Provision for constitution of Alternate Dispute Resolution Mechanism [Section 144C] :
An alternate dispute resolution mechanism which will aid speedy resolution of disputes on a fast track basis has now been provided for under the Income-tax Act, 1961. The significant features of the alternate dispute resolution mechanism are briefed hereunder –
(1) The Assessing Officer shall, forward a draft order of assessment to the eligible assessee if he proposes to make, on or after 1st October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.
“Eligible assessee” means,-
(i) any person in whose case such variation 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.
(2) The eligible assessee shall, within thirty days of the receipt by him of the draft order, –
(a) file his acceptance of the variations to the Assessing Officer; or
(b) file his objections, if any, to such variation with,—
(i) The Dispute Resolution Panel; and
(ii) The Assessing Officer.
“Dispute Resolution Panel” means a collegium comprising of three commissioners of Incometax constituted by the CBDT for this purpose.
(3) The Assessing Officer has to complete the assessment on the basis of the draft order, if—
(a) the assessee intimates the acceptance of the variation to the Assessing Officer; or
(b) no objections are received within the period of 30 days specified in (2) above.
(4) The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order within one month from the end of the month in which,—
(a) the acceptance is received; or
(b) the period of filing of objections expires.
(5) The Dispute Resolution Panel shall, in a case where any objections are received, issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment.
(6) The Dispute Resolution Panel shall issue such directions, after considering 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.
(7) The Dispute Resolution Panel may, before issuing any such directions –
(a) make such further enquiry, as it thinks fit; or
(b) cause any further enquiry to be made by any income tax authority and report the result of the same to it.
(8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order. However, it cannot set aside any proposed variation or issue any direction as mentioned in (5) above, for further enquiry and passing of the assessment order.
The power of the DRP to enhance the variation as mentioned in section 144C(8) shall include and shall be deemed to have always included the power to consider any matter arising out of the assessment proceedings relating to the draft order. This power to consider any issue shall be irrespective of whether the matter was raised by the eligible assessee or not.
While exercising the aforesaid power for considering any matter arising out of the assessment proceedings relating to the draft order, the DRP can only enhance the variation. The power of reducing the variation is not accorded to DRP in respect of such matters.
(9) 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.
(10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assess ing Officer.
(11) If any direction is prejudicial to the interest of the assessee or the interest of the revenue, then, the same can be issued only after an opportunity of being heard is given to the assessee or the Assessing Officer, as the case may be.
(12) Such direction has to be issued within nine months from the end of the month in which the draft order is forwarded to the eligible assessee.
(13) Upon receipt of such direction, the Assessing Officer has to complete the assessment in accordance with the same, within one month from the end of the month in which the direction is received. This is notwithstanding anything contained in section 153 or section 153B. There is no requirement of providing any further opportunity of being heard to the assessee.
(14) The CBDT is empowered to make rules for the efficient functioning of the Dispute Resolution Panel and speedy resolution of the objections filed by the eligible assessee.