e-Dispute Resolution Scheme, 2022
The e-Dispute Resolution Scheme, 2022, notified via Notification No. 27/2022 dated 05.04.2022, provides a faceless framework for the resolution of specified disputes by the Dispute Resolution Committee (DRC). The DRC offers taxpayers an alternative remedy to avoid prolonged litigation by resolving eligible disputes arising from assessment and TDS/TCS-related orders.
- Preliminary Screening by DRC
o The DRC verifies whether the application meets the eligibility criteria and whether the order in question qualifies under the scheme.
o If the DRC intends to reject the application, it issues a show-cause notice, giving the assessee a chance to respond.
o Based on the response:
➢ DRC may reject the application, or
➢ Admit the application for further processing.
o If rejected, the assessee may appeal before JCIT(A) or CIT(A), and the time taken by the DRC will be excluded from the limitation period for such appeal.
- Post-Admission Process– Once an application is admitted:
o The DRC may call for relevant records from the Income Tax Authority.
o It may also seek a report from the Assessing Officer (AO).
o Requests for further queries or information are sent via registered e-mail, and the assessee must respond electronically.
o The assessee must also submit proof of withdrawal of any parallel appeal filed before JCIT(A), CIT(A), or the Dispute Resolution Panel (DRP), within 30 days of admission. Otherwise, the application is liable to be rejected.
- Types of Decision by DRC –After reviewing all material, DRC can pass any of the following three types of resolution orders:
o Modification with Relief –
➢ Makes changes to the assessment order in favour of the assessee.
➢ Waives penalties and grants immunity from prosecution.
➢ For waiver of penalty or immunity from prosecution or both, the following conditions should be satisfied:
o Full tax on returned income is paid.
o Assessee has cooperated during the proceedings.
No immunity if prosecution was already initiated before the DRC application
o Immunity Without Modification –
➢ Does not alter the assessment order.
➢ Still waives penalty and grants immunity from prosecution if the assessee meets the above conditions.
o No Modification –
➢ Does not modify or grant any immunity.
➢ Merely disposes of the application, which is still not prejudicial to the assessee.
- Timeline and Implementation –DRC must pass the resolution order within 6 months from the end of the month in which the application is admitted.
AO to issue modified order to give effect to the DRC’s decision and serve a demand notice on the assessee. The assessee shall submit proof of payment to the DRC and AO. Upon proof of payment, DRC grants immunity and/or penalty waiver.
- Termination of Proceedings –DRC may terminate proceedings at any stage, after recording the reasons in writing and giving the assessee a chance to be heard, if:
o The assessee fails to cooperate or respond.
o The assessee conceals material facts or provides false evidence.
o The assessee doesn’t pay the demand as per the DRC’s order.
In such cases, the DRC will notify the income-tax authority for appropriate further action under the Income-tax Act.
- Powers of the Dispute Resolution Committee –Any proceedings before the DRC are treated like court proceedings under certain sections of the Indian Penal Code. Income-tax authorities are considered Civil Courts for limited purposes. If there’s any difficulty in implementing the DRC’s order, the DRC can fix it on its own or on request, as long as it is not inconsistent with the Income-tax Act.
- No Further Appeal or Reference
o No appeal or revision can be filed against the AO’s order that gives effect to the DRC’s resolution.
o In case of a Section 144C(1) order, the assessee cannot approach the DRP after DRC resolution.
- Privacy and Confidentiality
o Proceedings are not open to the public.
o Only the assessee, authorised representatives, and concerned officers are allowed to attend (even virtually).
- Personal Hearing and Communication Protocol
o Personal Appearance – Not required in faceless proceedings. However, the appellant may request a personal hearing, which shall be:
➢ Allowed by DRC;
➢ Conducted via video conferencing or telephony;
➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.
➢ Assessee’s authorised representative must file the authorisation electronically in advance.
o Mode of Communication—All internal communications between DRC and any income-tax authority shall be exchanged exclusively by electronic mode, and communication between the DRC and the assessee or the authorised representative shall be exchanged electronically to the extent technologically feasible. Electronic records are authenticated by the DRC and the PCIT/CIT through digital signature. The assessee or any other person shall authenticate an electronic record by affixing a digital signature or logging in via a registered account.
All communication is delivered through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The assessee’s response is deemed authenticated once acknowledged via the registered account.
- Language of the DRC
o Language of proceedings: Hindi or English, as per assessee’s choice.
o If documents are in any other language, an English translation is mandatory
- Power to specify format, mode, procedure, and processes– The PDGIT/DGIT, in consultation with the jurisdictional PCCIT/PDGIT, in charge of DRC, with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of NFAC and the Appeal Unit in an automated environment, including:
o Service of orders, or other communications;
o Receipt of information or documents in response;
o Issue of official email-id to the DRC;
o Issuance of acknowledgements for responses received;
o Provision of e-proceedings facilities (login, status tracking, display, downloads);
o Access, verification, and authentication of submissions during the dispute resolution proceedings;
o Centralised receipt, storage, and retrieval of documents; and
o General administration and grievance redressal mechanism in the respective DRC.