Explanation:

First option is correct.

There are 3 lakh tax cases pending with the 1st Appellate Authority with disputed amount being 5.5 lakh crores. In order to reduce this number new dispute Resolution Scheme (DRS) is launched. Following are highlights of dispute resolution scheme:

• A taxpayer who has an appeal pending as of today before the Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment.
• No penalty in respect of Income-tax cases with disputed tax up to Rs. 10 lakh will be levied.
• Cases with disputed tax exceeding Rs. 10 lakhs will be subjected to only 25% of the minimum of the imposable penalty for both direct and indirect taxes.
• Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.
• Certain categories of persons including those who are charged with criminal offences under specific Acts are proposed to be barred from availing this scheme.

This scheme can be availed up to 31st December, 2016.