Legal Provision:

The Finance Act, 2009 introduced with effect from 01.10.2009 an alternate dispute resolution mechanism to facilitate expeditious resolution of disputes in tax related matters for foreign companies and for transfer pricing matters.

Further, the Central Board of Direct Taxes (CBDT) has also notified the Rules, viz., Income-tax (Dispute Resolution Panel) Rules, 2009 for establishing the Dispute Resolution Panels (DRP) and the framework for the proceeding [vide Notification S.O. No. 2958(E)/2009/ F.No.142/22/2009-TPL].

Also, the same was integrated in Faceless Scheme by CBDT vide notification no 6 & 7 of 2021 dated 17th February 2021 which provides an option for eligible assessee to approach the DRP after passing of draft assessment order under Faceless Scheme.

The eligible assessee may file objections before Dispute Resolution Panel against draft assessment order passed by the Assessing Officer within 30 days of receipt of draft assessment order.

As per Rule-4 (Income-tax (Dispute Resolution Panel) Rules, 2009), the objections may be filed in person or through his agent within the specified period in Form No. 35A. The sample of form 35A is given in Rule-Forms.

Further, the objections shall be filed in paper book form in quadruplicate duly accompanied by—

four copies of the draft order duly authenticated by the eligible assessee or his authorised representative:

Provided that in the case of draft assessment under sub-section (3) of section 143 read with section 144A, the objections shall also be accompanied by four copies of the directions issued by the Joint Commissioner or Additional Commissioner under section 144A and in the case of draft assessment under sub-section (3) of section 143 read with section 147, the objections shall also be accompanied by four copies of the original assessment order, if any :

Provided further that the Panel may, in its discretion, either accept the objections which are not accompanied by all or any of the documents referred to above or reject it.

the evidence, if any, the eligible assessee intends to rely upon including any document or statement or paper submitted to the Assessing Officer :

Provided that where the eligible assessee intends to rely upon any additional evidence other than those submitted to the Assessing Officer, such additional evidence shall not form part of the paper book but may be filed along with a separate application stating the reasons for filing such additional evidence.

As per section 144C(15)(b) of the Income Tax Act, 1961, “eligible assessee” means:

1. any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and

2. any non-resident not being a company, or any foreign company.


The form needs to be duly signed by the assessee or authorized representative.

Hearing of objections:

The panel may hold it sittings at headquarter or such other place it may deem proper. Authorization letter before the commencement of the hearing need to be filed if authorized representative appears on behalf of eligible assessee.

The panel may consider the application for filing additional affidavit and may either allow such application or reject it. And, the eligible assessee may, with the permission of the panel, urge any additional ground which has not been set forth in the objections.

Time limit for completion of assessment:

No direction shall be issued by the DRP after nine months from the end of the month in which the draft order is forwarded to the eligible assessee.

After the receipt of the directions of the DRP, AO shall pass final assessment order within one month from the end of the month in which such direction is received.

E-Assessment scheme:

Under the existing Faceless Scheme, there was ambiguity as to whether cases where the option to approach DRP is available are covered within the scope of Faceless Scheme in the absence of any mechanism under the Faceless Scheme to approach the DRP.

The CBDT vide notification no 6 & 7 of 2021 dated 17th February 2021 amended the Faceless Assessment Scheme, 2019 and integrated faceless assessment proceedings under Faceless Scheme with DRP proceedings.

The revised procedure in Faceless Scheme provides an option for eligible taxpayers to approach the DRP after passing of draft assessment order under Faceless Scheme. In such cases, a step-wise procedure is provided for granting an opportunity to eligible taxpayers to file objections before the DRP and to pass final assessment order in a faceless manner through National Faceless Assessment Centre post completion of the proceedings before the DRP in conformity with the directions of the DRP.

The amendment is effective from the date of its publication in the official gazette i.e., 17 February 2021.

Documents/information to be submitted along with Form 35A:

As per Rule-Forms (Income-tax (Dispute Resolution Panel) Rules, 2009), Following documents shall be furnished along with Form 35A in the prescribed order:

1. Ground of objection

2. Facts as submitted to Assessing Officer

3. Facts, if any, modified by the Assessing Officer

4. Do you wholly agree with the modifications in the facts by the Assessing Officer. If not, give reasons pointing the specific fact or facts with which you do not agree along with the reasons and documentary evidence, if any

5. Legal arguments submitted to Assessing Officer

6. Case laws relied upon by the assessee

7. Legal argument relied upon by the Assessing Officer

8. Case laws relied upon by Assessing Officer

9. Any additional new case laws which the assessee may like to rely upon

10. Factual and legal arguments against the addition proposed by the Assessing Officer

Author Bio

Qualification: Student - CA/CS/CMA
Company: Luthra & Luthra Chartered Accountants LLP
Location: New Delhi, Delhi, India
Member Since: 27 May 2021 | Total Posts: 1

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June 2021