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2021 (10) TMI 1142 - AT - Income TaxNon speaking order passed by CIT-A - Disallowance of set off claimed - HELD THAT - AO has not given any cogent reason or referred to the necessary provision of law as to why the claim by the assessee is not allowable. CIT(A) again has copied the order of AO not spelling out as to why and what violation of section 72 of the Act, the claim is being dismissed. Addition being the difference in business income arrived by the A.O - Again Ld. CIT(A) has passed a non speaking order. The Ld. CIT(A) mention that assessee could not file any documents and the reconciliation warranting, the AO to make the addition. But this is totally wrong appreciation as AO has mentioned that the reconciliation has been given by the assessee, but it is not acceptable. CIT(A) has passed the order without application of mind. It is settled law that even administrative orders have to be construct with rule of natural justice. The order by Ld. CIT(A) is on the cusp of abandonment of statutory duty cast upon him as the first appellant authority. This is more palpable by a reading of ground No. 1 of the assessee as above. Accordingly, remit the issue to the file of Ld. CIT(A) to pass a proper speaking order after giving the assessee proper opportunity of being heard. Assessee appeal allowed for statistical purpose.
Issues:
1. Dismissal of appeal by CIT(A) without proper notice service and consideration of merits. 2. Disallowance of setoff of brought forward business loss against current year's speculative profits. 3. Addition of difference in business income by the Assessing Officer. Issue 1: Dismissal of appeal without proper notice service and consideration of merits The appellant challenged the dismissal of the appeal by the CIT(A) within seven days of the first notice without ensuring proper service of notice in paper form. The appellant contended that the CIT(A) erred in not considering the merits of the case, which were covered by the statement of facts. The AO noted that the appellant accepted the mistake regarding the difference in the setoff amount and offered it for taxation. The CIT(A) dismissed the appeal based on non-attendance without providing a proper opportunity for the appellant to be heard. The ITAT remitted the issue back to the CIT(A) to pass a proper speaking order after giving the appellant a fair opportunity to be heard. Issue 2: Disallowance of setoff of brought forward business loss The AO disallowed the setoff of brought forward business loss against current year's speculative profits. The AO added the difference in the amount to the total income of the assessee, stating that speculation loss cannot be set off against business income. The CIT(A) upheld the AO's action without providing specific reasons or referring to the relevant provisions of the Income-tax Act. The ITAT noted that the AO did not provide a cogent reason for disallowing the setoff claimed by the assessee. The ITAT remitted the issue back to the CIT(A) for a proper consideration of the claim in accordance with the law. Issue 3: Addition of difference in business income The AO made an addition to the total income of the assessee based on the difference in business income. The AO mentioned discrepancies in the profit from share transactions reported by the assessee. The CIT(A) confirmed the addition without proper reasoning, stating that the appellant failed to provide necessary documents and reconciliation. The ITAT found that the CIT(A) passed a non-speaking order without considering the reconciliation provided by the assessee. The ITAT remitted the issue back to the CIT(A) to pass a reasoned order after giving the appellant a fair opportunity to present their case. In conclusion, the ITAT allowed the appeal for statistical purposes and directed the CIT(A) to reconsider the issues in accordance with the principles of natural justice and provide a proper opportunity for the appellant to be heard.
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