Section 245MA of Income Tax Act for AY 2023-24

Section 245MA of Income Tax Act 1961 as inserted by Finance Act 2022 and Income-tax Rules 1962. Dispute Resolution Committee.

Amended and updated notes on section 245MA of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Dispute Resolution Committee.

Chapter XIX-AA (Section 245MA) of the Income Tax Act 1961 deals with the provisions related to Dispute Resolution Committee in Certain Cases. Section 245MA of IT Act 1961 provides for Dispute Resolution Committee.

Recently, we have discussed in detail section 245M (Option to withdraw pending application) of IT Act 1961.

Today, we learn the provisions of section 245MA of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 245M is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 245MA of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-245MA: Dispute Resolution Committee

[Section 245MA inserted by the Finance Act 2021 and amended w.e.f. 1-April-2022 by the Finance Act 2022]

Section 245MA (1):

The Central Government shall constitute, one or more Dispute Resolution Committees, as may be necessary, in accordance with the rules made under this Act, for dispute resolution in the case of such persons or class of persons, as may be specified by the Board, who may opt for dispute resolution under this Chapter in respect of dispute arising from any variation in the specified order in his case and who fulfils the specified conditions.

Section 245MA (2):

The Dispute Resolution Committee, subject to such conditions, as may be prescribed, shall have the powers to reduce or waive any penalty imposable under this Act or grant immunity from prosecution for any offence punishable under this Act in case of a person whose dispute is resolved under this Chapter.

Section 245MA (2A):

Notwithstanding anything contained in section 144C, upon receipt of the order of the Dispute Resolution Committee under this section, the Assessing Officer shall,—

  • (a) in a case where the specified order is a draft of the proposed order of assessment under sub-section (1) of section 144C, pass an order of assessment, reassessment or recomputation; or
  • (b) in any other case, modify the order of assessment, reassessment or recomputation,

in conformity with the directions contained in the order of the Dispute Resolution Committee within a period of one month from the end of the month in which such order is received.

[Sub-section(2A) of section 245MA newly inserted w.e.f. 1-April-2022 by the Finance Act 2022]

Section 245MA (3):

The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of dispute resolution under this Chapter, so as to impart greater efficiency, transparency and accountability by –

  • (a) eliminating the interface between the Dispute Resolution Committee and the assessee in the course of dispute resolution proceedings to the extent technologically feasible;
  • (b) optimising utilisation of the resources through economies of scale and functional specialisation;
  • (c) introducing a dispute resolution system with dynamic jurisdiction.

Section 245MA (4):

The Central Government may, for the purposes of giving effect to the scheme made under sub-section (3), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the said notification:

Provided that no such direction shall be issued after the 31st day of March, 2023.

Section 245MA (5):

Every notification issued under sub-sections (3) and (4) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

Explanation: For the purposes of this section,-

(a) “specified conditions” in relation to a person means a person who fulfils the following conditions, namely:-

(I) where he is not a person,-

(A) in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974:

Provided that-

  • (i) such order of detention, being an order to which the provisions of section 9 or section 12A of the said Act do not apply, has been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board; or
  • (ii) such order of detention being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of section 9, or on the report of the Advisory Board under section 8, read with sub-section (2) of section 9, of the said Act; or
  • (iii) such order of detention, being an order to which the provisions of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub-section (3) of the said section, or on the basis of the report of the Advisory Board under section 8, read with sub-section (6) of section 12A, of the said Act; or
  • (iv) such order of detention has not been set aside by a court of competent jurisdiction;

(B) in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prohibition of Benami Transactions Act, 1988, the Prevention of Corruption Act, 1988 or the Prevention of Money-laundering Act, 2002 has been instituted and he has been convicted of any offence punishable under any of those Acts;

(C) in respect of whom prosecution has been initiated by an income-tax authority for any offence punishable under the provisions of this Act or the Indian Penal Code or for the purpose of enforcement of any civil liability under any law for the time being in force, or such person has been convicted of any such offence consequent upon the prosecution initiated by an Income-tax authority;

(D) who is notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;

(II) such other conditions, as may be prescribed.

(b) “specified order” means such order, including draft order, as may be specified by the Board, and,—

  • (i) aggregate sum of variations proposed or made in such order does not exceed ten lakh rupees;
  • (ii) such order is not based on search initiated under section 132 or requisition under section 132A in the case of assessee or any other person or survey under section 133A or information received under an agreement referred to in section 90 or section 90A;
  • (iii) where return has been filed by the assessee for the assessment year relevant to such order, total income as per such return does not exceed fifty lakh rupees.


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