Section 275: reference to the Dispute Resolution Panel (DRP)

The draft order and the assessee's options

Where the Assessing Officer proposes any variation prejudicial to an eligible assessee, he must first forward a draft of the proposed assessment order (the "draft order") to the assessee, irrespective of anything else in the Act.

Within thirty days of receiving the draft order, the eligible assessee must either file acceptance of the variations with the Assessing Officer, or file objections with both the Dispute Resolution Panel and the Assessing Officer.

If the assessee accepts, or does not object

If the assessee intimates acceptance of the variation, or no objection is received within the thirty-day period, the Assessing Officer completes the assessment on the basis of the draft order.

The assessment order must then be passed within one month from the end of the month in which the acceptance is received, or the objection-filing period expires.

If the assessee objects: the DRP's role

Where an objection is received, the Dispute Resolution Panel issues directions, in writing, stating the points for determination, its decision on each, and the reasons for the decision, to guide the Assessing Officer in completing the assessment.

Before issuing directions, the DRP may make further enquiry itself, or have an income-tax authority make the enquiry and report back.

The DRP may confirm, reduce or enhance the variations proposed in the draft order - including considering matters arising from the assessment proceedings even if not raised by the assessee - but it cannot set aside a proposed variation or send it back for further enquiry.

If DRP members differ in opinion, the majority view prevails. Every DRP direction is binding on the Assessing Officer.

No DRP direction prejudicial to the assessee or to the interests of the revenue can be issued without giving the assessee and the Assessing Officer an opportunity of being heard.

The DRP must issue its directions within nine months from the end of the month in which the draft order was forwarded to the eligible assessee.

After the DRP directs

On receiving the DRP's directions, the Assessing Officer must complete the assessment in conformity with those directions, without giving the assessee any further hearing, within one month from the end of the month in which the direction is received.

Who is an "eligible assessee" and when this section does not apply

"Dispute Resolution Panel" means a collegium of three Principal Commissioners or Commissioners of Income-tax constituted by the Board.

"Eligible assessee" means: (i) any person whose variation arises from an order of the Transfer Pricing Officer under section 166(6), and (ii) any non-resident (other than a company), or any foreign company - subject to certain exclusions.

This section does not apply where the assessment or reassessment order is passed with the prior approval of the Principal Commissioner or Commissioner under section 274(12) (the GAAR-approval route), nor to proceedings under Chapter XVI-B (the block-assessment provisions covered by sections 292 to 300 of this Act).

Frequently asked questions