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

A Dispute Resolution Panel is hearing objections of a foreign company against a draft order proposing an addition of Rs 8,00,000. During the proceedings it finds a further Rs 3,00,000 of income arising from the same assessment proceedings, which the assessee never raised. Which statement follows from section 275 of the Income-tax Act, 2025?

The Panel may enhance the variation and may consider the unraised matter, because section 275(9) extends its enhancement power to matters arising from the proceedings. It must still give the assessee an opportunity of being heard, and it cannot set aside variations or direct further inquiry.

  1. AThe Panel may enhance the variation, including by considering the unraised matter, giving the assessee an opportunity of being heardCorrect
  2. BThe Panel may only reduce or confirm the variation and cannot consider matters not raised by the assessee
  3. CThe Panel may set aside the addition and direct the Assessing Officer to make fresh inquiries
  4. DThe Panel may enhance the variation without hearing the assessee as it is a collegium

Explanation

Section 275(8) lets the Panel confirm, reduce or enhance variations, and 275(9) extends enhancement to matters arising from the proceedings even if not raised by the assessee. Section 275(12) requires an opportunity of being heard before directions prejudicial to the assessee. Setting aside or directing further inquiry is prohibited by 275(8).

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