Supply of relied upon agreements in transfer pricing assessment required to protect right to defend; redaction allowed.

Tax assessment under section 92CA(3) requires production of copies of relied upon agreements because denial impairs the assessee's right to a fair opportunity to defend. The court directed that where transfer pricing adjustments rest on third party or related party agreements, those agreements must be supplied to the taxpayer; confidentiality may be preserved by redaction of party names. Effect: the impugned assessment was set aside and the assessing officer ordered to provide the relied upon agreements by a specified date to enable effective defence.

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Issues: Whether an order passed under Section 92CA(3) of the Income Tax Act, 1961, without supplying copies of the agreements relied upon by the authority, is vitiated for failure to provide the assessee an opportunity to defend and thereby breaches principles of natural justice and procedural fairness.

Analysis: The issue concerns whether denial of copies of relied-upon agreements impairs the assessee's ability to file a meaningful reply on transfer pricing adjustments. Consideration includes the relevance of the nature and terms of agreements to comparability and pricing, the requirement that relied documents be made available so the assessee can identify parties, contractual clauses and transactional specifics, and the possibility of redaction to protect confidentiality. The timelines for filing replies and passing final orders were assessed in light of the need to supply documents and permit effective response within expanded time limits.

Conclusion: The order passed under Section 92CA(3) of the Income Tax Act, 1961, without supplying copies of the relied-upon agreements is set aside. The authority is directed to supply the relied-upon agreements (with permitted redactions) and to allow specified time for filing a reply and for passing a fresh order, thereby vindicating the assessee's right to disclosure and to a fair opportunity to be heard.

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