A.RAJA,TIRUNELVELI vs. ITO NON CORPORATE WARD-7(3), CHENNAI

The Registry has noted delay of 30 days in the appeal, the condonation of which has been sought by the assessee on the strength of an affidavit. The delay has been attributed to miscommunication between the assessee and his advocate. Considering the period of delay and the contents of the affidavit, we condone the delay and admit the appeal for adjudication on merits.

The material facts are that the assessee was assessed u/s. 143(3) of the Act on 29-03-2014 which travelled up to the level of Tribunal in order dated 24-03-2016. The Tribunal issued certain directions to Ld. AO qua disallowance u/s 40(a)(ia) after considering the order of Chennai Tribunal in Shri N. Palanivel Vs. ITO [2015] 40 ITR (Trib.) 325. 4. Pursuant to these directions, the Ld. AO issued notice to the assessee seeking relevant details. It was noted that there was no outstanding amount payable in respect of the expenditure related to s. 40(a)(ia) of the Act. Accordingly, the disallowance made u/s. 3 - 40(a)(ia) in respect of rent payment, advertisement expenses, legal fee expenses totaling to Rs.23.14 Lacs was deleted by Ld. AO which was sought to be revised by Ld. Pr. CIT. 5. The revision was in view of the observation of Ld. Pr. CIT that the ratio of decision of Tribunal stood overruled by the decision of Hon’ble Supreme Court in the case of M/s. Palam Gas Services Vs. CIT in Civil Appeal No.5512 of 2017. Accordingly, the order giving effect to Tribunal order as passed by Ld. AO on 01-11-2016 was held to be erroneous and prejudicial to the interest of the revenue. Since the assessee did not respond to the show-cause notice, Ld. AO was directed to consider the issue denovo in accordance with law and pass necessary orders after affording reasonable opportunity of hearing to the assessee. Aggrieved, the assessee is in further appeal before us. 6. Upon careful consideration, it could be seen that Ld. AO has merely given effect to the order of Tribunal in ITA No. 115/Mds/2016 passed on 24-03-2016. As a matter of judicial discipline, the Ld. AO was bound by the directions given by the Tribunal and had no other option. Apparently, the order of Tribunal has attained finality albeit on account of low tax effect. But the fact remain that the issue has already attained finality and therefore, the order passed by Ld. AO to carry out the directions of the Tribunal could not be held to be erroneous or prejudicial to the revenue which would justify revision u/s 263. Therefore, we have no hesitation in quashing the impugned order passed u/s 263.