Section 144C:

Section 144C(10): Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.

Purpose and Objective of the Act

Section 144C’s primary objective is to provide a structured and time-bound mechanism for resolving transfer pricing adjustments and international taxation disputes. By setting clear timelines for the completion of assessments, the section aims to expedite the resolution process and reduce prolonged litigation, ensuring timely and fair evaluations.

Proper Reasoning

The reasoning behind the specific timeline for completing assessments upon receiving directions from the DRP includes:

1. Expedited Resolution: Ensuring disputes are resolved quickly reduces the uncertainty for taxpayers.
2. Administrative Efficiency: Encouraging tax authorities to complete assessments promptly will improve the efficiency of tax administration.
3. Fairness and Transparency: Providing a clear timeframe ensures taxpayers are not subject to indefinite delays, promoting fairness and transparency in the tax assessment process.
4. Compliance Assurance: Clear deadlines help ensure tax authorities adhere to the stipulated procedures and timelines, maintaining the tax system’s integrity.

Legal Recourse and Legal Proceedings

The legal recourse and proceedings under Section 144C related to the time limit for completion of the assessment are as follows:

1. Receipt of DRP Directions: The Assessing Officer (AO) receives directions from the DRP after considering the draft order, objections filed by the assessee, and any additional evidence or reports.
2. Completion of Assessment: The AO must complete the assessment by the DRP’s directions within one month from the end of the month in which the directions are received.
3. Binding Directions: The directions issued by the DRP are binding on the AO, who must ensure that the assessment is completed according to the instructions provided by the DRP.
4. No Further Hearing: Once the DRP’s directions are received, the AO is not required to provide the assessee with any further opportunity to be heard.

Do’s and Don’ts

Do’s:

• Ensure timely and accurate submission of all objections and supporting documents to the DRP.
• Maintain clear communication with the tax authorities and promptly respond to any requests for additional information.
• Monitor the timeline for the completion of the assessment after the DRP’s directions are received.
• Seek professional advice to ensure compliance with all procedural requirements and effectively present your case.

Don’ts:

• Do not ignore the importance of submitting a well-documented objection to the draft order.
• Avoid delays in providing additional information or clarification requested by the DRP.
• Do not assume that the DRP’s directions will be automatically favourable; prepare a solid case to support your position.
• Avoid non-cooperation or providing incomplete information to the tax authorities or the DRP.

Conclusion

Section 144C of the Income Tax Act of 1961 provides a structured and time-bound mechanism for resolving disputes related to transfer pricing and international taxation through the Dispute Resolution Panel (DRP). By specifying a clear timeline for the completion of assessments upon receiving directions from the DRP, the section ensures expedited resolution of disputes, administrative efficiency, and fairness in the tax assessment process. Understanding the provisions, objectives, and procedures associated with Section 144C is essential for taxpayers to effectively navigate the DRP process and achieve timely and favourable outcomes. Proper documentation, timely filing of objections, and cooperation with the DRP and tax authorities are essential to successfully resolving disputes under this section.