Direct Tax Laws and International Taxation · Assessment Procedure including Dispute Resolution Process

Dispute Resolution Committee under Section 379, Income-tax Act 2025

Updated 11 October 2026 · Fact-checked

The Dispute Resolution Committee (DRC) under section 379 is a body the Central Government constitutes to settle small tax disputes. It can modify variations in a specified order, reduce or waive penalty, and grant immunity from prosecution. To solve questions, test the three conditions of a specified order, then apply the DRC's powers and the Assessing Officer's one-month time limit.

Understand Dispute Resolution Committee

A tax dispute usually means appeals, and appeals take years. Section 379 gives small taxpayers a faster option: take the dispute to a Dispute Resolution Committee instead of litigating.

The Central Government constitutes one or more DRCs under the rules. They work for persons or classes of persons that the Board specifies, who opt for dispute resolution and who meet the prescribed conditions. The dispute must arise from a variation in a specified order.

A specified order is an order, including a draft order, that the Board specifies. It must also pass three tests. First, the aggregate of variations proposed or made does not exceed ten lakh rupees. Second, it is not based on a search under section 247, a requisition under section 248, a survey under section 253, or information received under an agreement referred to in section 159(1) or (2). Third, if the assessee filed a return for the tax year, the total income as per that return does not exceed fifty lakh rupees.

The DRC, subject to prescribed conditions, may modify the variations in the specified order. It may also reduce or waive any penalty imposed or imposable under the Act, and grant immunity from prosecution for any offence punishable under the Act. The words "imposed or imposable" were substituted for "imposable" with effect from 1 April 2026, so a penalty already imposed can now also be reduced or waived.

After the DRC passes its order, the Assessing Officer must give effect to it. Where the specified order was a draft assessment order under section 275(1), the officer passes an order of assessment, reassessment or recomputation. In any other case, the officer modifies the existing order. In both cases this is done in line with the DRC's directions, within one month from the end of the month in which the DRC order is received. Section 379(3) operates irrespective of section 275.

Key rules to remember

Variation limit: Aggregate variations proposed or made ≤ ₹10,00,000; First test of a specified order. The limit is on the aggregate of variations, not on income.
Return income limit: Total income as per return ≤ ₹50,00,000; Applies where the assessee has filed a return for the tax year of the order. Equal to the limit passes; above it fails.
Excluded cases: No search (section 247), requisition (section 248), survey (section 253) or section 159(1)/(2) agreement information; An order based on any of these is not a specified order. This covers the assessee or any other person for search and requisition.
DRC powers: Modify variations + reduce or waive penalty (imposed or imposable) + grant immunity from prosecution; Subject to prescribed conditions, for a person whose dispute is resolved under the Chapter.
AO time limit: Give effect within 1 month from the end of the month in which the DRC order is received; Draft order case: pass assessment, reassessment or recomputation order. Other cases: modify the existing order.

How to solve Dispute Resolution Committee questions

Use this sequence for any question on the Dispute Resolution Committee. It makes you test eligibility before you discuss relief.

1Identify the order. Is it a final order or a draft order, and has the Board specified it?
2Add up all variations proposed or made in the order. Compare the total with ₹10 lakh.
3Check the basis of the order. If it rests on a search, requisition, survey or section 159(1)/(2) information, stop: the order is not a specified order.
4Check the return. If a return was filed for that tax year, compare total income as per the return with ₹50 lakh. Do not use the assessed income.
5If all tests pass, state that the assessee can opt for the DRC, subject to the prescribed conditions and the Board's specification.
6State the relief available: modification of variations, reduction or waiver of penalty, and immunity from prosecution.
7State the follow-up: the Assessing Officer gives effect to the DRC order within one month from the end of the month of receipt.
8Close with a clear conclusion in one line, such as eligible or not eligible, with the reason.

Quickest way: Three-test screen

When to use it: Use it for MCQs and short case questions asking whether an assessee can approach the DRC.

Test 1: variations total ₹10 lakh or less?
Test 2: no search, requisition, survey or section 159(1)/(2) information behind the order?
Test 3: return income ₹50 lakh or less, where a return was filed?
All three yes means eligible. One no means not a specified order.
Then recall the relief in one phrase: modify, waive penalty, grant immunity.

Common mistakes in Dispute Resolution Committee

Comparing assessed income with the ₹50 lakh limit.
Students assume the limit applies to income finally computed by the officer.
Fix: The test is total income as per the return filed. The ₹10 lakh test is the one that covers the officer's variations.
Treating the ₹10 lakh limit as a limit on tax or on one addition.
The word "aggregate" is overlooked.
Fix: Add all variations proposed or made in the order. Compare the sum with ₹10,00,000.
Allowing an order based on a survey or section 159 information.
Students remember only search and requisition as exclusions.
Fix: Remember all four: search (section 247), requisition (section 248), survey (section 253) and information under a section 159(1) or (2) agreement.
Confusing the DRC with the Dispute Resolution Panel or the penalty immunity in section 440.
Both deal with disputes and immunity, and the names sound similar.
Fix: The DRC is under section 379 and takes a specified order to a committee. Section 440 is an application to the Assessing Officer for waiver of penalty and immunity, with its own conditions such as payment of tax and interest and no appeal. The Dispute Resolution Panel is a separate topic.
Saying the DRC can only reduce penalty already imposed, or only penalty not yet imposed.
The 2026 amendment wording is missed.
Fix: The DRC may reduce or waive any penalty imposed or imposable under the Act.
Forgetting who gives effect to the DRC order and by when.
Students stop at the committee's powers.
Fix: The Assessing Officer acts within one month from the end of the month in which the DRC order is received.

Worked examples

Example 1

Rohan Mehta, a trader from Surat, filed his return for the tax year showing total income of ₹42,00,000. The Assessing Officer issued a draft order proposing additions of ₹4,50,000 and ₹3,25,000. The order is not based on any search, requisition or survey. Assuming the Board has specified the order, can Rohan opt for dispute resolution under section 379?

Show the solution

Aggregate variations = ₹4,50,000 + ₹3,25,000 = ₹7,75,000. This is not more than ₹10,00,000, so the first test is met.
The order is not based on search (section 247), requisition (section 248), survey (section 253) or section 159(1)/(2) information. The second test is met.
Rohan filed a return, so the return income applies: ₹42,00,000 is not more than ₹50,00,000. The third test is met.
The draft order is a specified order, and the Board has specified it. Rohan can opt for dispute resolution, subject to the prescribed conditions.

Answer: Yes. The draft order meets all three tests, so Rohan can opt for the DRC, subject to the prescribed conditions.

Example 2

Anita Industries, a partnership firm, received an assessment order with variations of ₹6,00,000 and ₹5,50,000. Its return showed total income of ₹30,00,000. The DRC later modified the variations and waived the penalty. The order of the DRC was received on 12 August. Answer: (a) Is the order a specified order? (b) By when must the Assessing Officer give effect to the DRC order?

Show the solution

Aggregate variations = ₹6,00,000 + ₹5,50,000 = ₹11,50,000.
₹11,50,000 exceeds ₹10,00,000, so the first test fails. The return income of ₹30,00,000 is within ₹50,00,000, but all tests must be met.
So the order is not a specified order, and the firm could not validly go to the DRC on these facts.
For the time limit, assume the DRC order was validly passed. The Assessing Officer must act within one month from the end of the month of receipt. The order was received in August, so the month ends on 31 August.
One month from 31 August gives 30 September.

Answer: (a) No, the aggregate variations of ₹11,50,000 exceed ₹10,00,000. (b) If a valid DRC order had been received on 12 August, the officer would have to give effect to it by 30 September.

Exam tips

In case-based MCQs, compute the aggregate variations first. Most options are built around the ₹10 lakh and ₹50 lakh limits.
Check the basis of the order in the facts. A mention of a survey or foreign information agreement is usually the trap.
Write the answer in the order eligibility, powers, Assessing Officer's follow-up, and end with a recommendation.
Learn the penalty wording exactly: reduce or waive penalty imposed or imposable. Also learn that immunity is from prosecution for offences punishable under the Act.
Do not mix up the DRC with section 440 immunity, section 519 immunity tendered by the Central Government for evidence, or the Dispute Resolution Panel.

Practice questions from Assessment Procedure including Dispute Resolution Process

Dispute Resolution Committee 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: frequently asked questions

What is the Dispute Resolution Committee under section 379?

It is a committee the Central Government constitutes under the rules to resolve disputes from variations in a specified order. It covers persons or classes specified by the Board who opt for it and meet the prescribed conditions. It can modify variations, reduce or waive penalty, and grant immunity from prosecution.

Who is eligible to approach the DRC?

The assessee must be one specified by the Board and must meet the prescribed conditions. The dispute must be from a specified order: variations of ₹10 lakh or less in aggregate, no search, requisition, survey or section 159 agreement information basis, and return income of ₹50 lakh or less where a return was filed.

What relief can the DRC give?

It can modify the variations in the specified order, subject to prescribed conditions. It can reduce or waive any penalty imposed or imposable. It can also grant immunity from prosecution for any offence punishable under the Act, for a person whose dispute is resolved.

What happens after the DRC passes its order?

The Assessing Officer must follow it. If the specified order was a draft assessment order, the officer passes the final order. Otherwise the officer modifies the existing order. This must be done within one month from the end of the month in which the DRC order is received.