A Practical Guide to Transfer Pricing Audit & Litigation Support
A transfer pricing adjustment does not arrive as an abstract number — it arrives as a draft order from a Transfer Pricing Officer proposing to add tens of lakhs (sometimes crores) to your taxable income, with a 30-day window to object before it becomes a binding demand. What happens in the weeks after that notice — how the comparable set is defended, whether the Dispute Resolution Panel route or the regular appeal is chosen, how the case is argued before the Income Tax Appellate Tribunal — determines whether the adjustment sticks or is reversed. PNPC Global has represented Indian companies and India-UAE group structures through TPO proceedings, DRP objections, and ITAT appeals since 1986.
Understanding the Service
Transfer Pricing Audit & Litigation Support covers the defence of an Indian taxpayer's related-party pricing once a case has been referred to, or is already before, the Transfer Pricing Officer (TPO), the Dispute Resolution Panel (DRP), the Commissioner of Income Tax (Appeals) / Income Tax Appellate Tribunal (ITAT), or beyond. Under Sections 92 to 92F of the Income-tax Act 1961 (read with Rules 10A to 10E of the Income-tax Rules 1962; note that the Income-tax Act 1961 has been replaced by the Income-tax Act 2025 with effect from 1 April 2026 — the underlying transfer pricing framework continues in substance under the new Act, and we confirm the precise corresponding provision applicable to your assessment year at the time of engagement, while using the long-familiar 1961-Act section numbers here as the terminology practitioners and taxpayers still recognise), every 'international transaction' between 'associated enterprises' as defined under Section 92A must be priced at arm's length. Where the Assessing Officer, with the prior approval of the Principal Commissioner or Commissioner, refers a case to the TPO under Section 92CA, the TPO conducts an independent examination of the taxpayer's benchmarking — the comparable companies selected, the transfer pricing method applied, and the resulting arm's length range — and can propose an adjustment if the TPO's own analysis diverges from the taxpayer's position.
For the full scope, current process and what PNPC includes, see the dedicated Transfer Pricing Audit & Litigation Support service page.
Signs This Applies to You
- You have received a reference notice indicating your case has been selected for a Transfer Pricing Officer examination under Section 92CA, whether flagged by CBDT risk parameters, transaction value, or prior-year adjustment history
- The TPO has issued a show-cause notice proposing to reject some or all of your comparable set, challenge your FAR characterisation, or apply a different transfer pricing method than the one you selected
- A TPO order has been passed proposing an adjustment, and you need to evaluate and act within the 30-day window for filing objections before the Dispute Resolution Panel
- You are not eligible for the DRP route (or have chosen not to use it) and need to appeal a finalised assessment order incorporating a TP adjustment to the CIT(A)/JCIT(A) and, if needed, the Income Tax Appellate Tribunal
When It Isn't the Right Fit
- You have not yet filed Form 3CEB or prepared your annual transfer pricing study and no TPO reference or notice has been issued — that is annual TP compliance and benchmarking, a preparatory service distinct from audit and litigation defence, though PNPC recommends building both together
- Your dispute is a routine income-tax scrutiny or reassessment with no international-transaction or TP dimension at all — see our general scrutiny, reassessment and appeals service, which follows the same CIT(A)/ITAT ladder but without the TPO/DRP-specific layer
- Your matter is a GST or customs valuation dispute on a related-party transaction — GST and customs valuation are governed by separate statutory frameworks (CGST Act Section 15, Customs Valuation Rules) with their own appellate forums, distinct from income-tax transfer pricing appeals
Quick Answers
What is the difference between transfer pricing compliance and transfer pricing audit and litigation support?
Transfer pricing compliance is the annual exercise of preparing the FAR analysis, comparable benchmarking, TP study, and Form 3CEB certification ahead of the filing due date. Transfer pricing audit and litigation support begins once a case has actually been referred to the Transfer Pricing Officer under Section 92CA, or is already at the DRP, CIT(A)/JCIT(A), ITAT, or beyond — it is the defence of the position already taken, in an adversarial proceeding with a genuine tax demand at stake. The two are closely connected: the quality of the annual compliance documentation directly determines how strong the audit defence is once a case is selected.
How does a company find out its case has been selected for a Transfer Pricing Officer examination?
The Assessing Officer refers the case to the TPO under Section 92CA, with the prior approval of the Principal Commissioner or Commissioner of Income-tax, typically as part of the regular scrutiny assessment process where international transactions are involved. The taxpayer generally becomes aware through a notice or questionnaire issued by the TPO calling for the transfer pricing documentation, comparable analysis, and supporting evidence. Selection follows CBDT risk parameters (not fully public), transaction value thresholds, and often prior-year adjustment history — being selected does not itself imply any wrongdoing.
What does the TPO actually examine, and what can it change?
The TPO independently examines the international transactions disclosed in Form 3CEB and the taxpayer's supporting transfer pricing study — the FAR characterisation, the transfer pricing method selected, the comparable companies used, and the resulting arm's length price or margin range. The TPO can accept the taxpayer's position, propose adjustments to the comparable set, apply a different method, make economic adjustments (for working capital, risk, or extraordinary items), or determine an entirely different arm's length price. The TPO's order is not itself the final assessment — it is incorporated into the Assessing Officer's draft or final assessment order.
Where PNPC Fits In
If a Transfer Pricing Officer notice, a draft order, or an ITAT hearing date has landed on your desk, speak directly with a PNPC Chartered Accountant before the next deadline passes. Not a generic litigation shop — a practising CA firm that has built the underlying benchmarking case since 1986 and stands with you through every forum it takes to defend it.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Income Tax practice for related services, or go straight to the Transfer Pricing Audit & Litigation Support page for specifics.
Rates, thresholds and filing dates are set by the relevant authority and revised periodically. Treat anything numeric here as "ask PNPC for the current figure," not as a quoted fact.