Sub-section (1) requires the Assessing Officer, in the first instance and irrespective of anything to the contrary in the Act, to forward a draft of the proposed order of assessment to an eligible assessee if he proposes any variation prejudicial to that assessee's interest.
Sub-section (2) gives the eligible assessee thirty days from receipt of the draft order either to file acceptance of the variations with the Assessing Officer, or to file objections with both the Dispute Resolution Panel and the Assessing Officer. Sub-section (3) requires the Assessing Officer to complete the assessment on the basis of the draft order where acceptance is intimated or no objection is received in that period. Sub-section (4), as substituted by Act No. 4 of 2026 with effect from 1 April 2026, requires that assessment order to be passed, irrespective of section 286, within one month from the end of the month in which the acceptance is received or the objection period expires; its new clause (b) provides that where the draft order was forwarded within the time allowed under section 286, the further time available to complete the assessment under sub-section (3) is governed by this sub-section.
Sub-sections (5) to (12) govern the Panel. On receipt of objections it issues such directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment, in writing, stating the points of determination, the decision and the reasons. It may make or cause further enquiry. It may confirm, reduce or enhance the variations proposed, but may not set aside any proposed variation or direct further enquiry and passing of the assessment order. Its power to enhance includes considering any matter arising out of the assessment proceedings relating to the draft order even if the assessee did not raise it. A difference of opinion is decided by the majority. Every direction is binding on the Assessing Officer. No direction may issue without an opportunity of being heard to the assessee, and to the Assessing Officer where the direction is prejudicial to the interest of the revenue.
Sub-section (13) bars any direction under sub-section (5) after nine months from the end of the month in which the draft order was forwarded. Sub-section (14), as substituted by Act No. 4 of 2026 with effect from 1 April 2026, requires the Assessing Officer, on receipt of directions, to complete the assessment in conformity with them without any further opportunity of being heard, irrespective of section 286, within one month from the end of the month in which the direction is received; its new clause (b) provides that where the draft order was forwarded within the section 286 time, the time available to pass the order on receipt of directions is governed by sub-section (13) and this sub-section.
Sub-section (15) allows the Board to make rules for the efficient functioning of the Panel. Sub-section (16) disapplies the section to an assessment or reassessment order passed with the prior approval of the Principal Commissioner or Commissioner under section 274(12). Sub-section (17) defines the Panel as a collegium of three Principal Commissioners or Commissioners constituted by the Board, and "eligible assessee" as a person in whose case the variation arises as a consequence of an order of the Transfer Pricing Officer under section 166(6), or any non-resident not being a company, or any foreign company. Sub-section (18) excludes from "eligible assessee" a person referred to in section 292(1) or another person referred to in section 295. Sub-section (19) disapplies the section to proceedings under Chapter XVI-B.
Why it is there
Transfer pricing adjustments and additions against non-residents are large and are often better tested before the demand exists than after. The section inserts a collegium of three Commissioners between the draft and the final order, with binding directions and a nine-month outer limit, so the dispute is resolved inside the assessment rather than through years of appeal. The bar on setting aside in sub-section (8) is deliberate: the Panel must decide the point, not send it back.
Who it applies to
An eligible assessee in whose case a variation arises from a Transfer Pricing Officer's order under section 166(6)
A non-resident not being a company, and a foreign company
The Assessing Officer forwarding the draft order and passing the final order
The Dispute Resolution Panel, a collegium of three Principal Commissioners or Commissioners
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Time to accept or object to the draft order
Thirty days
From receipt of the draft order by the eligible assessee; objections go to both the Dispute Resolution Panel and the Assessing Officer
Sub-section (2)
Time to pass the assessment order where the draft is accepted or unopposed
One month from the end of the month in which the acceptance is received or the objection period expires
Irrespective of section 286; sub-section (4) as substituted by Act No. 4 of 2026 w.e.f. 1 April 2026
Sub-section (4)(a)
Outer limit for the Panel's directions
Nine months from the end of the month in which the draft order is forwarded to the eligible assessee
No direction under sub-section (5) may issue after that period
Sub-section (13)
Time to pass the assessment order after directions
One month from the end of the month in which the direction is received
In conformity with the directions and without any further opportunity of being heard; sub-section (14) as substituted by Act No. 4 of 2026 w.e.f. 1 April 2026
Sub-section (14)(a)
Composition of the Dispute Resolution Panel
Three Principal Commissioners or Commissioners of Income-tax
A collegium constituted by the Board for this purpose
Sub-section (17)(a)
What this means in practice
Objecting is not risk-free. Under sub-sections (8) and (9) the Panel may enhance the variations proposed, and may do so on a matter arising out of the assessment proceedings that the assessee never raised, so a reference can leave the assessee worse off than the draft order. What the Panel cannot do is set a variation aside or direct further enquiry followed by a fresh assessment order; it must confirm, reduce or enhance. The thirty days in sub-section (2) is the whole window, and objections must reach both the Panel and the Assessing Officer — filing with one only leaves the other free to treat the draft as unopposed and complete the assessment under sub-section (3). After the directions issue there is no further hearing: sub-section (14)(a) requires the Assessing Officer to complete the assessment in conformity with them within one month from the end of the month of receipt, so anything not argued before the Panel is not argued at all at that stage. The 2026 substitutions of sub-sections (4) and (14) each add a clause (b) tying the remaining time to section 286 where the draft order was forwarded within the section 286 period. Note the exclusions: the section does not apply where the order is passed with the prior approval of the Principal Commissioner or Commissioner under section 274(12), nor to proceedings under Chapter XVI-B, nor to a person within section 292(1) or 295.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A foreign company receives a draft order proposing a transfer pricing variation of Rs. 20 crore consequent on an order of the Transfer Pricing Officer under section 166(6). It files objections within thirty days with both the Panel and the Assessing Officer. The Panel, after hearing it, takes up a matter arising out of the assessment proceedings that the company had not raised and, under sub-sections (8) and (9), enhances the variation to Rs. 24 crore. That direction is binding, and under sub-section (14)(a) the Assessing Officer must pass the assessment order in conformity with it, without any further hearing, within one month from the end of the month in which he receives it.
Where you meet this section
You meet it as a draft assessment order forwarded to you under sub-section (1) — the document that starts the thirty-day clock — and then in the Panel's written directions stating the points of determination and reasons, followed by the final assessment order passed in conformity with them.
The words themselves
the eligible assessee shall, within thirty days of its receipt by him,— (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections
Section 275(2), Income-tax Act, 2025.
The Dispute Resolution Panel may, confirm, reduce or enhance the variations proposed in the draft order, so however, that it shall not set aside any proposed variation, or issue any direction under sub-section (5) for further enquiry and passing of the assessment order.
Section 275(8), Income-tax Act, 2025.
No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee.
Section 275(13), Income-tax Act, 2025.
complete, irrespective of anything to the contrary contained in section 286, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received
Section 275(14)(a), Income-tax Act, 2025.
What people get wrong
Filing objections only with the Dispute Resolution Panel. Sub-section (2)(b) requires them to be filed with the Panel and with the Assessing Officer.
Assuming the Panel can only reduce or confirm. Sub-section (8) lets it enhance the variations, and sub-section (9) lets it do so on a matter the assessee never raised.
Expecting the Panel to set aside a variation for fresh enquiry. Sub-section (8) expressly bars setting aside and bars a direction for further enquiry and passing of the assessment order.
Expecting a further hearing before the final order. Sub-section (14)(a) requires the Assessing Officer to complete the assessment in conformity with the directions without any further opportunity of being heard.
Treating every non-resident as an eligible assessee. Sub-section (17)(b) covers a section 166(6) transfer pricing case, a non-resident not being a company, and a foreign company, and sub-section (18) excludes persons referred to in section 292(1) or 295.
Applying the section to an order approved under section 274(12) or to a Chapter XVI-B proceeding. Sub-sections (16) and (19) exclude both.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
Rules of the Income-tax Rules, 2026 that work section 275. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.
Rule 176 — Procedure for faceless assessment, reassessment or recomputation under section 273(1) — on reading the rule
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 12/2024 — Guidance note 1/2024 on provisions of the direct tax vivad se vishwas scheme 2024 2024-10-15
Circular No. 8/2021 — Extension of time lines related to certain compliances by the taxpayers under the income tax act 1961 2021-04-30
Circular 9/2013 — Section 144C of the Income-tax Act, 1961 - Dispute resolution panel - Reference to - Clarification in respect of circular no.5/201 2013-11-19
F. NO. 500/15/2011—FT&TR-1 — Section 144C of the Income-tax Act, 1961 - Dispute Resolution Panel - Reference to - Constitution of DRP at specified places - Cor 2012-04-11
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 275. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
ACIT v Shelf Drilling Ron TappmeyerSupreme Courttagged s.144C Has the Supreme Court settled whether the s.144C nine-month DRP process runs over and above the s.153 limitation?
CIT v Roca Bathroom ProductsHigh Courttagged s.144C Are proceedings before the Dispute Resolution Panel outside the ordinary limitation for completing an assessment?
Pfizer Healthcare India P Ltd v JCITHigh CourtHelps taxpayertagged s.144C The TPO's order was one day late. Does that kill the transfer pricing addition?
SHL (India) v DCITHigh Courttagged s.144C If the Assessing Officer passes a final assessment order on an eligible assessee without first issuing a draft order, can s.292B save it?
Shelf Drilling Ron Tappmeyer v ACITHigh Courttagged s.144C Does the DRP route under s.144C buy the Assessing Officer extra time, or must the whole assessment still finish within the s.153 limitation?
Shell India Markets P Ltd v ACITHigh CourtHelps taxpayertagged s.144C The TPO says we issued shares to our parent too cheaply. Can he tax the shortfall?
Sony Ericsson Mobile Communications India P Ltd v CITHigh CourtCuts both waystagged s.144C The TPO says my advertising spend is higher than comparables and has added the excess as brand building for my foreign parent. Can he do that?
Vijay Television P Ltd v DRPHigh CourtHelps taxpayertagged s.144C The AO skipped the draft order and passed a final one. Can a corrigendum cure that?
Sky High Appeal XLIII Leasing v ACITITATHelps taxpayertagged s.144C Can the officer apply the PPT to my India-Ireland treaty claim just because both countries signed the MLI?
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.