CBDT launches New Dispute Resolution Scheme to Minimise Litigation

The Central Board of Direct Taxes (CBDT) notified the e-Dispute Resolution Scheme, 2022 (e-DRS) under section 245MA of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) in order to reduce litigation and offer relief to eligible taxpayers. Section 245MA of the Act also allows for the formation of Dispute Resolution Committees (DRC).

The e-DRS allows taxpayers who meet certain defined requirements as outlined in Section 245MA of the Act to file an application for dispute resolution electronically with the DRC designated for the region of the Principal Chief Commissioner of Income-tax having jurisdiction over them. To that purpose, DRCs have been established in all 18 jurisdictional Pr. CCIT zones around the country.

According to e-DRS, a taxpayer can seek an e-Dispute Resolution against a specified order as defined in clause (b) of the Explanation to Section 245MA of the Act, which includes an order in which the aggregate sum of variations proposed or made does not exceed Rs.10 lakh and the returned income for the relevant assessment year does not exceed Rs.50 lakh. Furthermore, such an order shall not be based on searches/surveys or information obtained through an agreement referred to in Sections 90 or 90A of the Act.

As per e-DRS, a DRC can make the amendments in the prescribed sequence and decide to give a reduction/waiver of penalty and prosecution in accordance with Rule 44DAC of the Income-tax Rules, 1962 (hereinafter referred to as “the Rules”). The DRC is required to issue an order within six months of accepting an application for dispute resolution.

The application for e-DRS must be filed in Form No. 34BC, as referred to in Rule 44DAB of the Rules, on the Income Tax Department’s e-filing platform within one month after receiving the stated order. In cases where an appeal has already been filed and is ongoing before the Commissioner of Income-tax (Appeals), the e-DRS application must be filed on or before September 30, 2024. In cases where the indicated order was issued on or before August 31, 2024, and the deadline for filing an appeal against it before CIT (Appeals) has not expired, the application for dispute settlement can be filed on or before September 30, 2024.

The taxpayer can access the e-DRS module by logging into the income tax portal. Log in to your account with PAN/TAN as the user ID -> Navigate 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 out Form No. 34BC >> Review the details. E-Verify Form No. 34BC with Aadhar OTP, EVC, or DSC.

This is another initiative by the Government towards minimising litigation.