Direct Tax Laws & International Taxation · Dispute Resolution

Dispute Resolution Committee: Scope and Eligibility (Section 379, Income-tax Act, 2025)

Updated 5 October 2026 · Fact-checked

The Dispute Resolution Committee (DRC) under section 379 is a departmental panel that settles small tax disputes early. You can apply only if you are an eligible assessee: you hold a specified order, the proposed variation and returned income are within the limits, and the case is not excluded (search or requisition, treaty information, or detention or prosecution under listed Acts). Test the order, the limits, then the exclusions.

Understand Dispute Resolution Committee: Scope and Eligibility

A Dispute Resolution Committee is a panel set up under section 379 of the Income-tax Act, 2025. Its aim is to resolve small-value disputes at an early stage, so the assessee does not go through the long appeal ladder of Commissioner (Appeals), Tribunal and courts.

The DRC is constituted by the Board (CBDT), as under the earlier section 245MA position. Each committee comprises three Principal Commissioners or Commissioners of Income-tax. It is not an independent judicial body. It is an executive mechanism. Think of it as a settlement table, not a court.

Not everyone can use it. The route is meant for an assessee who has received a specified order. As defined in section 379, this is the order in which the Assessing Officer proposes a variation to the assessee's income or loss that is prejudicial to the assessee, including a draft order proposing such a variation. It is not open for any variation proposed in any order. The test has three layers: (1) the nature of the dispute, which is a prejudicial variation proposed in a specified order; (2) money limits on the aggregate variation and on the returned income; (3) exclusions.

The exclusions, in line with the earlier section 245MA position, are:

Cases where a search was initiated, or books of account, other documents or assets were requisitioned.
Cases where the order is based on information received under an agreement with a foreign country or specified territory (a tax treaty). This does not cover all international tax cases.
Cases where the assessee has been detained or prosecuted under the listed Acts: COFEPOSA, FEMA, NDPS, UAPA, the Prevention of Corruption Act, the Benami Act, the Black Money Act, PMLA and others in the list.

The benefit is practical: early settlement of the dispute. That is why the exclusions matter. Parliament did not want serious evasion or offence cases closed through a small-dispute route.

In the exam, treat this topic as a screening exercise. Read the facts, tick each condition, and give a clear conclusion on eligibility. Procedure and time limits belong to the next topic, and the DRC's powers and immunity are tested separately.

Key rules to remember

Eligibility test: specified order: Specified order (order in which the Assessing Officer proposes a variation, as defined in section 379) received by the assessee + variation prejudicial to the assessee; The DRC route is for an assessee who has received a specified order and meets the conditions for that order. It is not for any variation in any order.
Eligibility test: variation limit: Aggregate of variations proposed in the specified order ≤ ₹10,00,000; The limit is on the total of all proposed variations in the specified order, not on each item. The condition is met at exactly ₹10,00,000, as section 379 sets the limit.
Eligibility test: returned income limit: Returned income ≤ ₹50,00,000; This is the income declared in the return, not the income after the proposed variation. Section 379 sets this limit.
Exclusion: search and requisition cases: Search initiated, or books of account, other documents or assets requisitioned → not eligible; State it in plain words: search cases and requisition cases are excluded.
Exclusion: treaty information cases: Order based on information received under an agreement with a foreign country or specified territory (tax treaty) → not eligible; This is the equivalent of the earlier section 245MA position. State it in plain words. Do not stretch it to all international tax cases.
Exclusion: detention or prosecution: Assessee detained or prosecuted under the listed Acts → not eligible; Listed Acts include COFEPOSA, FEMA, NDPS, UAPA, the Prevention of Corruption Act, the Benami Act, the Black Money Act, PMLA and others. Recall the category and give examples.
Constitution: DRC = committee of 3 Principal Commissioners or Commissioners of Income-tax, constituted by the Board (CBDT); Say it is a departmental body, not a tribunal. This follows the earlier section 245MA position.

How to solve Dispute Resolution Committee: Scope and Eligibility questions

Use this screening method for any question on who can approach the DRC. It works for MCQs and for written answers in provision-facts-conclusion form.

1Identify the order. Check that the assessee has received a specified order proposing a variation, and that the variation is prejudicial to the assessee.
2Add up the variations proposed in that order. Compare the total with the ₹10,00,000 limit.
3Read the returned income, not the assessed income. Compare it with the ₹50,00,000 limit.
4Scan the facts for exclusions: search or requisition, information received under a tax treaty, detention or prosecution under the listed Acts.
5If any one condition fails, conclude not eligible and name the failed condition. If all pass, conclude eligible.
6Write the answer in three parts: the provision (conditions), the facts (your tick-marks), and the conclusion. If the question asks about constitution, say the committee is constituted by the Board (CBDT) and has three Principal Commissioners or Commissioners.

Quickest way: Three-gate check

When to use it: Use this for MCQs and short case-scenario questions when you have under two minutes.

Gate 1: Is the total proposed variation in the specified order ₹10 lakh or less? If not, stop.
Gate 2: Is the returned income ₹50 lakh or less? If not, stop.
Gate 3: Is there any search or requisition, treaty-information, or detention or prosecution flag in the facts? If yes, stop.
Passing all three gates means eligible, provided the dispute is a prejudicial variation in a specified order.

Common mistakes in Dispute Resolution Committee: Scope and Eligibility

Testing the ₹50 lakh limit against assessed income instead of returned income.
Students see a final income figure in the facts and use it automatically.
Fix: Underline the words 'returned income' or 'income declared in the return'. Use only that figure for the second limit.
Applying the ₹10 lakh limit to each addition separately.
The facts list several additions, and each one looks small.
Fix: Add all the proposed variations first. The limit applies to the aggregate.
Treating a search case as eligible because the amounts are small.
Students focus on the money tests and forget the exclusions.
Fix: Always scan the facts for search, requisition, treaty-information and detention or prosecution flags before concluding.
Calling the DRC a quasi-judicial tribunal like the ITAT.
Students group all dispute bodies together.
Fix: Write that it is a departmental committee of three Principal Commissioners or Commissioners, constituted by the Board (CBDT), and not an independent tribunal.
Saying a person at exactly ₹10,00,000 variation or ₹50,00,000 returned income is ineligible.
Students read 'limit' as 'below the limit'.
Fix: The conditions are 'does not exceed'. Equal to the limit passes.
Treating any variation in any order as eligible for the DRC route.
Students skip the check that the order is a specified order.
Fix: First confirm that the assessee has received a specified order proposing a variation. Only then test the limits and exclusions.
Writing the conclusion without naming the condition that failed or passed.
Students rush to the answer to save time.
Fix: State each condition and your finding in one line. Marks are given for each tested condition.

Worked examples

Example 1

Meera Textiles, a partnership firm, filed a return showing income of ₹38,00,000. The Assessing Officer has proposed variations of ₹6,00,000 and ₹3,50,000 in a specified order, both prejudicial to the firm. There was no search or requisition, and no tax-treaty information or detention or prosecution angle. Can the firm approach the Dispute Resolution Committee?

Show the solution

Provision: an eligible assessee who has received a specified order can approach the DRC under section 379. Aggregate proposed variations must not exceed ₹10,00,000 and returned income must not exceed ₹50,00,000, and no exclusion must apply.
Facts on variation: ₹6,00,000 + ₹3,50,000 = ₹9,50,000. This is below ₹10,00,000, so the limit is met.
Facts on returned income: ₹38,00,000 is below ₹50,00,000, so this limit is met.
Facts on exclusions: no search or requisition, no order based on treaty information, no detention or prosecution under the listed Acts. No exclusion applies.
The variations are prejudicial and proposed in a specified order, so the nature of the dispute is also satisfied.

Answer: Yes. The firm is an eligible assessee because the aggregate variation of ₹9,50,000 is within ₹10,00,000, the returned income of ₹38,00,000 is within ₹50,00,000, and no exclusion applies.

Example 2

Rohan filed a return showing income of ₹44,00,000. A specified order proposes one variation of ₹8,00,000. The order arises from a search conducted on his premises earlier. Rohan says the amounts are well within the limits, so he should be allowed to approach the DRC. Advise him.

Show the solution

Provision: the DRC route requires the money limits to be met and also that the case is not an excluded one. Search and requisition cases are excluded.
Facts on variation: ₹8,00,000 is below ₹10,00,000, so the limit is met.
Facts on returned income: ₹44,00,000 is below ₹50,00,000, so this limit is met.
Facts on exclusions: the order arises from a search. This falls in the excluded category.
Meeting the money tests is necessary but not enough. A single failed exclusion makes the person ineligible.

Answer: No. Rohan satisfies both money limits, but the case arises from a search and is excluded. He is not an eligible assessee and cannot approach the DRC. He must use the other remedies available for the order.

Exam tips

Write the answer in provision-facts-conclusion form. State the conditions first, tick them against the facts, then conclude.
In case scenarios, the examiner often keeps the money limits satisfied and hides the failure in an exclusion. Read every line of the facts.
Add the variations yourself. Case facts usually split the amount into two or three items so that you must sum them.
Keep this topic separate from the next topic on application procedure and time limits and from the topic on DRC powers and immunity. Answer only what the question asks.
Before the exam, revise the definition of specified order, the ₹10,00,000 and ₹50,00,000 limits and the three exclusions as stated in section 379 of the Income-tax Act, 2025.

Practice questions from Dispute Resolution

Dispute Resolution Committee: Scope and Eligibility in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Dispute Resolution Committee: Scope and Eligibility: frequently asked questions

What is the Dispute Resolution Committee under section 379 of the Income-tax Act, 2025?

It is a departmental committee that settles small tax disputes early. It is constituted by the Board (CBDT) and has three Principal Commissioners or Commissioners of Income-tax. Only an eligible assessee who has received a specified order can approach it.

Who can apply to the Dispute Resolution Committee?

An assessee whose specified order carries a prejudicial proposed variation. The aggregate variation must not exceed ₹10,00,000 and the returned income must not exceed ₹50,00,000. The case must also be free of the excluded categories.

Which cases are excluded from the DRC?

Search and requisition cases are excluded. So are orders based on information received under a tax-treaty agreement with a foreign country or specified territory, and cases where the assessee has been detained or prosecuted under listed Acts such as COFEPOSA, FEMA, NDPS, UAPA, the Prevention of Corruption Act, the Benami Act, the Black Money Act and PMLA.

Is the ₹50 lakh limit tested on the assessed income?

No. It is tested on the returned income, which is the income declared in the return. The ₹10 lakh limit is tested on the total of the proposed variations.