Finance Bill, 2022 is proposed to amend section 245MA of the Income-tax Act, 1961 (‘Act’) to enable the Assessing Officer to pass an order giving effect to the directions or order of the Dispute Resolution Committee (DRC).
Amendment in section 245MA of the Act related to Dispute Resolution Committee
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.
After the resolution of the dispute by the DRC the assessed income of the person who had applied to DRC has to be determined, which will be followed by, inter alia, initiation of penalty proceedings, if any and issuance of demand notice under section 156 of the Act. However, the existing provisions of the said section do not contain any provision which will enable the Assessing Officer to pass an order giving effect to the order or directions of the Dispute Resolution Committee under the said section
Therefore, it is proposed to insert a new sub-section to this section to enable the Assessing Officer to pass an order giving effect to the resolution of dispute by the DRC.
However, since DRC is an alternate dispute resolution mechanism itself, a taxpayer may opt for approaching either the Dispute Resolution Panel under section 144C of the Act or the DRC under section 245MA of the Act, and the AO shall pass the final order in conformity with the order by the DRC even in the case of an eligible assessee.
Amendment of section 245MA.
67. In section 245MA of the Income-tax Act, after sub-section (2), the following sub-section shall be inserted, namely:–
“(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 recomputation; or
(b) in any other case, modify the order of assessment, reassessment or recomputation,
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.”.
Explaining the proposed amended provisions of section 2456MA
Clause 67 seeks to amend section 245MA of the Act relating to Dispute Resolution Committee.
The said section, inter alia, provides that the Central Government shall constitute one or more Dispute Resolution Committees, for specified persons who may opt for dispute resolution under the said section and who fulfil specified conditions mentioned in the said section.
It is proposed to insert a new sub-section (2A) in the said section to provide that notwithstanding anything contained in section 144C, upon receipt of order of the Dispute Resolution Committee, the Assessing Officer shall 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 recomputation or in any other case, modify the order of assessment, reassessment or recomputation, which shall be passed in conformity with the directions contained in such order of the Dispute Resolution Committee, within a period of one month from the end of the month in which such order is received.
This amendment will take effect from 1st April, 2022.
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