Section 144C(13) mandatory compliance with DRP directions: final assessment quashed for ignoring panel modifications.

Section 144C(13) requires the Assessing Officer to complete the final assessment strictly in conformity with the Dispute Resolution Panel's directions. Where the Panel modified the transfer pricing adjustment and directed recomputation of interest on receivables, the Assessing Officer could not ignore those directions in the final order. The absence of a TPO order giving effect to the directions did not excuse non-compliance. The Tribunal treated the order as contrary to the mandatory statutory scheme and quashed the final assessment order.

---

---

Issues: Whether the final assessment order was liable to be quashed for non-compliance with the directions issued by the Dispute Resolution Panel under section 144C(13) of the Income-tax Act, 1961.

Analysis: The Dispute Resolution Panel had issued directions modifying the transfer pricing adjustment and directing recomputation of interest on receivables, but the Assessing Officer passed the final assessment order without giving effect to those directions. The Tribunal held that section 144C(13) obliges the Assessing Officer to complete the assessment strictly in conformity with the Dispute Resolution Panel directions, and the absence of a TPO order giving effect to those directions did not excuse non-compliance. Relying on the jurisdictional High Court decision and the dismissal of the Revenue's further challenge, the Tribunal found the assessment order contrary to the mandatory statutory mandate.

Conclusion: The final assessment order was quashed and the assessee's appeal was allowed.

---