Summary:
The e-Dispute Resolution Scheme (e-DRS) aims to expedite tax dispute resolution for small taxpayers, building on the success of the 2020 Vivad se Vishwas scheme. It allows faceless, electronic communication through a digital platform for faster, objective, and transparent handling of disputes. The scheme focuses on taxpayers with minor disputes, providing a jurisdiction-free framework. Under this, taxpayers must submit applications by specified deadlines, and the Dispute Resolution Committee (DRC) has the authority to waive penalties or grant immunity. All proceedings must be concluded within six months. The time limit where the regular appeal has been filed and assessee wishes to opt for the scheme ends on 30/09/2024.
Introduction:
Building on the success of the Vivad se Vishwas scheme, 2020, which resolved around 1.46 lakh appeals and collected taxes at approx of ₹ 0.54 trillion, the govt introduced a new Dispute Resolution Committee (DRC). This committee aims to provide early tax certainty to small and medium taxpayers by settling disputes at the initial stage. The Finance Bill,2021 accordingly introduced Chapter XIX-AA for such early resolution of dispute.
2. Key Features of the e-DRS:
(a) Faceless Resolution: The scheme allows taxpayers to resolve disputes in a faceless manner. The entire process is driven through a digital platform, ensuring transparency.
(b) Eligibility: The scheme primarily caters to small taxpayers, to provide a quicker resolution for minor disputes.
(c) Jurisdiction-less Framework: The resolution of disputes is done without assigning cases to specific jurisdictions, allowing for more objectivity and faster processing.
3. Notification of e-DRS 2022 : No. 27/2022/F. No. 370142/5/2022-TPL-Part1 dated 05/04/2022
This notification has been issued by the CBDT, in accordance with the powers conferred by section 245MA(3) and 245MA(4). It gives the details of procedure to be followed by the DRC, Taxpayers, Assessing officer, powers of the DRC the and other modalities.
3.1 Mode of Communication:
(a) All communications between the DRC and the assessee shall be exclusively by electronic mode and
(b) All internal communications between the DRC or/and any income-tax authority shall be exchanged exclusively by electronic mode.
3.3 Procedure in the e-DRS
3.3.1 Application for dispute resolution:
(a) Application is to be made in electronic mode to the Dispute Resolution Committee designated for the region of PCIT having jurisdiction over the assessee;
(b) The application shall be filed in the Form No. 34BC
(c) Where appeal has already been filed and pending before CIT(A) within such time, as may be specified by the Board, (Date specified by the Board vide notification dated 30/08/2024 is 30/09/2024)
(d) In any other case – within one month from the date of receipt of specified order,
(e) The application shall be submitted by email along with proof of payment of tax on the returned income and challan towards payment of a fee of ₹ 1000/-.
3.3.2 Screening of application:
Upon receipt of application, the DRC may admit, reject or terminate the application
(a) If the application is admitted, assessee is required to withdraw the appeal filed before JCIT(A) u/s 246A of the Act.
(b) DRC has power to terminate the proceedings, if the assessee fails to cooperate, fails to respond to or if he conceals any particular material important for deciding the issue under dispute, or gives false evidence. However, the DRC decides the to terminate the proceedings, a reasonable opportunity shall be provided to the assessee.
(c) DRC has power to reject the application. However, after rejection the assessee may file an appeal before JCIT(A)/CIT(A) and the period taken by the DRC in deciding on the admission shall be excluded from the period available to file such appeal.
3.3.3 Procedure to be followed by DRC:
Upon admitting an application, DRC has the power to review records, seeks reports from AO, call for further information from the assessee. The DRC thereafter
(i) Will modify the specified order with penalty waiver and immunity -OR
(ii) Grant waiver without modifications -OR-
(iii) Dispose of the application.
The DRC should complete the proceedings within six months from the end of the month in which application of the assessee is admitted.
3.3.4 Powers of DRC:
(a) Any proceedings before the DRC shall be deemed to be a judicial proceeding and every income-tax authority shall be deemed to be a Civil Court.
(b) The Dispute Resolution Committee shall have the powers of waiver of penalty imposable or immunity from prosecution or both under this Act.
(c) No appeal or revision shall lie against the order.
4. Provisions of Section 245MA
S. 245MA(1): The Central Government will form one or more Dispute Resolution Committees (DRCs) as needed, following rules made under this Act. These DRCs will resolve tax disputes related to the persons or group of persons who opt for dispute resolution.
245MA(2): The DRC has the power to reduce or waive penalties or grant immunity from prosecution for resolved disputes.
245MA(2A): Upon receiving the DRC’s order, the Assessing Officer shall:
(a) If the specified order is a draft assessment order u/s 144C(1), the AO shall issue a final order of assessment, reassessment, or re-computation as per the directions of the DRC.
(b) Modify the assessment, reassessment, or re-computation as per the directions issued by DRC.
245MA(3): The Central Government may introduce schemes for efficient dispute resolution through Technology-driven interface elimination, resource optimization and dynamic jurisdiction.
245MA(4): The Central Government may issue notifications to implement these schemes, directing exceptions, modifications, or adaptations to this Act’s provisions. However, no directions will be issued after March 31, 2023.
However, in the finance act 2023, a proviso was added to this section: “Provided further that the Central Government may amend any direction, issued under this sub-section on or before the 31st day of March, 2023, by notification in the Official Gazette.”
245MA(5): Every Notifications under subsections (3) and (4) will be presented to both Houses of Parliament.
“Specified conditions” for eligible assessee who can opt for this scheme, means a person excluding
(a) Persons in respect of whom an order of detention has been made under the COFEPOSA Act,1974.
(b) Persons in respect of whom, Prosecution for any offence has been instituted and he has been convicted of any offence punishable under the IPC or the Unlawful Activities (Prevention) Act, 1967 or the Narcotic Drugs and Psychotropic Substances Act, 1985 or The Prohibition of Benami Transactions Act, 1988 or The Prevention of Corruption Act, 1988 or the Prevention of Money-laundering Act, 2002.
“Specified order” means orders where additions/variations are less than ₹ 10 lakh and returned income is less than ₹ 50 lakh.
5. Rule 44DAA
Each Dispute Resolution Committee shall consist of three members and the decision of the Dispute Resolution Committee shall be by majority.
6. Rule 44DAB
An application to the Dispute Resolution Committee shall be made in Form No. 34BC and every application in connection with resolution of dispute shall be accompanied by a fee of ₹ 1,000/-
7. Rule 44DAC
(a) The DRC for the reasons to be recorded in writing, grant to the person waiver of penalty imposable or immunity from prosecution or both.
(b) An immunity granted to a person under sub-rule (1) shall stand withdrawn, if such person fails to comply with any of the conditions as mentioned in the directions.
8. Rule 44DAD
“Specified Order” in relation to a dispute under section 245MA of the Act means: –
(a) A draft order 144C(1) of the Act
(b) An intimation under section 143 (1)/ 200A(1) or 206CB(1) of the Act, where the assessee or the deductor or the collector objects to the adjustments made.
(c) An order of assessment or reassessment, except an order passed in pursuance of directions of the Dispute Resolution Panel
(d) An order made under section 154 of the Act enhancing the assessment or reducing the loss
(e) An order made under section 201 of the Act or section 206C (6A) of the Act
(f) An order in respect of which, the aggregate sum of variations proposed/ made does not exceed ₹ 10 lakh and the total income as per return does not exceed ₹ 50 lakh.
(g) The orders which are not eligible for this scheme are the order
(a) Completed in consequence to S&S u/s 132 or requisition made u/s 132A or
(b) Completed in consequence to survey carried out u/s 133A of or
(c) Completed on the basis of information received under an agreement referred to in section 90 or 90A of the Act.
(d) For the purposes of the variation in the specified order relating to default in TDS or TCS, it shall refer to the amount on which tax has not been deducted or collected.
9. Press Release by CBDT on 30/08/2024
(a) CBDT rolls out Dispute Resolution Scheme (e-DRS), 2022, to minimise litigation
Dispute Resolution Committees (DRCs) constituted in all 18 jurisdictional Pr. CCIT regions across the country As per e-DRS, a taxpayer can opt for e-Dispute Resolution against the ‘specified order’ under certain conditions
e-DRS application must be filed within one month from the date of receipt of specified order
If appeal is pending, e-DRS application is to be filed on or before 30.09.2024
(b) The list of such DRCs along with their e-mail addresses is available on: https://www.incometax.gov.in/iec/foportal/help/all-topics/statutory-forms/file-statutory-form/popular-form/form-34-BC.
(c) The Tax Payer can access e-DRS module by login on income tax portal https://eportal.incometax.gov.in. Login to account using PAN / TAN as user ID ->Go to Dashboard ->e-File ->Income Tax Forms ->File Income Tax Forms -> under tab ‘Persons not dependent on any source of Income (Source of Income not relevant)> Dispute Resolution Committee in Certain Cases (Form 34BC) -> Fill Form No. 34BC -> Review the details -> E-Verify the Form No. 34BC using Aadhar OTP, EVC or DSC.
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