When order passed by AO is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile

When order passed by AO is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile

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When order passed by AO is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile

Tata Communications Ltd Vs DCIT
Whether when order passed by AO is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile – YES: HC
– Case disposed of: BOMBAY HIGH COURT
Whether when order passed by AO is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile – YES: HC
++ in the present case, the Tribunal has already examined the question of interest payable to assessee u/s 244A and laid certain parameters. As per this order, the AO was required to compute the interest u/s 244A following the principles laid down by Delhi High Court in case of India Trade Promotion Organisation. It was not open for AO thereafter to dissect the ratio of the decision of the Delhi High court in case of India Trade Promotion Organisation and came to the conclusion that further interest u/s 244A is not payable. His role was limited to giving effect to the directions of the Tribunal. The question whether the interest is or is not payable was already decided by the Tribunal. Undoubtedly, if the Department had any legal dispute with the decision of the Tribunal, it was always open to the Department to challenge the same in accordance with law. The Department has infact exercised such option by first filing an application for rectification before the Tribunal and when such rectification application came to be dismissed, by filing income tax appeal before the High Court;
++ the limited role of AO was to implement the directions of the Tribunal. In the process, he exceeded his brief virtually coming to the conclusion that the Tribunal was not justified in issuing such directions and distinguishing the ratio of the decision of the Delhi High Court in case of India Trade Promotion Organisation. In view of such position, availability of appeal is not an absolute bar on the High Court exercising its jurisdiction under Article 226 of the Constitution. If order passed by AO is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile and in facts of the present case also lead to undue hardship. The AO is therefore directed to compute the interest payable to the assessee u/s 244A.
Writ Petition No.1033 of 2019

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