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CMA Final · Direct Tax Laws and International Taxation

Assessment Procedure including Dispute Resolution Process

Assessment procedure is the path from filing a return to a final tax liability: return, assessment, reassessment, appeal, and the alternate dispute routes (Dispute Resolution Panel, Dispute Resolution Committee, advance ruling, settlement). To solve questions, identify the order, the forum, the time limit and the conditions, then apply them to the facts.

What this chapter covers

This chapter covers how a return of income becomes an assessed tax liability and how you challenge that liability. It runs in a clear sequence: filing the return, the assessment types, correcting or reopening an assessment, appeals and revision, and then the alternate dispute routes outside regular litigation.

The dispute resolution part is where the Income-tax Act, 2025 gives you precise rules. Section 275 sets up the Dispute Resolution Panel (DRP) for eligible assessees. Section 379 sets up the Dispute Resolution Committee (DRC) for smaller disputes. Section 357 lists the orders you can appeal to the Commissioner (Appeals). Learn these as conditions and time limits, because that is how questions are framed.

The chapter connects to the rest of Paper 15. Computation chapters give you the income that is assessed. International taxation and transfer pricing feed directly into the DRP route, because an eligible assessee includes a person whose variation arises from a Transfer Pricing Officer's order under section 166(6), and any non-resident (not being a company) or foreign company. So this chapter lets you answer procedure questions attached to those cases.

Procedure questions are rule-driven, so they are among the easier marks to secure if you learn the conditions exactly. They appear both as MCQs, where one wrong limit makes an option wrong, and as case-based written answers where you must advise on the right forum and time. Students who learn limits by heart and ignore conditions lose marks, so this chapter rewards careful, exact study.

Assessment Procedure including Dispute Resolution Process: topics in the order to study them

  1. 1Return of Income and Types of ReturnsEvery assessment starts from the return, so learn who files, which return type applies and how defects are corrected first.
  2. 2Types of Assessment and Assessment ProcedureOnce you know the return, learn how it is processed and assessed, including the draft order step that links to the DRP.
  3. 3Reassessment, Rectification and Time LimitsThis builds on assessment, since you can only reopen or correct something you understand, and time limits apply across the chapter.
  4. 4Appeals and RevisionLearn the regular litigation route after the assessment orders are clear, starting with the orders listed in section 357.
  5. 5Dispute Resolution CommitteeStudy this after appeals because it is an alternate route with conditions you can compare against the regular appeal path.
  6. 6Advance Rulings and Settlement of CasesKeep this last as it covers forward-looking certainty and settlement, which are easier once the main dispute path is firm.

How to prepare Assessment Procedure including Dispute Resolution Process

Treat this chapter as a flow of events with forums, conditions and time limits. Build one running chart and add to it as you study each topic.

  1. Draw a timeline from return filing to final order, and mark each assessment type and the order it produces.
  2. Make a table of time limits in your notes. For the DRP: 30 days for the assessee to accept or object after the draft order, directions within nine months from the end of the month the draft order is forwarded, and the Assessing Officer completes the assessment within one month from the end of the month the directions are received.
  3. Learn section 275 as a sequence: draft order, acceptance or objection, directions, binding effect, final assessment. Note that the DRP can confirm, reduce or enhance variations but cannot set aside a variation or direct further enquiry.
  4. Learn section 379 conditions exactly: the aggregate variation in the specified order must not exceed ten lakh rupees, and where a return is filed, total income as per the return must not exceed fifty lakh rupees. Search, requisition, survey and treaty-information based orders are excluded.
  5. Read the list of appealable orders in section 357 and group them by type: assessment orders, intimations, penalty orders, agent orders and others. Practise spotting which orders are not appealable there, such as those passed under DRP directions.
  6. Solve case-style questions where you must name the forum, the time limit and the next step, and write a short recommendation for the client.
  7. Revise using one page of limits and conditions every few days, ideally on your phone.

Common mistakes in Assessment Procedure including Dispute Resolution Process

  • Mixing up the DRP and the DRC

    Fix: Remember that the DRP is for eligible assessees (transfer pricing cases, non-residents and foreign companies) under section 275, while the DRC is for small disputes under section 379 with value limits.

  • Treating the DRP as able to send the case back

    Fix: State that it may confirm, reduce or enhance, but cannot set aside a variation or direct further enquiry and a fresh order.

  • Mixing the DRC limits with other amounts

    Fix: Tie ten lakh to the aggregate variation and fifty lakh to total income as per the return, and note the exclusion of search, requisition, survey and treaty-information cases.

  • Counting time limits from the wrong date

    Fix: Always identify the trigger event, then count from the end of the month in which it happens, as the text says.

  • Assuming every order can be appealed to the Commissioner (Appeals)

    Fix: Check the order against section 357. Assessment orders passed under DRP directions are excluded from the appeal in the relevant clauses.

  • Using old Income-tax Act, 1961 section numbers

    Fix: For the June 2027 term use the Income-tax Act, 2025, with the tax year and its section numbers, and update your notes accordingly.

Last-day revision: Assessment Procedure including Dispute Resolution Process

  • The DRP is a collegium of three Principal Commissioners or Commissioners of Income-tax constituted by the Board.
  • An eligible assessee for the DRP includes a person whose variation arises from the Transfer Pricing Officer's order under section 166(6), and any non-resident (not being a company) or foreign company.
  • The Assessing Officer must first forward a draft order if the proposed variation is prejudicial to the eligible assessee.
  • The assessee has 30 days from receiving the draft order to accept, or to file objections with the DRP and the Assessing Officer.
  • If the assessee accepts or does not object in time, the Assessing Officer completes the assessment on the draft order.
  • DRP directions must be issued within nine months from the end of the month in which the draft order is forwarded.
  • The DRP may confirm, reduce or enhance variations, but may not set aside a variation or direct further enquiry.
  • DRP directions bind the Assessing Officer, who must complete the assessment without a further hearing to the assessee within one month from the end of the month of receipt.
  • DRP directions need a hearing for the assessee, and for the Assessing Officer on directions prejudicial to the revenue.
  • Section 379 DRC: aggregate variation not above ten lakh rupees, and return income not above fifty lakh rupees where a return is filed.
  • The DRC may modify variations, reduce or waive penalty imposed or imposable, and grant immunity from prosecution.
  • Orders based on search, requisition, survey or treaty information are outside the DRC route.

Assessment Procedure including Dispute Resolution Process practice questions

Assessment Procedure including Dispute Resolution Process in other exams

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

Assessment Procedure including Dispute Resolution Process: frequently asked questions

Which law applies to this chapter for the June 2027 term?

The Income-tax Act, 2025 applies, with its tax year concept and new section numbers. Do not answer using the Income-tax Act, 1961 numbering.

What is the difference between the DRP and the DRC?

The DRP under section 275 handles draft orders for eligible assessees, such as those with transfer pricing variations and non-residents. The DRC under section 379 handles smaller disputes within value limits and can also waive penalty and grant immunity from prosecution.

Can the DRP increase my income?

Yes. It may confirm, reduce or enhance the variations in the draft order, and for enhancement it can consider any matter arising from the assessment proceedings even if you did not raise it. It still cannot set aside a variation or order further enquiry.

How long does the Assessing Officer have after DRP directions?

The Assessing Officer must complete the assessment in line with the directions, without giving the assessee a further hearing, within one month from the end of the month in which the directions are received.

How should I study this chapter in less time?

Focus on a single page of forums, conditions and time limits, then practise short case questions. Spend most effort on section 275, section 379 and the appealable orders in section 357.