Order passed by AO against directions issued by Tribunal is not sustainable in law

Engineering Professional Co. Pvt. Ltd. Vs DCIT (Gujarat High Court)

In the given case, Assessee has filed appeal before ITAT against the order passed by the A.O. u/s 44AD. With respect to that appeal ITAT passed the order and state that “the Assessee is directed to attend the assessment proceedings and justify its claim of lower rate of profit in accordance with its books of account. The A.O. is directed to verify the same and decide the issue afresh after giving a reasonable and fair opportunity of being heard to the assessee.” ITAT has provided in depth direction to A.O. as what points should be considered at the time of fresh assessment.

In the fresh assessment order A.O. has absolutely created new liability for the writ applicant and that too, contrary to the directions issued by the Appellate Tribunal. Now the issue under consideration is whether the order passed by A.O. at the time of fresh assessment is justified in law?

It is stated that “what cannot be done directly could not have been done indirectly”. It is submitted that the order of the Tribunal remitting the matter, more particularly, the last part of the direction is very specific and clear. The Assessing Officer was asked to look into the claim of the assessee with regard to lower rate of profit and while undertaking such exercise, the Assessing Officer appears to have travelled much beyond the issue upon which he was asked to look into

If the appeal would have been dismissed without there being any direction of remitting the matter to the Assessing Officer, then the effect would have been as if the Tribunal has accepted that the case would fall within the section 44AD of the Act thereby justifying 8% rate of profit. But in the given case, the Assessing Officer, by its impugned order, has absolutely created new liability for the writ applicant and that too, contrary to the directions issued by the Appellate Tribunal. Therefore, HC are convinced that the impugned order passed by the Assessing Officer is not sustainable in law.

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