Invocation of dispute resolution panel for transfer pricing is improper where TPO issues no variation, assessment quashed

Invoking the dispute resolution mechanism under section 144C is improper where the Transfer Pricing Officer issued no variation after a section 92CA reference; consequently the assessee cannot be treated as an eligible assessee for section 144C proceedings and the Assessing Officers reliance on that provision is invalid. The tribunal concluded that absence of any TPO variation forecloses transfer pricing reference under section 144C and therefore quashed the assessment order, allowing the assessees appeal.

---

---

Issues: Whether the Assessing Officer could validly invoke the procedure under section 144C of the Income-tax Act, 1961 (including issuance of a draft assessment order) where the Transfer Pricing Officer under section 92CA had issued an order under section 92CA(3) making no variation.

Analysis: The issue involves interpretation of section 144C read with section 92CA, specifically whether an assessee becomes an "eligible assessee" under section 144C(15) when the TPO passes an order under section 92CA(3) without making any variation. Relevant legal framework includes the statutory scheme for transfer pricing adjustments and reference to the Dispute Resolution Panel under section 144C, and precedent addressing identical facts where no variation was made by the TPO. Applying that framework, when the TPO does not propose any variation, the statutory condition that triggers the section 144C draft-order procedure is absent, and the DRP reference procedure does not validly arise.

Conclusion: The invocation of section 144C was invalid where the TPO made no variation; the assessee is not an "eligible assessee" under section 144C(15) in such circumstances, and the assessment passed under the section 144C process is quashed.

---