ITAT Delhi remands Forum Sales appeals over non-speaking CIT(A) order; directs fresh adjudication on merits

The Delhi Bench of the Income Tax Appellate Tribunal has set aside the orders passed by the National Faceless Appeal Centre (NFAC) in the case of Forum Sales Pvt. Ltd. for Assessment Years 2013–14 and 2014–15, holding that the appellate authority failed to decide the matter on merits and had passed a non-speaking order.

Background

Forum Sales Pvt. Ltd. had filed its return under Section 153A declaring an income of ₹75.88 lakh. The Assessing Officer, however, completed the assessment under Section 143(3) at an income of ₹7.43 crore, making, inter alia, an addition on account of alleged unaccounted profits arising from transactions with Bajrang Traders and Gurunanak Enterprises. In the first round of litigation, the Tribunal had remanded the issue to the Assessing Officer with specific directions to verify whether any unaccounted transactions existed beyond the seized material and had cautioned against mechanical extrapolation. Pursuant to this, the Assessing Officer passed a fresh order under Sections 254 read with 153A and 143(3), again confirming substantial additions.

Tribunal’s findings

In the second round, the NFAC upheld the Assessing Officer’s action, noting that the assessee had not produced corroborative evidence. However, the Tribunal observed that the CIT(A) failed to adjudicate the issues on merits and merely endorsed the assessment order without independent reasoning.

The Bench held that such a cryptic and non-speaking order is unsustainable in law, especially in appellate proceedings where detailed examination is mandatory.

Directions issued

The Tribunal remanded the matter to the CIT(A) with directions to:

1. adjudicate the issues afresh on merits by passing a reasoned and speaking order after granting due opportunity to the assessee; and
2. specifically examine the legal issue relating to common approval under Section 153D, keeping in view the judgment of the Delhi High Court in PCIT v. Shiv Kumar Nayyar.

The Revenue raised no objection to the remand.

The Tribunal clarified that its findings for AY 2013–14 would apply mutatis mutandis to AY 2014–15, and accordingly allowed both appeals for statistical purposes.