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

The Dispute Resolution Panel reviews a draft order against Zenith Ltd, a foreign company. The draft proposes a transfer pricing addition. During hearings, the Panel finds an unclaimed-by-AO disallowance arising out of the same assessment proceedings, which the assessee never raised. Which course is permitted under section 275?

The Panel may confirm, reduce or enhance the variation, and its power to enhance extends to any matter arising out of the assessment proceedings even if the assessee did not raise it. It cannot set aside the variation or direct further enquiry for a fresh assessment, and must give the assessee a hearing.

  1. ASet aside the proposed variation and direct a fresh enquiry by the Assessing Officer
  2. BConfirm, reduce or enhance the variation, including considering the new matter arising from the assessment proceedingsCorrect
  3. COnly confirm or reduce the variation, as enhancement requires the assessee's objection on that point
  4. DDirect the Assessing Officer to ignore the Panel's findings and complete the assessment afresh

Explanation

Section 275(8) lets the Panel confirm, reduce or enhance, and 275(9) extends enhancement to any matter arising from the assessment proceedings even if not raised by the assessee. It cannot set aside a variation or direct further enquiry and fresh assessment. An opportunity of hearing must be given before a prejudicial direction under 275(12).

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