₹4.30 Crore Section 69A Addition Restored as CIT(A) Did Not Decide Merits: ITAT Rajkot

Bhavesh Haribhai Mundiya Vs ITO (ITAT Rajkot)

Summary: ITAT Rajkot restored both the quantum assessment and the connected penalty proceeding to the Assessing Officer for fresh adjudication for AY 2013-14. The assessment had been reopened under Section 147 of the Income-tax Act on the basis of information alleging that the assessee was a beneficiary of accommodation entries aggregating to ₹4,30,77,687, which the AO treated as unexplained money under Section 69A. The assessee had not responded to the Section 148 notice or subsequent notices during assessment proceedings, and the CIT(A) later dismissed the appeal on the ground of delay without deciding the issues on merits. Before the Tribunal, the assessee explained that his failure to properly attend the proceedings was attributable to the death of his father and his father’s prolonged illness and sought one effective opportunity to contest the assessment. Considering these circumstances, the Tribunal held that the matter required examination on merits and restored all issues arising from the assessment order dated 18.05.2023 to the AO, directing reasonable and effective opportunity of hearing. The Tribunal did not decide the validity or merits of the ₹4.30 crore Section 69A addition. Since the connected Section 271(1)(c) penalty arose from the same assessment, it was also restored to the AO for reconsideration in accordance with the outcome of the quantum proceedings. Both appeals were accordingly allowed for statistical purposes.