Facts of the Case

The petitioner, Goodrich Carbohydrates Ltd., filed its return of income for Assessment Year 2017-18 on 30.10.2017 declaring total income of ₹2,26,85,350. The case was selected for scrutiny and assessment was completed under Section 143(3) on 21.12.2019, wherein the Assessing Officer made an addition of ₹5,87,096 on account of delayed deposit of employees’ contribution towards EPF/ESI under Section 36(1)(va).

The petitioner preferred an appeal before the Commissioner of Income Tax (Appeals). By order dated 27.08.2020, the CIT(A) allowed the appeal and deleted the addition, holding that the employees’ contribution having been deposited before the due date of filing the return under Section 139(1), the disallowance was not sustainable, relying on binding judicial precedents including AIMIL Ltd. and Vinay Cement.

Pursuant to the appellate order, the Assessing Officer was required to pass an order giving effect to the CIT(A)’s decision. However, by order dated 29.11.2024 passed under Sections 250/143(3), the Assessing Officer held that no change in assessment was required, relying on the subsequent Supreme Court judgment in Checkmate Services Pvt. Ltd. The petitioner challenged this order before the Delhi High Court.

Issues Involved

Whether the Assessing Officer, while passing an order to give effect to the order of the CIT(A), could disregard the appellate order and re-adjudicate the issue on merits by relying on a subsequent judgment of the Supreme Court, and whether such action amounted to lack of jurisdiction.

Petitioner’s Arguments

The petitioner contended that the Assessing Officer’s jurisdiction while passing a giving-effect order was limited to implementing the directions of the CIT(A). It was argued that the Assessing Officer had no authority to review or sit in appeal over the appellate order, and if the Revenue was aggrieved by the CIT(A)’s decision, the only remedy was to file an appeal before the ITAT. Reliance on a subsequent Supreme Court judgment to negate a binding appellate order was impermissible.

Respondent’s Arguments

The Revenue argued that in view of the Supreme Court’s judgment in Checkmate Services Pvt. Ltd., the deduction under Section 36(1)(va) was not allowable even if the employees’ contribution was deposited before the due date of filing the return. It was contended that the Assessing Officer had merely applied the correct position of law while passing the impugned order and that the petitioner had an alternative statutory remedy of appeal.

Court Order / Findings

The Delhi High Court examined the impugned order and held that the Assessing Officer had clearly exceeded his jurisdiction. The Court observed that the CIT(A)’s order dated 27.08.2020 was unambiguous and had conclusively deleted the addition of ₹5,87,096. The Assessing Officer was bound to give effect to the appellate order and could not disregard it on the ground that, in his view, the Supreme Court had subsequently taken a different position.

The Court held that permitting an Assessing Officer to review or nullify an appellate order while giving effect to it would undermine judicial discipline and the rule of law. If the Revenue was of the view that the CIT(A)’s order was erroneous, the proper course was to challenge it before the ITAT. The impugned order was therefore held to be without jurisdiction.

Important Clarification

The High Court clarified that while passing an order to give effect to an appellate decision, the Assessing Officer acts in a ministerial capacity and cannot reopen or re-examine the merits of issues decided by the appellate authority, even on the basis of subsequent judicial developments.

Final Outcome

The writ petition was allowed. The impugned order dated 29.11.2024 passed under Sections 250/143(3) was set aside. The Assessing Officer was directed to forthwith pass a fresh order strictly giving effect to the CIT(A)’s order dated 27.08.2020.

Link to download order https://www.mytaxexpert.co.in/uploads/1769756197_GOODRICHCARBOHYDRATESLTD.VsASSISTANTCOMMISSIONEROFINCOMETAX.pdf 

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