Dispute Resolution Committee (DRC) [Section 245MA]

Section 245MA of the Income Tax Act, 1961, introduces a faceless dispute resolution mechanism for small and medium taxpayers to reduce litigation and provide faster resolution of tax disputes. Below is a detailed breakdown of its provisions:

1. Objective of DRC

• To provide early tax certaintyto small taxpayers by resolving disputes at the initial stage.
• To reduce pendencyin appellate forums like CIT(A), ITAT, and courts .

2. Eligibility Criteria

A taxpayer can approach the DRC if they meet the following conditions:

✅ Income Limit:

• • Returned income ≤ ₹50 lakh(if a return is filed).

✅ Dispute Threshold:

• • Aggregate tax variation in the order ≤ ₹10 lakh.

❌ Exclusions:

• • Cases involving search/survey(Sections 132/132A/133A).
  • Persons convicted under anti-smuggling, PMLA, or corruption laws.

3. Types of Orders Covered (“Specified Orders”)

• Assessment Orders: Draft/final orders under Section 143(3), 144, etc.
• TDS/TCS Adjustments: Intimations under Sections 200A/206CB.
• Reassessment Orders: Except those based on search/survey .

4. Powers of DRC

• Waive or reduce penalties(e.g., under Section 271(1)(c)).
• Grant immunity from prosecution(e.g., for concealment).
• Issue binding ordersthat the AO must implement within 1 month .

5. Application Process

1. Form 34BC: Filed electronically on the e-filing portal.
2. Timeline: Within 1 monthof receiving the disputed order.
3. Verification: Via Aadhaar OTP, EVC, or DSC .

6. Key Features

🔹 Faceless Proceedings: No physical hearings; dynamic jurisdiction.

🔹 Time-Bound Resolution: DRC must decide within 6 months.

🔹 Final & Non-Appealable: No further appeal to ITAT/HC .

7. Penalties for Non-Cooperation

• DRC may terminate proceedingsif:
  • Taxpayer fails to respond to notices.
  • Conceals material facts .

8. Comparison with DRP (Section 144C)

9. Practical Example

Scenario: A taxpayer with ₹45 lakh declared income receives a reassessment order adding ₹8 lakh.

• Action: Files Form 34BCseeking penalty waiver.
• Outcome: DRC reduces the addition to ₹5 lakh and waives penalties .

10. Recent Updates (2024)

• Extended Deadline: For pending appeals, applications can be filed until 09.2024.
• 18 Regional DRCs: Established across India

Note: Taxpayers should verify eligibility and deadlines before applying.