Procedures and Legal Safeguards of 'impermissible avoidance arrangements' (IAAs) : Clause 274 of the Income Tax Bill, 2025 Vs. Section 144BA of Income-tax Act, 1961

Impermissible avoidance arrangements: GAAR procedure mandates reference, Approving Panel review, and binding directions with safeguards.

Clause 274 creates a multi-stage GAAR procedure: the Assessing Officer may refer suspected impermissible avoidance arrangements to the Principal Commissioner/Commissioner, who must notify the assessee and allow objections; absent or unsatisfactory responses permit directions or escalation to an independent Approving Panel. The Approving Panel, composed of a High Court judge, a senior revenue officer, and an academic, may summon evidence, hold hearings, and issue binding directions within set timelines; such directions are final under the Act, subject only to constitutional judicial review.