Final assessment under transfer pricing without Dispute Resolution Panel directions held void, assessment quashed in favor of the assessee.

Final assessment orders passed under the transfer pricing framework without incorporating Dispute Resolution Panel directions are null and void because the Transfer Pricing Officer has not issued any corresponding order as directed by the DRP; therefore the assessing officer cannot finalise assessment under 143(3) read with 144C(3) r.w.s.144B without those directions, and the tribunal cannot set aside such an assessment to permit the TPO to issue a future order outside applicable time limits. The decision favors the assessee and follows prior precedents condemning assessments lacking DRP incorporation.

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Issues: Whether the final assessment order dated 28.10.2024 passed under section 143(3) r.w.s. 144C(3) r.w.s. 144B of the Income-tax Act, 1961, without incorporating the directions issued by the Dispute Resolution Panel (DRP), is valid or is null and void.

Analysis: The Tribunal examined section 144C and allied provisions governing transfer pricing proceedings and the statutory timeline for completion of assessment including the role of the Transfer Pricing Officer (TPO) to give effect to DRP directions. The Tribunal considered coordinate and higher judicial decisions on whether non-incorporation of DRP directions in the final assessment where the TPO has not passed an order within the statutory time renders the assessment void, and whether subsequent rectification under section 154 or later TPO action can cure such non-conformity. The Tribunal noted that as on the date of decision the TPO had not passed any order giving effect to the DRP directions and that the statutory period for taking corrective action under section 144C had expired. The Tribunal distinguished authorities relied upon by the Revenue on facts where limitation had not expired and followed precedents holding that an assessing officer's final order not in conformity with mandatory DRP directions is without jurisdiction and void.

Conclusion: The final assessment order dated 28.10.2024 passed without incorporating the DRP directions is null and void. Grounds Nos. 1 and 2 of the appeal are allowed in favour of the assessee.

Ratio Decidendi: Where an assessing officer passes a final assessment order without incorporating binding DRP directions and the TPO has not given effect to those directions within the statutory time prescribed under section 144C, the assessment order is without jurisdiction and is null and void; subsequent rectification or later TPO action cannot validate the time-barred non-conforming assessment.

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