORM shall be inserted, namely:–
“FORM NO. 34BC
(See rule 44DAB)
(e-Form)
Application to the Dispute Resolution Committee
.
.
.
.
[Notification No. 26 /2022/[F.No. 370142/05/2022-TPL-Part 1(Part1)]
SHEFALI SINGH, Under Secy.
Note:- The principal rules were published vide notification S.O. 969(E), dated the 26th March, 1962 and last amended vide notification GSR 256(E), dated the 04th April, 2022.
Download CBDT Notification No. 26/2022 dated 05.04.2022 on Constitution of Dispute Resolution Committee in pdf format
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