Binding DRP directions under section 144C must be followed; assessment order was quashed for non-compliance.

The final assessment order was unsustainable because the Assessing Officer did not act in conformity with the Dispute Resolution Panel's binding directions under section 144C. The order retained the transfer pricing adjustment from the draft order and failed to give effect to the DRP's directions on comparables, although section 144C(10) makes those directions binding and section 144C(13) requires completion of assessment in conformity with them. As a result, the ITAT quashed and set aside the assessment order in favour of the assessee.

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Issues: Whether the final assessment order was liable to be quashed for not being passed in conformity with the directions issued by the Dispute Resolution Panel under section 144C of the Income-tax Act, 1961.

Analysis: The final assessment order retained the transfer pricing adjustment made in the draft order and did not give effect to the DRP's directions on the comparables, though section 144C(13) required the Assessing Officer to complete the assessment in conformity with those directions. Since the statutory directions of the DRP are binding under section 144C(10), non-compliance with them rendered the assessment order unsustainable in law.

Conclusion: The assessment order was quashed and set aside as being contrary to the binding DRP directions, in favour of the assessee.

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