Fermion masses

20.11.2009. The rules inter alia contain the procedure for filing objections, hearing of objections, power to call for or permit additional evidence, issue of directions, passing of assessment order, rectification of mistake and appeal against the assessment order.

The scheme did not provide for filing appeal by the tax department against the order passed in pursuance of the directions issued by the DRP. However the Finance Act 2012 has amended section 253 of the Act to provide that the CIT may direct the AO to file an appeal against final order passed by AO incorporating the directions of DRP, if the commissioner objects to any of the directions issued by the DRP. The appeal can be filed within 60 days of the date on which the final order is passed by the AO.

Provisions in the Act relating to reference to dispute resolution panel

Under section 144C (1), the Assessing Officer shall forward a draft of the proposed order of assessment to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.

Sub –section (2) provides the option to the eiligible assessee to either accept the draft order or file his objections against the draft order before the Dispute Resolution Panel. The exercise of option or filing of objections must be completed within 30 days from the date of the receipt of the draft order by

In the event of the assessee intimating to the Assessing Officer the acceptance of the variation; or if no objections are received from the assessee within the period mentioned above, the assessing officer shall pass the final assessment order notwithstanding the provisions relating to time period of passing the order contained in section 153 or section 153B of the Act. [Section 144C(3)&(4)]

Where the assessee has filed objections with the DRP, the Dispute Resolution Panel shall, issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. [Section 144C(5)]

Section 144C(6) provides that while issuing the directions, the Dispute Resolution Panel shall consider the following, namely:—

(a) draft order;

(b) objections filed by the assessee;

(c) evidence furnished by the assessee;

(d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority;

(e) records relating to the draft order;

(f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it.

The Dispute Resolution Panel may, before issuing any directions make or cause to be made such further enquiry, as it thinks fit. [Section 144C(7)]

The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. [Section 144C(8)]

The Finance Act 2012 has added a clarificatory explanation to sub-section (8) providing that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. The explanation is effective retrospectively from 1.04.2009

If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. [Section 144C(9)]

Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. [Section 144C(10)]

In a case where the proposed directions by the DRP are prejudicial to the interest of the assessee or the interest of the revenue, the directions cannot be issued without giving an opportunity of being heard to the assessee or to the revenue as the case may be. [Section 144C(11)]

Sub – section (12) has set the time limit for the issue of directions to nine months from the end of the month in which the draft order is forwarded to the eligible assessee.

Upon receipt of the directions, the Assessing Officer shall, in conformity with the directions, complete, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. This is notwithstanding anything to the contrary contained in section 153 or section 153B. [Section 144C(13)]

Under sub- section (14) of section 144C, the Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee.

The Finance Act 2012 has introduced sub-section (14A) to section 144C which is effective from 1-4-2013. This amendment is collateral to the GAAR provisions introduced by the Finance Act 2012:

(14A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12) of section 144BA.

The following meanings are assigned to the various expressions used in this section-

(a) "Dispute Resolution Panel" means a collegium comprising of three Commissioners of Income-tax constituted by the Board for this purpose;

(b) "eligible assessee" means

(i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and

(ii) any foreign company.