Income Tax Act

Official PDF pages 366–370

SOURCE PDF PAGE 366
Commissioner shall issue such directions as he deems fit in respect of declaration
of the arrangement to be an impermissible avoidance arrangement.
(4) In case the assessee objects to the proposed action, and the Principal Commis -
sioner or Commissioner, after hearing the assessee in the matter, is not satisfied
with the explanation of the assessee, then, he shall make a reference in the matter
to the Approving Panel for the purpose of declaration of the arrangement as an
impermissible avoidance arrangement.
(5) If the Principal Commissioner or Commissioner is satisfied, after having heard
the assessee that the provisions of Chapter XI are not to be invoked, he shall by
an order in writing, communicate the same to the Assessing Officer with a copy to
the assessee.
(6) The Approving Panel, on receipt of a reference from the Principal Commissioner
or Commissioner under sub-section (4), shall—
( a )   issue such directions, as it deems fit, in respect of the declaration of the
arrangement as an impermissible avoidance arrangement as per the
provisions of Chapter XI; and
( b )   specify the tax year or years to which such declaration of an arrangement
as an impermissible avoidance arrangement shall apply.
(7) No direction under sub-section (6) shall be issued unless an opportunity of being
heard is given to the assessee and the Assessing Officer on such directions which
are prejudicial to the interest of the assessee or the interests of the revenue, as the
case may be.
(8) The Approving Panel may, before issuing any direction under sub-section (6),—
( a )   if it is of the opinion that any further inquiry in the matter is necessary,
direct the Principal Commissioner or Commissioner to make such inquiry
or cause the inquiry to be made by any other income-tax authority and
furnish a report containing the result of such inquiry to it; or
( b )   call for and examine such records relating to the matter as it deems fit;
or
( c )   require the assessee to furnish such documents and evidence as it may
direct.
(9) If the members of the Approving Panel differ in opinion on any point, such point
shall be decided according to the opinion of the majority of the members.
(10) The Assessing Officer, on receipt of directions of the Principal Commissioner
or Commissioner under sub-section (3) or of the Approving Panel under sub-section
(6), shall proceed to complete the proceedings referred to in sub-section (1) as per
such directions and the provisions of Chapter XI.
(11) If any direction issued under sub-section (6) specifies that declaration of the
arrangement as impermissible avoidance arrangement is applicable for any tax
year other than the tax year to which the proceedings referred to in sub-section (1)
pertains, then,—
( a )   the Assessing Officer while completing any assessment or reassessment
proceedings relevant to such other tax year shall do so as per such
directions and the provisions of Chapter XI; and

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( b )   it shall not be necessary for him to seek fresh direction on the issue for
such other tax year.
(12) No order of assessment or reassessment shall be passed by the Assessing
Officer without the prior approval of the Principal Commissioner or Commissioner,
if any tax consequences have been determined in the order under the provisions
of Chapter XI.
(13) The Approving Panel shall, subject to sub-sections (14) and (15), issue directions
under sub-section (6) within six months from the end of the month in which the
reference under sub-section (4) was received.
(14) In computing the period referred to in sub-section (13), the following shall be
excluded:—
( a )   the period commencing from the date on which the Approving Panel
first directs the Principal Commissioner or Commissioner for getting
the inquiries conducted through the authority competent under an
agreement referred to in section 159 and ending with the date on which
the information so requested is last received by the Approving Panel or
one year, whichever is less;
( b )   the period commencing on the date on which the proceeding of the
Approving Panel is stayed by an order or injunction of any court and
ending on the date on which certified copy of the order vacating the stay
was received by the Approving Panel.
(15) If immediately after the exclusion of the period as per sub-section (14), the
remaining period available to the Approving Panel for issue of directions is less than
sixty days, such remaining period shall be extended to sixty days and the period of
six months mentioned in sub-section (13) shall be deemed to have been extended
accordingly.
(16) The directions issued by the Approving Panel under sub-section (6) shall be
binding on—
( a )   the assessee; and
( b )   the Principal Commissioner or Commissioner and the income-tax
authorities subordinate to him.
(17) No appeal under the Act shall lie against directions issued by the Approving
Panel under sub-section (6), irrespective of anything contained in any other pro -
vision of the Act.
(18) The Central Government shall, for the purposes of this section, constitute one
or more Approving Panels as may be necessary and each panel shall consist of three
members including a Chairperson.
(19) The Chairperson of the Approving Panel shall be a person who is or has been
a judge of a High Court, and—
( a )   one member shall be a member of Indian Revenue Service not below
the rank of Principal Chief Commissioner or Chief Commissioner of
Income-tax; and

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( b )   one member shall be an academic or scholar having special knowledge of
matters, such as direct taxes, business accounts and international trade
practices.
(20) The term of the Approving Panel shall ordinarily be for one year and may be
extended from time to time up to three years.
(21) The Chairperson and members of the Approving Panel shall meet, as and
when required, to consider the references made to the panel and shall be paid such
remuneration as may be prescribed.
(22) In addition to the powers conferred on the Approving Panel under this section,
the powers which are vested in the Board for Advance Rulings under section 387
shall apply   mutatis mutandis   to the Approving Panel.
(23) The Board shall provide to the Approving Panel such officials as may be neces -
sary for the efficient exercise of powers and discharge of functions of the Approving
Panel under this Act.
(24) The Board may make rules for the purposes of the constitution and efficient
functioning of the Approving Panel and expeditious disposal of the references re -
ceived under sub-section (4).
Reference to Dispute Resolution Panel.
275.   (1) The Assessing Officer shall, irrespective of anything to the contrary
contained in this Act, in the first instance, forward
92  
a draft of the proposed
order of assessment (hereafter in this section referred to as the draft order) to the
eligible assessee, if he proposes to make any variation which is prejudicial to the
interest of such assessee.
(2) On receipt of the draft order, the eligible assessee shall, within thirty days of its
receipt by him,—
( a )   file his acceptance of the variations to the Assessing Officer; or
( b )   file his objections, if any, to such variation with,—
( i )   the Dispute Resolution Panel; and
( ii )   the Assessing Officer.
(3) The Assessing Officer shall complete the assessment on the basis of the draft
order, if—
( a )   the assessee intimates to the Assessing Officer the acceptance of the
variation; or
( b )   no objection is received within the period specified in sub-section (2).
56
[ (4)( a ) The Assessing Officer shall, irrespective of anything contained in section
286, pass the assessment order under sub-section (3) within one month from the end
of the month in which,—
56.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(4) read as under :
“(4) The Assessing Officer shall, irrespective of anything contained in section 286, pass the
assessment order under sub-section (3) within one month from the end of the month in
which,—
( a )   the acceptance is received; or
( b )   the period of filing of objections under sub-section (2) expires.”

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( i )   the acceptance is received; or
( ii )   the period of filing of objections under sub-section (2) expires.
( b ) Irrespective of anything contained in section 286, where a draft of the proposed
order of assessment under sub-section (1) is forwarded within the time period allowed
under the said section, further time period available to the Assessing Officer to com -
plete the assessment under sub-section (3) shall be governed by the provisions of this
sub-section. ]
(5) The Dispute Resolution Panel shall, in a case where any objection is received
under sub-section (2), issue such directions, as it thinks fit, for guidance of the
Assessing Officer to enable him to complete the assessment.
(6) The Dispute Resolution Panel shall issue the directions as referred to in sub-sec -
tion (5), in writing, stating the points of determination, the decision thereon and
the reason for such decision.
(7) The Dispute Resolution Panel may, before issuing any directions referred to in
sub-section (5),—
( a )   make such further enquiry, as it thinks fit; or
( b )   cause any further enquiry to be made by any income-tax authority and
report the result of the same to such panel.
(8) The Dispute Resolution Panel may, confirm, reduce or enhance the variations
proposed in the draft order, so however, that it shall not set aside any proposed vari -
ation, or issue any direction under sub-section (5) for further enquiry and passing
of the assessment order.
(9) For the purposes of sub-section (8), the power of the Dispute Resolution Panel
to enhance the variation shall include the power to consider any matter arising out
of the assessment proceedings relating to the draft order, irrespective of the fact
that such matter was not raised by the eligible assessee.
(10) If the members of the Dispute Resolution Panel differ in opinion on any point,
the point shall be decided as per the opinion of the majority of the members.
(11) Every direction issued by the Dispute Resolution Panel shall be binding on the
Assessing Officer.
(12) No direction under sub-section (5) shall be issued unless an opportunity of
being heard is given to the assessee, and the Assessing Officer, on such directions
which are prejudicial to the interest of the assessee, or the interest of the revenue,
respectively.
(13) No direction under sub-section (5) shall be issued after nine months from the
end of the month in which the draft order is forwarded to the eligible assessee.
57
[ (14)( a ) Upon receipt of the directions issued under sub-section (5), the Assessing
Officer shall, in conformity with the directions, complete, irrespective of anything to
57.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(14) read as under :
“(14) Upon receipt of the directions issued under sub-section (5), the Assessing Officer
shall, in conformity with the directions, complete, irrespective of anything to the contrary
contained in section 286, the assessment without providing any further opportunity of being
heard to the assessee, within one month from the end of the month in which such direction
is received.”

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the contrary contained in section 286, the assessment without providing any further
opportunity of being heard to the assessee, within one month from the end of the month
in which such direction is received.
( b ) Irrespective of anything contained in section 286, where a draft of the proposed
order of assessment under sub-section (1) is forwarded within the time period allowed
under section 286, time period available for the Assessing Officer under this sub-section
to pass the assessment order upon receipt of the direction issued under sub-section (5),
shall be governed by the provisions of sub-section (13) and this sub-section. ]
(15) The Board may make rules for the purposes of the efficient functioning of the
Dispute Resolution Panel and expeditious disposal of the objections filed under
sub-section (2) by the eligible assessee.
(16) The provisions of this section shall not apply to any assessment or reassess -
ment order passed by the Assessing Officer with the prior approval of the Principal
Commissioner or Commissioner as provided in section 274(12).
(17) For the purposes of this section, subject to the provisions of sub-section (18),—
( a )   “Dispute Resolution Panel” means a collegium comprising of three
Principal Commissioners or Commissioners of Income-tax constituted
by the Board for this purpose;
( b )   “eligible assessee” means,—
( i )   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 section 166(6);
( ii )   any non-resident (not being a company), or any foreign company.
(18) The eligible assessee referred to in sub-section (17) shall not include person
referred to in section 292(1) or other person referred to in section 295.
(19) The provisions of this section shall not apply to any proceedings under Chapter
XVI-B.
Method of accounting.
276.   (1) Income chargeable under the head “Profits and gains of business or
profession” or “Income from other sources” shall, subject to the provisions of
sub-section (2), be computed as per either cash or mercantile system of accounting
regularly employed by the assessee.
(2) The Central Government may notify income computation and disclosure stan -
dards to be followed by any class of assessees or in respect of any class of income.
(3) The Assessing Officer may make an assessment in the manner provided in
section 271, where—
( a )   he is not satisfied about the correctness or completeness of the accounts
of the assessee; or
( b )   the method of accounting provided in sub-section (1) has not been reg -
ularly followed by the assessee; or
( c )   income has not been computed as per the   standards notified under
sub-section (2).