The assessment officer (AO) was bound by the issues and ...

Tribunal's Directions Limit Assessment Officer; Uncontested Issues Quashed, Staff Welfare and Guarantee Liabilities Upheld.

September 7, 2024

Case Laws     Income Tax     AT

The assessment officer (AO) was bound by the issues and directions given by the Tribunal. The AO could not raise issues that had already attained finality. If the Department was aggrieved by the Tribunal's order, they should have filed an appeal before the High Court, which the Revenue did not do specifically on these three issues. Even otherwise, the Revenue had opportunities to raise grounds before the Tribunal against the CIT(A)'s order but failed to do so. Therefore, in the impugned assessment proceedings pursuant to the Tribunal's order, these three issues could not have been raised. The additions are quashed as they are beyond the scope of the present assessment proceedings. Regarding provision for staff welfare expenses, it was held that the provision was worked out on a scientific basis by the accrual method and represents an ascertained liability, so no adjustment could be made in the book profit. The CIT(A)'s observation is confirmed, and a similar issue was decided in favor of the assessee's group concern. The provision for loss on guarantee is a contractual liability based on agreement, and the company had to account for the accrued liability. The Revenue did not file an appeal against this issue, and it had attained finality, decided in favor of the assessee. The interest u/s 234B is consequential, and since most additions have been deleted, the A.

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