Binding DRP directions must be incorporated within limitation; a later corrigendum cannot cure a jurisdictionally defective final assessment order

Section 144C(13) requires a final assessment order to conform to the Dispute Resolution Panel's binding directions. The analysis explains that where the Transfer Pricing Officer gives effect to those directions before the limitation date, but the final assessment order is issued without incorporating them and substantially replicates the draft order, the defect is jurisdictional. A corrigendum issued after expiry of the statutory limitation period cannot cure the failure to pass a compliant final order within time. Accordingly, the notes state that the final assessment order is legally unsustainable for non-compliance with Section 144C(13), and that the subsequent corrigendum is beyond jurisdiction.

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Issues: Whether the final assessment order passed under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961, without incorporating the directions of the Dispute Resolution Panel, could be sustained by a subsequent corrigendum issued after expiry of the limitation period.

Analysis: Under the scheme of Section 144C of the Income-tax Act, 1961, the final assessment order is required to be passed in conformity with the directions issued by the Dispute Resolution Panel. In the present matter, the Transfer Pricing Officer had already passed the order giving effect to the DRP directions before the limitation date, yet the final assessment order dated 30.06.2022 was issued without incorporating those directions and remained substantially identical to the draft assessment order. The later corrigendum dated 27.07.2022 was issued after expiry of the statutory time limit. A corrigendum cannot be used to cure a jurisdictional defect arising from failure to pass a compliant final assessment order within limitation. Once the final order was passed contrary to the binding DRP directions, the subsequent attempt to rectify it after the limitation period was beyond jurisdiction.

Conclusion: The final assessment order was bad in law for non-compliance with Section 144C(13) of the Income-tax Act, 1961, and the subsequent corrigendum was beyond jurisdiction; the issue was decided in favour of the assessee.

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