360 Degree overview of the E-disputes Resolution Scheme – 2022
By the Finance Act -2021, the Government has added section 245MA [Chapter XIX-AA] to the Income Tax Act -1961. The said scheme provides a mechanism to resolve the disputes by e-mode. It has empowered the CBDT to issue the notification for dispute resolution. The same has been finally done and the notification to that has been issued by the CBDT.
Let us have a short overview of the scheme:
1. CBDT rolls out Dispute Resolution Scheme (e-DRS), 2022, to minimize litigation.
In pursuance of section 245MA in the Income-tax Act, 1961 (hereinafter referred to as “the Act”), the Central Board of Direct Taxes (CBDT) had notified the e-Dispute Resolution Scheme, 2022 (e-DRS) with the aim to reduce litigation and provide relief to eligible taxpayers. Section 245MA of the Act also provides for the constitution of Dispute Resolution Committees (DRC).
2. Dispute Resolution Committees (DRCs) constituted in all 18 jurisdictional Pr. CCIT regions across the country
3. As per e-DRS, a taxpayer can opt for e-Dispute Resolution against the ‘specified order’ under certain conditions
a) e-DRS application must be filed within one month from the date of receipt of specified order
b) If appeal is pending, e-DRS application is to be filed on or before 30.09.2024.
4. The e-DRS enables the taxpayer, who fulfils certain specified conditions as stipulated in section 245MA of the Act, to file an application electronically for dispute resolution to the DRC designated for the region of Principal Chief Commissioner of Income-tax having jurisdiction over the taxpayer. To this end, DRCs have been constituted in all 18 jurisdictional Pr. CCIT regions across the country. The list of such DRCs along with their email addresses is available on:
https://www.incometax.gov.in/iec/foportal/help/all-topics/statutory-forms/file-statutory-form/popular-form/form-34-BC.
5. As per e-DRS, a taxpayer can opt for e-Dispute Resolution against the ‘specified order’ as defined in clause (b) of the Explanation to section 245MA of the Act, which includes an order in which the aggregate sum of variations proposed or made does not exceed Rs.10 lakh and returned income for the relevant assessment year does not exceed Rs. 50 lakh. Further, such order should not be based on search/surveys or information received under an agreement referred to under section 90 or 90A of the Act.
6. According to e-DRS, a DRC may make modification to the variations in the specified order and decide to grant reduction/waiver of penalty and prosecution in accordance with the provision of rule 44DAC of the Income-tax Rules, 1962 (hereinafter referred to as “the Rules”). The DRC is mandated to pass its order within six months from the end of month in which an application for dispute resolution is admitted by it.
7. The application for e-DRS is to be filed in Form No. 34BC referred to in rule 44DAB of the Rules, on the e-filing portal of the Income Tax Department, within one month from the date of receipt of specified order. In cases where appeal has already been filed and is pending before the Commissioner of Income-tax (Appeals), the application for e-DRS, is to be filed on or before 30.09.2024. In cases where the specified order has been passed on or before 31.08.2024 and the time for filing appeal against such order before CIT (Appeals) has not lapsed, the application for dispute resolution can be filed on or before 30.09.2024.
8. The Taxpayer can access e-DRS module by login on income tax portal https://eportal.incometax.gov.in. Login to your account using PAN / TAN as user ID ->Go to Dashboard ->e-File ->Income Tax Forms ->File Income Tax Forms -> under tab ‘Persons not dependent on any source of Income (Source of Income not relevant)> Dispute Resolution Committee in Certain Cases (Form 34BC) -> Fill Form No. 34BC -> Review the details -> E-Verify the Form No. 34BC using Aadhar OTP, EVC or DSC.
This is another initiative by the Government towards minimising litigation.
One may note that the e-disputes resolution scheme can be referred only for waiver of penalty imposable or immunity from prosecution or both. No power has been conferred on to reduce or nullify the addition. For all this, the only option is to approach the appellate authorities by filing an appeal.
The relevant Section 245MA of the Income Tax Act – 1961 & Rule 45DAA, 45DAB, 45DAC & 45DAD pursuant to which the DRS is notified is as under:
INCOME TAX ACT – 1961
CHAPTER XIX-AA
DISPUTE RESOLUTION COMMITTEE IN CERTAIN CASES51
Dispute Resolution Committee.
245MA. (1) The Central Government shall constitute, one or more Dispute Resolution Committees, as may be necessary, in accordance with the rules made under this Act, for dispute resolution in the case of such persons or class of persons, as may be specified by the Board, who may opt for dispute resolution under this Chapter in respect of dispute arising from any variation in the specified order in his case and who fulfils the specified conditions.
(2) The Dispute Resolution Committee, subject to such conditions, as may be prescribed51, shall have the powers to reduce or waive any penalty imposable under this Act or grant immunity from prosecution for any offence punishable under this Act in case of a person whose dispute is resolved under this Chapter.
52[(2A) Notwithstanding anything contained in section 144C, upon receipt of the order of the Dispute Resolution Committee under this section, the Assessing Officer shall,—
(a) in a case where the specified order is a draft of the proposed order of assessment under sub-section (1) of section 144C, pass an order of assessment, reassessment or re-computation; or
(b) in any other case, modify the order of assessment, reassessment or re-computation,
in conformity with the directions contained in the order of the Dispute Resolution Committee within a period of one month from the end of the month in which such order is received.]
(3) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of dispute resolution under this Chapter, so as to impart greater efficiency, transparency and accountability by—
(a) eliminating the interface between the Dispute Resolution Committee and the assessee in the course of dispute resolution proceedings to the extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale and functional specialisation;
(c) introducing a dispute resolution system with dynamic jurisdiction.
(4) The Central Government may, for the purposes of giving effect to the scheme made under sub-section (3), 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 said notification:
Provided that no such direction shall be issued after the 31st day of March, 2023:
53[Provided further that the Central Government may amend any direction, issued under this sub-section on or before the 31st day of March, 2023, by notification in the Official Gazette.]
(5) Every notification issued under sub-sections (3) and (4) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.
Explanation.— For the purposes of this section,—
(a) “specified conditions” in relation to a person means a person who fulfils the following conditions, namely:—
(I) where he is not a person,—
(A) in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):
Provided that—
(i) such order of detention, being an order to which the provisions of section 9 or section 12A of the said Act do not apply, has been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board; or
(ii) such order of detention being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of section 9, or on the report of the Advisory Board under section 8, read with sub-section (2) of section 9, of the said Act; or
(iii) such order of detention, being an order to which the provisions of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub-section (3) of the said section, or on the basis of the report of the Advisory Board under section 8, read with sub-section (6) of section 12A, of the said Act; or
(iv) such order of detention has not been set aside by a court of competent jurisdiction;
(B) in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code (45 of 1860), the Unlawful Activities (Prevention) Act, 1967 (37 of 1967), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Prohibition of Benami Transactions Act, 1988 (45 of 1988), the Prevention of Corruption Act, 1988 (49 of 1988) or the Prevention of Money-laundering Act, 2002 (15 of 2003) has been instituted and he has been convicted of any offence punishable under any of those Acts;
(C) in respect of whom prosecution has been initiated by an income-tax authority for any offence punishable under the provisions of this Act or the Indian Penal Code (45 of 1860) or for the purpose of enforcement of any civil liability under any law for the time being in force, or such person has been convicted of any such offence consequent upon the prosecution initiated by an income-tax authority;
(D) who is notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (27 of 1992);
(II) such other conditions, as may be prescribed.
(b) “specified order” means such order, including draft order, as may be specified by the Board, and,—
(i) aggregate sum of variations proposed or made in such order does not exceed ten lakh rupees;
(ii) such order is not based on search initiated under section 132 or requisition under section 132A in the case of assessee or any other person or survey under section 133A or information received under an agreement referred to in section 90 or section 90A;
(iii) where return has been filed by the assessee for the assessment year relevant to such order, total income as per such return does not exceed fifty lakh rupees.]
INCOME TAX RULES – 1962
ART IX-AA
DISPUTE RESOLUTION COMMITTEE
Constitution of Dispute Resolution Committee.
44DAA. (1) The Central Government shall constitute a Dispute Resolution Committee for every region of the 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.]
Application for resolution of dispute before the Dispute Resolution Committee.
44DAB. (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 fulfils the specified conditions.
(2) Every application in connection with resolution of dispute shall be accompanied by a fee of one thousand rupees.
[Power to reduce or waive penalty imposable or grant immunity from prosecution or both under the Act.
44DAC. (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
Definitions
44DAD. 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 fulfils the specified conditions.]
For availing the benefit under this scheme, taxpayers shall be required to file Form No. 34BC which is also attached herewith.
The copy of the order is as under:
