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CA Final · Direct Tax Laws & International Taxation · Dispute Resolution

A draft order was forwarded to Kestrel Overseas Ltd, a foreign company, which filed objections. The Dispute Resolution Panel found that an additional receipt of Rs 8 lakh, never raised by the assessee or the Assessing Officer but arising from the same assessment proceedings, was taxable. Which course is permitted under section 275?

The Panel may enhance the variation and consider the unraised receipt, since it arises from the assessment proceedings relating to the draft order. It must first give the assessee an opportunity of being heard. It cannot set aside variations or direct a fresh enquiry.

  1. AThe Panel may enhance the variation by considering the matter, after giving the assessee an opportunity of being heardCorrect
  2. BThe Panel may not consider it because the assessee did not raise it
  3. CThe Panel may set aside the variation and direct the Assessing Officer to make a fresh enquiry
  4. DThe Panel may direct further enquiry by the Assessing Officer and have a new assessment passed

Explanation

Section 275(8) lets the Panel confirm, reduce or enhance variations, and section 275(9) extends enhancement to matters arising from the assessment proceedings even if not raised by the assessee. Section 275(12) requires a hearing before any prejudicial direction. The Panel cannot set aside a variation or direct further enquiry and passing of the assessment order under sub-section (8).

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