Natural justice in transfer pricing objections: failure to consider fresh evidence justified remand for fresh DRP adjudication.

Non-consideration of additional documentary evidence relevant to the 90-day stay test, including passport material, vitiated the assessment and DRP directions because the assessee's objections were not examined on the full record. The endorsement of the adverse view without evaluating the fresh evidence amounted to a breach of natural justice. The matter was therefore restored to the DRP for fresh adjudication after considering the documentary evidence on record.

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Issues: Whether the assessment and DRP directions could be sustained when documentary evidence relevant to the 90-day stay test was not considered, and whether the matter required restoration for fresh adjudication.

Analysis: The assessee produced additional evidence before the Dispute Resolution Panel, including passport material and other documents relevant to the period of stay of the employees in India. The assessment had proceeded on the premise that the assessee had not established the 90-day condition, and the DRP endorsed that view without examining the fresh material. Such non-consideration of relevant evidence amounted to a violation of natural justice. The appropriate course was to restore the matter so that the objections could be decided afresh after considering the documentary evidence on record.

Conclusion: The issue was decided in favour of the assessee to the extent that the matter was remanded to the DRP for fresh consideration after examining the additional evidence.

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