Section 379 Income Tax Act 2025: Who Can Apply to the Dispute Resolution Committee?
Section 379 provides an optional dispute-resolution route before a Dispute Resolution Committee (DRC) for specified persons and eligible income-tax orders. It allows qualifying disputes involving a variation of up to Rs. 10 lakh to be considered under prescribed conditions, with powers to modify variations, reduce or waive penalties and grant prosecution immunity. Eligibility depends on the statute, Board specifications and applicable rules.
Law: Section 379, Income-tax Act, 2025, as amended by the Finance Act, 2026.
Official statutory source: Income Tax Department - amended Income-tax Act, 2025.
What is the Dispute Resolution Committee under Section 379?
Section 379 falls within the alternate dispute-resolution provisions of the Income-tax Act, 2025. The Central Government constitutes one or more Dispute Resolution Committees in accordance with the rules. The mechanism is available to specified persons or classes of persons who opt for dispute resolution, meet prescribed conditions and dispute a variation in an eligible specified order. It is not a general right to take every tax dispute to a DRC.
Section 379: Explanation of all four subsections
| Provision | What the law provides | Practical significance |
|---|---|---|
| 379(1) | Central Government constitutes DRCs under the rules for specified persons or classes of persons who elect the mechanism and satisfy prescribed conditions. | Check notification, class of applicant and procedural rules before applying. |
| 379(2) | Subject to prescribed conditions, the DRC may modify variations in a specified order, reduce or waive a penalty imposed or imposable, or grant immunity from prosecution for offences punishable under the Act. | Relief is discretionary and subject to the applicable conditions, not automatic. |
| 379(3) | On receipt of the DRC order, the Assessing Officer must issue an assessment, reassessment or recomputation order where the specified order was a draft under Section 275(1), or modify the existing order in other cases, in conformity with DRC directions, within one month from the end of the month of receipt. | The DRC decision is implemented through the Assessing Officer's consequential order. |
| 379(4) | Defines a Board-specified order (including a draft order), subject to a maximum Rs. 10 lakh aggregate variation, specified exclusions, and a Rs. 50 lakh returned-income ceiling where a return was filed. | All statutory requirements and prescribed eligibility conditions must be checked. |
Who is eligible for DRC relief under Section 379?
Section 379(4) defines a specified order by reference to orders, including draft orders, specified by the Board. The statutory tests include:
- Variation limit: the aggregate sum of variations proposed or made in the order does not exceed Rs. 10 lakh.
- Excluded source of order: the order must not be based on a search under Section 247, requisition under Section 248 (whether involving the assessee or another person), survey under Section 253, or information received under an agreement referred to in Section 159(1) or (2).
- Returned income: where a return was filed for the relevant tax year, the total income shown in that return does not exceed Rs. 50 lakh.
- Other conditions: the applicant must belong to the person or class specified by the Board and satisfy the applicable prescribed conditions and procedures.
Important distinction: The Rs. 10 lakh threshold concerns the aggregate variations proposed or made, not necessarily the tax demand. The Rs. 50 lakh threshold concerns total income as per the return filed, where a return was filed. These are different tests.
What relief can the Dispute Resolution Committee grant?
Under Section 379(2), subject to prescribed conditions, the Committee may:
- Modify variations in the specified order.
- Reduce or waive a penalty already imposed or one that may be imposed under the Act.
- Grant immunity from prosecution for an offence punishable under the Act in a case resolved under the DRC mechanism.
Finance Act, 2026 update: With effect from 1 April 2026, the phrase relating to penalty waiver was amended to cover a penalty "imposed or imposable". This makes it important not to describe the DRC's penalty powers as limited to penalties that have not yet been imposed.
How does the Assessing Officer implement a DRC order?
Section 379(3) operates notwithstanding Section 275. Upon receipt of the DRC's order, the Assessing Officer must act in conformity with its directions:
| Type of specified order | Required action | Deadline |
|---|---|---|
| Draft proposed assessment order under Section 275(1) | Pass an assessment, reassessment or recomputation order. | Within one month from the end of the month in which the DRC order is received. |
| Other specified order | Modify the assessment, reassessment or recomputation order. | Same statutory deadline. |
For example, if the Assessing Officer receives the DRC order on 12 August 2026, the ordinary Section 379(3) deadline is 30 September 2026. The date of receipt by the Assessing Officer is decisive for this computation.
Relevant statutory definitions and legal expressions
- Dispute Resolution Committee (DRC)
- A committee constituted by the Central Government under Section 379(1), in accordance with rules made under the Act, to resolve qualifying disputes.
- Specified order - Section 379(4)
- An order, including a draft order, specified by the Board that satisfies the variation ceiling, exclusions and returned-income condition set out in that subsection.
- Board
- The Central Board of Direct Taxes (CBDT), subject to the Act's statutory definition.
- Variation
- A proposed or made adjustment in the specified order; the aggregate variations are tested against the Rs. 10 lakh ceiling in Section 379(4)(i).
- Returned income
- The total income stated in the return filed by the assessee for the relevant tax year, used for the Rs. 50 lakh test where a return was filed.
- Assessing Officer
- The income-tax authority responsible for passing or modifying the consequential assessment, reassessment or recomputation order under Section 379(3).
- Immunity from prosecution
- Relief that the DRC may grant under Section 379(2) for an offence punishable under the Act, subject to prescribed conditions.
Practical illustrations
1. Variation within the statutory limit
An assessee has filed a return showing total income of Rs. 32 lakh. A Board-specified order proposes aggregate variations of Rs. 8 lakh. The monetary tests in Section 379(4)(i) and (iii) are met, but the assessee must also satisfy the exclusions, specified class and prescribed conditions. Eligibility cannot be decided from the amounts alone.
2. Variation exceeding Rs. 10 lakh
An otherwise eligible assessee faces aggregate variations of Rs. 12 lakh in the specified order. The order does not satisfy Section 379(4)(i), even if the resulting tax demand is less than Rs. 10 lakh.
3. Order arising from a search
A proposed order follows a search initiated under Section 247. Section 379(4)(ii) excludes orders based on the specified search, requisition, survey and treaty-information sources. A small variation alone does not remove this exclusion.
Frequently asked questions
Is the DRC available for every income-tax dispute?
No. It is an optional route for specified persons and eligible orders satisfying Section 379 and prescribed rules.
What is the maximum variation allowed?
The aggregate variations proposed or made in the specified order must not exceed Rs. 10 lakh under Section 379(4)(i).
Is the Rs. 50 lakh test based on assessed income?
No. Section 379(4)(iii) refers to total income as per the return filed for the relevant tax year, where a return was filed.
Can the DRC waive an already imposed penalty?
Section 379(2), as amended by the Finance Act, 2026, refers to a penalty imposed or imposable, subject to prescribed conditions.
Can the DRC grant immunity from prosecution?
Yes, Section 379(2) authorises immunity in qualifying resolved cases, subject to prescribed conditions. It is not automatic.
When must the Assessing Officer implement the DRC order?
Within one month from the end of the month in which the Assessing Officer receives the DRC order, as specified in Section 379(3).
How is a DRC different from a Dispute Resolution Panel?
The DRC under Section 379 is a separate alternate dispute-resolution mechanism. The Dispute Resolution Panel process under Section 275 serves a different statutory function; the names should not be treated as interchangeable.
Related provisions and official references
Section 378 - Revision of other orders; Section 275 - Dispute Resolution Panel; Section 380 - Advance rulings: interpretation. For authoritative text, consult the Income Tax Department's amended Act and the departmental appeals and revisions guidance.
Legal note: This article is a general explanation of Section 379. The applicable rules, Board specifications, tax year and procedural requirements should be verified before applying for dispute resolution.