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

Mehta Overseas Ltd, a foreign company, receives a draft assessment order on 20 March proposing variations, and the Dispute Resolution Panel is approached. Which combination is correct under the Income-tax Act, 2025?

The Panel must issue directions within nine months from the end of the month in which the draft order was forwarded, here March, and must give the assessee and the Assessing Officer a hearing on directions prejudicial to them. Section 275(13) and 275(12) apply, and further enquiry does not extend the limit.

  1. AThe Panel must issue directions within nine months from the end of March, being the month in which the draft order is forwarded, and must give the assessee and the Assessing Officer an opportunity of being heard before directions prejudicial to themCorrect
  2. BThe Panel must issue directions within nine months from 20 March, and hearing is needed only for the assessee
  3. CThe Panel must issue directions within twelve months from the end of March, and hearing is optional
  4. DThe Panel need not follow any time limit if it makes further enquiry before directions

Explanation

Section 275(13) bars directions after nine months from the end of the month in which the draft order is forwarded, so the period runs from 31 March. Section 275(12) requires an opportunity of being heard to the assessee and the Assessing Officer on directions prejudicial to them. Further enquiry under section 275(7) does not remove the limit.

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