Assessment order nullified for non-compliance with DRP directions, emphasizing procedural adherence under Income Tax Act.

The Tribunal allowed the appeal of the assessee due to the nullity of the assessment order resulting from the Assessing Officer's failure to comply with the Dispute Resolution Panel's directions within the specified time frame. The Tribunal emphasized that issuing an order not in line with the DRP's directions violates the law, leading to the quashing of the assessment order. The decision, delivered on December 31, 2018, favored the assessee, highlighting the importance of adherence to procedural requirements under the Income Tax Act.

---

---

Issues:
- Delay in filing the appeal by the assessee.
- Compliance with the directions of the Dispute Resolution Panel (DRP) under section 144C(5) of the Income Tax Act.
- Validity of the final order of assessment passed by the Assessing Officer (AO) in relation to transfer pricing adjustments.

Analysis:
1. Delay in filing the appeal: The assessee appealed against the final order of assessment dated 31.01.2017 passed by the ACIT, Circle 3(1)(1), Bangalore for assessment year 2012-13. A delay of 7 days in filing the appeal was explained by the absence of the Managing Director. The Tribunal accepted the reasons for the delay and condoned it.

2. Compliance with DRP directions: The main issue revolved around ground No.2 raised by the assessee in its appeal, challenging the conformity of the AO's order with the directions of the DRP under section 144C(5) of the Act. The DRP had issued directions on 28.12.2016, but the final order of assessment dated 31.01.2017 did not incorporate these directions. The assessee argued that the final order should have been in accordance with the DRP's directions within the specified time frame, as per section 144C of the Act.

3. Validity of the final order: The Tribunal, citing a similar case, quashed the final order of assessment due to the AO's failure to comply with the DRP's binding directions within the specified time. The Tribunal emphasized that passing an order not in conformity with the DRP's directions is a violation of the Act. The Tribunal held that the impugned order was unsustainable in law and quashed it. The Tribunal also noted that other issues raised by both parties did not require consideration due to the nullity of the assessment order.

4. Precedent and Conclusion: The Tribunal rejected the argument that a decision based on concession by the Assessee in a different case could serve as a precedent. The Tribunal allowed the appeal of the assessee, emphasizing the nullity of the assessment order due to non-compliance with the DRP's directions. The decision was pronounced on December 31, 2018, in favor of the assessee.

---