Dispute Resolution Committee (DRC)
The Dispute Resolution Committee (DRC) provides a mechanism for specified taxpayers to resolve disputes arising from assessment orders or TDS/TCS-related orders through a faceless process.
- Constitution and Composition of DRC –Constituted by the Central Government for each region under the jurisdiction of the Principal Chief Commissioner of Income-tax. Each DRC comprises:
o 2 retired IRS officers (who held the rank of CIT or higher for at least 5 years); and
o 1 serving officer, not below the rank of Principal CIT/CIT, nominated by the CBDT.
o Members are appointed for a term of 3 years and can be removed for valid reasons, with due opportunity of hearing.
- Eligible Applicants (Specified Persons) –A person is eligible to approach the DRC if he is not:
o Subject to detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974;
o Prosecuted and convicted under:
➢ Indian Penal Code (IPC), 1860;
➢ Unlawful Activities (Prevention) Act, 1967;
➢ Narcotic Drugs and Psychotropic Substances Act, 1985;
➢ Prohibition of Benami Transactions Act, 1988;
➢ Prevention of Corruption Act, 1988;
➢ Prevention of Money Laundering Act, 2002.
o Prosecuted or convicted under the Income Tax Act or the IPC;
o Convicted in a prosecution by the Income Tax authority;
o Notified under Section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;
o Subject to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, proceedings for the relevant year.
- Orders Eligible for Resolution before DRC –An application can be filed with DRC in respect of the following orders:
o Intimation under Section 143(1) where adjustments are objected to;
o Assessment or reassessment order except an order passed in pursuance of DRP directions;
o A draft assessment order referred to in Section 144C(1);
o Order for TDS/TCS matters, including intimations under Sections 200A(1), 206CB, 206C(6A), and orders under Section 201;
o Rectification order under Section 154 that enhances the assessment or reduces loss.
- Eligibility Criteria for Dispute Resolution –An assessee may approach DRC if:
o Aggregate variation proposed or made in the order does not exceed Rs. 10 lakh;
o Return of income has been filed for the relevant assessment year, and the returned income does not exceed Rs. 50 lakh;
o The order is not based on search (Section 132), requisition (Section 132A), survey (Section 133A), or information received under an agreement referred to in Sections 90/90A;
o For TDS/TCS cases, variation means the amount on which tax was not deducted/collected.
- Procedure and Filing
o Application to be filed in Form 34BC on the Income-tax e-filing portal;
o Application fee: Rs. 1,000;
o Proceedings shall be conducted under the e-Dispute Resolution Scheme, 2022, effective from 05.04.2022.
- Time Limits for Application
o Orders passed on or before 31.08.2024: File by 30.09.2024, if the appeal time has not expired or is pending before the JCIT(A) or CIT(A). If the appeal deadline has lapsed, application to the DRC is not permitted.
o Orders passed after 31.08.2024: Application must be filed within 1 month of receipt of the order.
- Powers of DRC– The DRC may:
o Reduce or waive penalty imposable under the Income Tax Act;
o Grant immunity from prosecution for any offence punishable under the Income Tax Act.
- Conditions for Granting Relief –DRC shall grant relief if the assessee has paid tax on the returned income in full and co-operated during DRC proceedings. However, no immunity is available where prosecution was initiated before receipt of the application. Immunity stands withdrawn if conditions are violated.
- Time Limit for Resolution Order—The DRC must pass the resolution order within 6 months from the end of the month in which the application is admitted. If DRC members differ in opinion, the decision shall be made by the majority.
- Modification of Order by AO –Upon receipt of DRC’s order:
o The AO shall pass the assessment, reassessment, or recomputation order where the specified order is a draft under Section 144C(1); or
o In any other case, modify the assessment, reassessment, or recomputation order, as directed.
o AO to act within 1 month from the end of the month of receipt of the DRC order.
- Finality of the DRC Order –No appeal or revision is permitted against the AO’s order passed in conformity with the DRC’s resolution. If the matter originally related to a draft order under Section 144C(1), no reference to DRP is allowed after DRC resolution.