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

A foreign company files objections against a draft assessment order, and the Dispute Resolution Panel issues directions. Which statement is correct under the Income-tax Act, 2025?

The Panel may confirm, reduce or enhance the variations proposed in the draft order, but it cannot set aside a variation or issue a direction for further enquiry and passing of the assessment order. Its directions bind the Assessing Officer, and enhancement is expressly permitted.

  1. AThe Panel may set aside a proposed variation and direct the Assessing Officer to make fresh enquiries
  2. BThe Panel may confirm, reduce or enhance the variations, but cannot set aside a variation or direct further enquiry and passing of the assessment orderCorrect
  3. CThe Panel may only confirm or reduce variations, never enhance them
  4. DThe Panel's directions are advisory and the Assessing Officer may depart from them

Explanation

Section 275(8) lets the Panel confirm, reduce or enhance variations but bars it from setting aside any variation or directing further enquiry and passing of the order. Section 275(11) makes directions binding, so the advisory option is wrong, and enhancement is expressly permitted.

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