Non-compliance with remand directions on section 54 claim renders the consequential assessment void ab initio.

Failure to comply with a binding remand direction to examine an assessee's claim under section 54 rendered the consequential assessment unsustainable. The Tribunal had specifically required the Assessing Officer to consider the deduction claim, but the later order contained no discussion or determination on that issue. As the remand mandate was not carried out, the assessment order was treated as a direct violation of the Tribunal's direction and was held void ab initio, with the appeal allowed in favour of the assessee.

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Issues: Whether the consequential assessment order was void ab initio for failure to comply with the Tribunal's direction to examine the assessee's claim under section 54.

Analysis: The earlier remand had specifically directed the Assessing Officer to examine the assessee's claim for deduction under section 54. In the consequential assessment order, there was no discussion or determination on that claim. Non-compliance with a binding remand direction amounted to a direct violation of the Tribunal's order, and the resultant assessment order could not be sustained in law.

Conclusion: The consequential assessment order was held to be void ab initio and the appeal was allowed in favour of the assessee.

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