Impermissible avoidance arrangement declaration triggers mandatory approving panel directions binding on assessee and tax authorities. Assessing Officers may refer cases where an arrangement appears to be an impermissible avoidance arrangement to the Principal Commissioner or Commissioner, who must notify and hear the assessee and may either direct consequences or, if unconvinced, refer the matter to an Approving Panel. The Approving Panel may declare the arrangement impermissible, specify applicable tax years, order further inquiries or records, and issue binding directions that the Assessing Officer must implement; such panel directions are final and not appealable under the Act.