Section 144BA

Section 144BA — the law in short

What the courts have decided on section 144BA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Hinduja Global Solutions Ltd v PCIT — Chapter X-A invoked on an NCLT-sanctioned demerger: Rule issued because no appeal lies, and the s.144BA reference, the directions and the assessments stayed High CourtHelps taxpayerNo later treatment found
  The department has invoked GAAR on a demerger that the NCLT sanctioned after notice to the income-tax authorities, and s.72A(4) expressly allowed the loss to move with the undertaking. I have no right of appeal against the reference or the directions. What can I actually do?
  You go to the High Court under Article 226, and the Bombay High Court has said in terms that the absence of an appeal is itself a reason to entertain the writ. On 19 December 2025 it issued Rule on a petition challenging a s.144BA reference dated 31 March 2025 and directions dated 30 October 2025 invoking Chapter X-A on an NCLT-sanctioned demerger, recording that it was "mindful of the fact that there is no provisions for an Appeal for impugning the reference ... or the directions ... invoking the provisions of Chapter X-A of the IT Act". It found a strong prima facie case and granted interim relief staying the reference, the directions and the assessment proceedings for AYs 2022-23 and 2023-24. Two arguments carried that interim finding: that Chapter X-A could never have been invoked once a competent authority, the NCLT, had sanctioned the demerger after notice to the income-tax authorities who raised no objection; and that s.72A(4) expressly permits the transfer of accumulated loss and unabsorbed depreciation of the demerged undertaking, so that what the Act itself allows cannot be an impermissible avoidance arrangement.
• Vedanta Holdings Mauritius II Ltd v CIT (International Taxation)-3 — an Approving Panel order under GAAR stayed by the Delhi High Court, with the Revenue filing its own writ against the same order High CourtHelps taxpayerNo later treatment found
  The Approving Panel has issued its order and s.144BA(14) says no appeal lies. Will a High Court actually stay a Panel order, and does the same bar stop the department from challenging a Panel order it dislikes?
  It will entertain the writ, and on this occasion it stayed the Panel's order — but by consent, not on a contested application. On 17 December 2025 the Delhi High Court issued notice in two writ petitions directed against a single order of the Approving Panel dated 28 November 2025 under the General Anti Avoidance Rule, by which the reference made by the Commissioner of Income Tax (International Taxation)-3, New Delhi under s.144BA(4) dated 26 May 2025 had been upheld; and it directed that "In the meantime, by concurrence of ld. Counsels, the impugned order and the consequent assessment proceedings shall remain stayed till the next date of hearing" — the stay was therefore made on the concurrence of counsel on both sides, and the order is not authority that a contested stay would be granted. The striking feature is who filed the second petition: W.P.(C) 19105/2025 was filed by the Assistant Commissioner of Income Tax, International Tax Circle 3(1)(1), Delhi against the same Panel order. Because s.144BA(14) binds "the Principal Commissioner or Commissioner and the income-tax authorities subordinate to him" as well as the assessee, and bars any appeal under the Act, the department is in the same position as the taxpayer: if it wants to impugn a Panel direction it must also go by writ.
• Ayodhya Rami Reddy Alla v PCIT High CourtHelps departmentUnder appeal
  The AO invoked GAAR even though a specific anti-avoidance section covers my transaction. Can he do that?
  Yes, on this ruling. Chapter X-A is not shut out because a specific anti-avoidance rule occupies part of the field: s.95(1) opens with a non-obstante clause, which displaces the usual presumption that the special provision excludes the general one, so GAAR can supersede a SAAR. The Court also refused to interfere at the initiation stage because s.144BA gives the assessee a reference to the Principal Commissioner and the Approving Panel.
• Manipal Education and Medical Group India Pvt Ltd v ACIT — where the s.148 reassessment falls, the s.144BA(1) and (2) GAAR notices issued inside it fall with it as consequential High CourtHelps taxpayerNo later treatment found
  The GAAR reference in my case was made inside a reassessment. If I succeed in getting the s.148A(d) order and the s.148 notice set aside, do the s.144BA notices go too, or do I have to fight them separately?
  They go with it. In a writ petition in which the Revenue itself accepted, through the Additional Solicitor General, that the matter should be remanded to the stage before the s.148 notice because the principles of natural justice had been violated, the Karnataka High Court set aside the s.148A(d) order and the s.148 notice, both dated 31 March 2022, and then quashed "all actions initiated pursuant to the above under Section 142(2A), Section 144BA(1) and Section 144BA(2) of the Act, being consequential" — naming a notice dated 21 March 2023, an order dated 30 March 2023, a notice dated 24 March 2023 for invocation of Chapter X-A and a further notice dated 26 April 2023. The matter was remanded to the Assessing Officer to begin again from the s.148A(b) stage, with thirty days to reply, and all contentions of both parties kept open.
• DCIT, Central Circle 8(3), Mumbai v Sanjana Cryogenic Storages Ltd ITATHelps taxpayerNo later treatment found
  The Approving Panel held that my client's arrangement is NOT an impermissible avoidance arrangement, but the Assessing Officer has taxed the same transaction under another section anyway. Can he do that?
  The Mumbai Tribunal did not decide the wide question, but it held that the Assessing Officer could not, while giving effect to the statutory process under section 144BA, proceed on a factual premise diametrically opposed to the findings returned by the Approving Panel on the very arrangement referred to it. It then dismissed the Revenue's appeal on the narrower ground that a company buying back its own shares, which must then be extinguished, does not 'receive' property within section 56(2)(x) at all.
• Statutory position — section 158BE: the block assessment is barred twelve months from the end of the QUARTER, not the month CBDT Circulars & InstructionsCuts both ways
  The last panchnama in my client's search is dated 9 April 2025. By when must the block assessment order be passed?
  Twelve months from the end of the QUARTER in which the last of the authorisations was executed — so, on those facts, from the end of the quarter ending 30 June 2025, which gives 30 June 2026, subject to the exclusions and extensions in the section. The old Chapter ran the period from the end of the MONTH; the substituted section 158BE runs it from the end of the quarter, which can add up to nearly three months to the department's time.
• Statutory position — Rules 10UD, 10UE and 10UF: the Approving Panel stage — Form 3CEIA, four sets, circulation within seven days, and the notice of hearing to both sides CBDT Circulars & InstructionsCuts both ways
  The Commissioner has referred my case to the Approving Panel. What form does that reference take, what is the Panel obliged to do with it, and am I entitled to be heard?
  Three rules govern this stage and they are short. Rule 10UD requires the reference under s.144BA(4) to be "made in Form No. 3CEIA along with a copy of Form No. 3CEI and such other documents which the Principal Commissioner or the Commissioner deems fit" and to be "submitted in four sets, either in Hindi or English". Rule 10UE(1) requires the Chairperson of the Panel to cause the reference to be circulated among the other members "within seven days from the date of receipt of such reference". Rule 10UE(2) requires the Chairperson to "cause to be issued the notice to the Assessing Officer and the assessee affording an opportunity of being heard specifying therein the date and place of hearing" — so the taxpayer's right to be heard before the Panel is in the rules as well as in s.144BA(7). Rule 10UE(3) leaves the venue of the Panel's meetings to the Panel. Rule 10UF fixes the members' remuneration at a sitting fee of six thousand rupees per day plus travelling and daily allowances as admissible to an officer of the rank of Special Secretary to the Government of India, met from the budgetary grants of the Department of Revenue.
• Statutory position — the GAAR procedure: section 144BA, Rules 10UB and 10UC, and the Approving Panel whose direction binds both sides CBDT Circulars & InstructionsCuts both ways
  My client has received a notice under Chapter X-A saying his arrangement may be an impermissible avoidance arrangement. What is the procedure from here, who actually decides, and can I appeal the decision?
  GAAR cannot be applied by the Assessing Officer on his own. He must refer the matter to the Principal Commissioner or Commissioner under s.144BA(1) in Form No. 3CEG after first putting a written notice to the assessee under Rule 10UB(1); the Principal Commissioner then issues his own notice under s.144BA(2) giving the assessee up to sixty days to object and a hearing, and either drops the matter in Form No. 3CEH or refers it to the Approving Panel in Form No. 3CEI. The Approving Panel's direction under s.144BA(6) is binding on the assessee and on the Commissioner and his subordinates, and s.144BA(14) bars any appeal under the Act against that direction — the only route against it is a writ.
• Statutory position — sections 100 and 101: Chapter X-A applies in addition to or in lieu of any other basis, and only in accordance with prescribed guidelines CBDT Circulars & InstructionsCuts both ways
  Can the department run GAAR and a specific anti-avoidance provision on the same transaction, and is there anything that limits how GAAR is applied?
  Section 100 provides that the provisions of Chapter X-A shall apply in addition to, or in lieu of, any other basis for determination of tax liability — so GAAR is not an alternative of last resort and can be invoked alongside, or instead of, a specific charging or anti-avoidance provision. Section 101 provides that the Chapter shall be applied in accordance with such guidelines and subject to such conditions as may be prescribed, and it is under that section that rules 10U to 10UC are made.
• Statutory position — s.144BA(15) to (21) and the Explanation: who sits on the Approving Panel, the powers it borrows from the Advance Rulings Authority, and the two things that stop its six-month clock CBDT Circulars & InstructionsCuts both ways
  My case is going to the Approving Panel. Who actually sits on it, what powers does it have over me, how long is its term, and can the six months it has to decide be extended?
  The Approving Panel is not a departmental committee. By s.144BA(15) the CENTRAL GOVERNMENT constitutes one or more Panels, each of three members including a Chairperson, and by s.144BA(16) "the Chairperson of the Approving Panel shall be a person who is or has been a judge of a High Court", with one member from the Indian Revenue Service not below the rank of Principal Chief Commissioner or Chief Commissioner of Income-tax and one member "an academic or scholar having special knowledge of matters, such as direct taxes, business accounts and international trade practices". By s.144BA(19) the Panel has, in addition to its own powers, "the powers which are vested in the Authority for Advance Rulings under section 245U". Its term is ordinarily one year, extendable up to three years (s.144BA(17)). The six-month period in s.144BA(13) is subject to an Explanation that excludes two things — time taken on an exchange-of-information reference under s.90 or s.90A, capped at one year, and any period during which the Panel's proceeding is stayed by a court order or injunction — with a proviso that if fewer than sixty days remain after that exclusion, the period is extended to sixty days.
• Statutory position — s.95: the gateway into Chapter X-A, the years it reaches, and the Explanation that lets the department attack one STEP of an otherwise genuine transaction CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has written that he proposes to invoke Chapter X-A. Which provision actually gives him that power, from which assessment year does it bite, and can he pick on a single step of a transaction that as a whole was done for real commercial reasons?
  Section 95(1) is the gateway, and it does two things: it opens with "Notwithstanding anything contained in the Act", so Chapter X-A overrides the rest of the Act, and it allows an arrangement to be "declared to be an impermissible avoidance arrangement" with the tax consequences then determined under the Chapter. Section 95(2) confines the whole Chapter to "any assessment year beginning on or after the 1st day of April, 2018" — that is AY 2018-19 onwards, and nothing earlier. The Explanation is the sting: the Chapter "may be applied to any step in, or a part of, the arrangement as they are applicable to the arrangement", so the officer does not have to condemn your whole transaction; he can isolate one step inside it.
• Statutory position — s.96: what makes an arrangement impermissible — the main-purpose test, the four tainted elements, and the s.96(2) presumption that shifts the burden onto you CBDT Circulars & InstructionsCuts both ways
  The Commissioner's notice under s.144BA(2) says my arrangement is an impermissible avoidance arrangement. What exactly does the Revenue have to establish, and who has to prove what?
  Section 96(1) is a two-limb test and BOTH limbs must be satisfied. The arrangement must be one "the main purpose of which is to obtain a tax benefit", AND it must additionally have at least one of four tainted elements — rights or obligations not ordinarily created between persons dealing at arm's length; misuse or abuse of the provisions of the Act; lacking or deemed to lack commercial substance under s.97, in whole or in part; or being entered into or carried out by means or in a manner not ordinarily employed for bona fide purposes. Section 96(2) then supplies a presumption that works against you: if the main purpose of a STEP in, or a part of, the arrangement is to obtain a tax benefit, the whole arrangement is presumed to have been entered into for that main purpose — "unless it is proved to the contrary by the assessee" — even though the main purpose of the whole arrangement was not a tax benefit.
• Statutory position — s.144C(1) to (5): the Assessing Officer must, notwithstanding anything to the contrary in the Act, forward a draft order to an eligible assessee before he makes any prejudicial variation, and the assessee has thirty days to accept or to object to the Dispute Resolution Panel AND to the Assessing Officer CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has served a final assessment order on our foreign company raising a transfer pricing addition, without ever serving a draft order. Was he obliged to serve one first, and what was I supposed to do with it if he had?
  He was obliged to serve one first, if the company is an eligible assessee and the variation is prejudicial. Section 144C(1), as printed on the departmental edition stamped Year 2025, reads: "The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee." Three things follow from the words themselves. The obligation is cast in the mandatory "shall"; it operates "notwithstanding anything to the contrary contained in this Act", so it overrides the ordinary assessment machinery; and it bites "in the first instance", that is, before and not after the order that would otherwise be the assessment order. Sub-section (2) gives the eligible assessee thirty days of the receipt by him of the draft order to do one of two things: "(a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with,— (i) the Dispute Resolution Panel; and (ii) the Assessing Officer." The "and" in clause (b) is conjunctive: an objection is filed with the Panel and with the Assessing Officer, not with one or the other. Sub-section (3) requires the officer to complete the assessment on the basis of the draft order if the assessee intimates acceptance of the variation or if no objections are received within the period specified in sub-section (2). Sub-section (4) fixes the time for that order — one month from the end of the month in which the acceptance is received or the period of filing objections expires, notwithstanding s.153 or s.153B. Sub-section (5) is the Panel's charging provision: where any objection is received under sub-section (2), the Panel "shall ... issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment".
• Statutory position — s.144C(8) with its Explanation, and s.144C(10) and (11): the Panel may confirm, reduce or ENHANCE but may not set aside or remit, the Explanation inserted by the Finance Act 2012 is retrospective to 1 April 2009, the direction binds the Assessing Officer, and no direction may issue without an opportunity of being heard — with what s.253 and s.246A provide about appeal CBDT Circulars & InstructionsCuts both ways
  We are considering objecting to a draft order. Can the Dispute Resolution Panel make our position worse, can it send the matter back for fresh enquiry, and if we lose before it, do we appeal to the Commissioner (Appeals) or straight to the Tribunal?
  It can make your position worse; it cannot send the matter back; and the appeal lies to the Tribunal, not to the Commissioner (Appeals). Section 144C(8), as printed on the departmental edition stamped Year 2025, reads: "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." The Explanation to that sub-section reads: "For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee." Footnote 76 on the departmental edition stamped Year 2014 records that Explanation verbatim as "Inserted by the Finance Act, 2012, w.r.e.f. 1-4-2009" — note the date: it is retrospective to 1 April 2009, the date the section itself was inserted from, and not 2012. The original edition stamped Year 2009 prints sub-section (8) with no Explanation at all. Sub-section (10): "Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer." Sub-section (11): "No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively." Sub-section (9) resolves a difference of opinion among the members by the opinion of the majority. On appeal: s.246A(1)(a), on the departmental edition stamped Year 2025, excepts from the first appeal "an order passed in pursuance of directions of the Dispute Resolution Panel", and s.253(1)(d), on the edition stamped Year 2024 (No. 2), gives a direct right of appeal to the Appellate Tribunal against "an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order". Sub-sections (2A) and (3A) of s.253 are printed as "[***]" on the current editions, and the departmental edition stamped Year 2016 carries footnotes against both reading "Omtt. by Act No. 28 of 2016 (w.e.f. 1-6-2016)."
• Statutory position — s.153 Explanation 1(xi): the limitation clock stops from the day the GAAR reference reaches the Commissioner until his direction or the Panel's comes back, and then never leaves less than sixty days CBDT Circulars & InstructionsCuts both ways
  A reference under s.144BA has been made in my case and months have gone by. Does the ordinary time limit for completing the assessment keep running while the Approving Panel sits on it?
  No. Clause (xi) of Explanation 1 to s.153 excludes from the limitation period "the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer". The clock therefore stops on receipt of the Assessing Officer's reference and restarts only when the outcome — the Commissioner's own direction under s.144BA(3), the Approving Panel's direction under s.144BA(6), or the Commissioner's order under s.144BA(5) dropping the matter — reaches the Assessing Officer. The proviso that follows the Explanation then gives the officer at least sixty days: if what is left after the exclusion is less than sixty days, the remaining period is extended to sixty days.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.