ITAT Remands Rs 1.30 Crore Unexplained Money Addition and Penalty for Fresh Hearing:

The AO passed an assessment order dated 22 March 2023 under Section 144 read with Section 144B of the Income Tax Act, 1961, making an addition of Rs 1,30,65,000 under Section 69A of the Act and a further addition of Rs 23,000 on account of variation in interest income.

Subsequently, a penalty order under Section 271AAC was passed on 11 September 2023. Aggrieved by the assessment and penalty orders, the assessee filed separate appeals before the CIT(A). However, the CIT(A), vide orders dated 15 April 2026, dismissed both appeals. 

The Tribunal examined the material on record and observed that the CIT(A) had passed the quantum appellate order ex parte without hearing the assessee. It further noted that the CIT(A) had not adjudicated all the grounds of appeal on their merits. Considering that the assessee had not participated in the first appellate proceedings, the Tribunal held that, in the interest of justice, the matter should be reconsidered after providing a proper opportunity of hearing. Accordingly, it remanded the quantum appeal to the CIT(A) with directions to decide it afresh on merits and in accordance with law.

Since the quantum appellate order had been set aside and remanded, the Tribunal also set aside the CIT(A)'s order upholding the penalty under Section 271AAC and restored the penalty matter to the CIT(A) for decision alongside the quantum appeal.