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

Under section 275 of the Income-tax Act, 2025, Meridian GmbH, a foreign company, objects to a draft order. During hearing, the Panel notices an unraised matter arising from the assessment proceedings relating to the draft order that could increase income. Which statement is correct?

The Panel may enhance by considering the unraised matter, because section 275(9) permits this. However, it cannot set aside a variation or direct further enquiry and a fresh order under section 275(8), and its directions bind the Assessing Officer under section 275(11).

  1. AThe Panel may enhance the variation by considering that matter, and may not set aside the variation or direct further enquiry for a fresh orderCorrect
  2. BThe Panel may consider only matters raised by the assessee and cannot enhance
  3. CThe Panel may set aside the variation and direct the Assessing Officer to make fresh enquiry
  4. DThe Panel can enhance only with the Assessing Officer's consent, and its directions are not binding

Explanation

Section 275(8) lets the Panel confirm, reduce or enhance variations but not set aside any variation or direct further enquiry and passing of an order. Section 275(9) extends enhancement to matters not raised by the assessee. Section 275(11) makes directions binding, which defeats the last option.

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