CIT(A) Cannot Reject Appeal on Technical Grounds Over Non-Speaking Order: ITAT 

The assessee, Rohit Amritlal Kapadia, filed his Income Tax Return (ITR) for AY 2018-19, declaring an income of Rs 13,19,96,470. After the ITR was processed, the CPT determined the income of Rs 17,22,25,610, after making an adjustment of Rs 4,02,29,136 on capital gains. The case was later selected for scrutiny, where the income was determined to be Rs 17,22,25,610, which was the same as determined earlier.

The assessee filed a rectification request for the adjustments, but it was transferred by CPC to the AO, claiming that the case was already under scrutiny. However, the AO rejected the request. The assessee expected that the issues related to the capital gains would be considered and decided on the merits. However, the AO continued with the total income as computed u/s. 143(1) and assessed the same under section 143(3) of the Act at Rs. 17,22,25,610.

The assessee filed an appeal before the CIT(A), which rejected the appeal, saying that the Assessing Officer did not make any addition to the income during scrutiny, so no appeal lies against such an order. Therefore, the assessee approached the Income Tax Appellate Tribunal (ITAT), Mumbai.

The assessee argued that if the case is selected for scrutiny, the AO must compute the income after the enquiry and before making any addition, and the AO must discuss it.

The Tribunal observed that the addition was part of the assessment order, as the AO had made enquiries into the computation of capital gains during proceedings. The Tribunal said that the CIT(A) cannot refuse to decide the issue on technical grounds just because the AO passed a non-speaking order.

Based on these facts, the ITAT deleted the CIT(A)’s order and directed the CIT(A) to pass a fresh order after providing an opportunity for hearing to the assessee.