Section 144C of Income Tax Act: Reference to Dispute Resolution Panel
Section 144C of the Income-tax Act, 1961 established a special route for eligible taxpayers to challenge proposed prejudicial variations in a draft assessment order before a Dispute Resolution Panel (DRP). The procedure is especially relevant to transfer pricing cases, foreign companies and qualifying non-residents. Its corresponding provision under the Income-tax Act, 2025 is Section 275.
What is a Dispute Resolution Panel?
Under Section 144C(15)(a), the DRP is a collegium of three Principal Commissioners or Commissioners of Income-tax constituted by the Central Board of Direct Taxes (CBDT). It examines objections to specified draft assessment orders and issues directions binding on the Assessing Officer (AO). The DRP is not the same as the Commissioner of Income-tax (Appeals).
Who is an eligible assessee?
Under Section 144C(15)(b), eligibility covers (i) a person whose proposed variation results from an order of the Transfer Pricing Officer under Section 92CA(3), and (ii) a non-resident individual or other non-corporate non-resident, or a foreign company. The earlier version of the section referred only to foreign companies in the second category; subsequent amendments expanded it. Statutory exclusions apply to specified block assessment cases under Sections 158BA and 158BD, and Section 144C(16) excludes proceedings under Chapter XIV-B.
How Section 144C works
1. Draft assessment order - Section 144C(1)
Where the AO proposes a variation prejudicial to an eligible assessee, the AO must first forward a draft assessment order. This gives the assessee an opportunity to dispute the proposed adjustments before the final order is issued.
2. Acceptance or objections - Section 144C(2)
Within 30 days of receiving the draft order, the eligible assessee may accept the proposed variations before the AO or file objections with both the DRP and the AO. Filing with only one of them does not follow the express statutory procedure.
3. No objections or acceptance - Sections 144C(3), (4), (4A) and (4B)
If the assessee accepts the variation or does not object within the prescribed period, the AO completes the assessment on the basis of the draft. The order is generally due within one month from the end of the month in which acceptance is received or the objection period expires. Clarificatory subsections (4A) and (4B) address interaction with the assessment limitation provisions.
4. DRP review - Sections 144C(5) to (9)
On timely objections, the DRP considers the draft order, the objections and evidence, relevant reports of the AO, Valuation Officer or Transfer Pricing Officer, records and any further inquiry. It may confirm, reduce or enhance the proposed variations. It cannot simply set aside a proposed variation and remand the assessment for a fresh order. Its enhancement powers may extend to matters arising from the draft assessment proceedings even if not raised in the objections. Differences among panel members are resolved by majority opinion.
5. Hearing and binding directions - Sections 144C(10) and (11)
DRP directions bind the AO. Before prejudicial directions are issued, the assessee or the revenue, as relevant, must have an opportunity of being heard. Taxpayers should therefore support their objections with documentary evidence, computations and relevant legal authorities.
6. Final assessment - Sections 144C(12), (13), (13A) and (13B)
The DRP must issue directions within nine months from the end of the month in which the draft order was forwarded. The AO then passes the final order in conformity with those directions within one month from the end of the month in which they are received, without another hearing at that stage. Clarificatory provisions (13A) and (13B) address the interaction of these time limits with Sections 153 and 153B.
Key statutory deadlines
| Action | Time limit under Section 144C |
|---|---|
| File objections with DRP and AO | 30 days from receipt of draft order |
| AO order after acceptance or no objections | 1 month from end of relevant month |
| DRP directions | 9 months from end of month draft order was forwarded |
| AO final order after DRP directions | 1 month from end of month directions were received |
These are the general statutory periods; the exact computation and effect of amendments, judicial orders and transitional provisions must be checked for the case concerned.
Other important provisions of Section 144C
- Section 144C(14): CBDT may frame rules for efficient functioning of the DRP and expeditious disposal of objections.
- Section 144C(14A): The DRP procedure does not apply to an assessment or reassessment order approved under the GAAR procedure in Section 144BA(12).
- Sections 144C(14B) to (14D): Deal with schemes for DRP directions, related notifications and parliamentary laying requirements.
- Section 144C(15): Defines the DRP and eligible assessee.
- Section 144C(16): Excludes proceedings under Chapter XIV-B.
Income-tax Act, 2025: Section 275
Section 275 of the Income-tax Act, 2025 addresses references to the Dispute Resolution Panel. It preserves the broad draft-order and objection mechanism, including the 30-day objection window, binding directions, nine-month period for DRP directions and one-month period for the final order. It also expressly requires written DRP directions stating the points for determination, decisions and reasons. Definitions, exclusions and cross-references have been renumbered; for example, the transfer pricing reference is to Section 166(6), and the assessment time-limit cross-reference is Section 286. The current Act should be consulted directly for post-commencement matters.
Practical guidance for taxpayers
- Check that the draft order has been issued in a case covered by the DRP procedure.
- Record the actual date of receipt and calculate the 30-day deadline.
- Identify each disputed variation separately and support it with evidence and relevant law.
- File objections with both the DRP and AO, retaining acknowledgements.
- Participate in hearings and respond to any proposed enhancement or adverse material.
- Examine the final assessment order and available appellate remedies, including appeal before the Income Tax Appellate Tribunal where applicable.
Official statutory sources
Read the Income Tax Department's Section 144C page, the Income-tax Act, 1961 as amended by Finance Act, 2025 (PDF), and the Income-tax Act, 2025 (official PDF). Check subsequent Finance Acts, notifications and judicial rulings where relevant.
This article is an explanatory guide, not a substitute for the applicable statutory text or case-specific professional advice. Updated 26 October 2026.