Rohit Amritlal Kapadia Vs DCIT (ITAT Mumbai)
ITAT Mumbai Sets Aside NFAC’s ‘No Appeal Lies’ View; Holds 143(3) Must Adjudicate 143(1) Adjustments & Remands Capital-Gains Addition for Fresh Decision
Assessee appealed against NFAC’s order dismissing his appeal on the ground that “no addition was made in scrutiny assessment”, because the AO merely adopted the income determined earlier u/s 143(1), without fresh discussion. The impugned adjustment was ₹4,02,29,136, treated as capital gains while processing the return, which Assessee had disputed by filing a rectification request u/s 154. Once scrutiny began, CPC transferred the rectification to the Jurisdictional AO, who rejected it—but without issuing any speaking order.
Tribunal noted that during scrutiny, the AO issued detailed 142(1) notices, called for capital-gains working, & Assessee filed complete replies. However, in the final order u/s 143(3) r.w.s. 144B, the AO failed to record any findings & simply copied the 143(1) figure as assessed income, thereby making the 143(1) adjustment part of the scrutiny assessment by implication.
ITAT held that:
- Once a case is selected for scrutiny, the AO must apply his mind & adjudicate all issues—including 143(1) adjustments—based on material gathered during proceedings.
- A cryptic or non-speaking assessment order does not deprive Assessee of appellate rights.
- NFAC erred in refusing to entertain the appeal on the premise that “no addition was made” during 143(3).
- The capital-gains addition did arise from the assessment order, & the CIT(A) was bound to decide it on merits.
Accordingly, ITAT set aside the NFAC order & restored the matter to CIT(A) to adjudicate the capital-gains issue afresh after granting proper opportunity.
