Alternate Dispute Resolution amendments through Finance Act 2020

Alternate Dispute Resolution amendments through Finance Act 2020

Previously, the taxpayer’s right was conditional to withdraw any appeal pending before any court of law or appellate authority after constitution of the Committee due to binding nature of Committee’s decision. The Committee previously comprised an officer not below the rank of Commissioner and two members from the panel notified by the Board.

The Finance Act has approved that in Alternate Dispute Resolution process an aggrieved person may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, which is under litigation in any court of law or an appellate authority.

This is not applicable in case where criminal proceedings have been initiated or where
interpretation of question of law having effect on identical cases is involved having effect on other cases.

The Board, after examination of application will appoint a committee within 60 days of receipt of application.

The Finance Act has also approved the change in the composition of the Alternate Dispute Resolution Committee (the Committee). It will now comprise of Chief Commissioner Inland Revenue, having jurisdiction over the case and two persons from a panel notified by the Board comprising of chartered accountants, cost and management accountants, advocates, having minimum of ten years’ experience in the field of taxation and reputable businessmen.

Under the Finance Act, the Board is also required to communicate the appointment of the Committee to the Commissioner and court of law or the appellate authority where the dispute is pending.

The Committee will examine the issue and if it deemed necessary, will conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and decide the dispute through consensus, within 120 days of its appointment.

The Committee in case of hardship, stay recovery of tax payable in respect of dispute pending before it for a period not exceeding 120 days in aggregate or till the decision of the committee or its dissolution, whichever is earlier.

Further, the Finance Act has approved a condition for making the decision of the Committee binding on the Commissioner. It requires the aggrieved person to withdraw the appeal pending before the court of law or any appellate authority and communicates the order of withdrawal to the Commissioner within 60 days of the service of decision of the Committee upon the aggrieved person, otherwise decision of the Committee shall not be binding on the Commissioner.

The Committee will be dissolved by the Board if it fails to decide the dispute within the period of one hundred and twenty days by an order in writing and the matter will be decided by the court of law or the appellate authority where the dispute was pending.

The Board is required to communicate the order of dissolution to the court of law or the appellate authority and the Commissioner. The aggrieved person, on receipt of the order of dissolution, shall communicate it to the court of law or the appellate authority, where the dispute is pending.

The aggrieved person may make the payment of income tax and other taxes as decided by the Committee and all decisions and orders made or passed shall stand modified to that extent.

The Board will have the power to prescribe the amount to be paid as remuneration for the services of the members of the committee, except for Chief Commissioner Inland Revenue.

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