ITAT Sets Aside Section 69A Unexplained Money Addition After AO Passes Assessment Order Before Hearing Date:

The ITAT Ahmedabad Bench has restored the case of Govindbhai Bhavandas Patel-HUF to the Assessing Officer (AO) for fresh examination after finding that the assessment order was passed before the scheduled hearing date, depriving the assessee of an effective opportunity to present its case.

In the present case, the Assessing Officer (AO) had noted that the assessee, Govindbhai Bhavandas Patel (HUF), during the Assessment Year 2010-11, had made credits/cash deposits amounting to Rs 21.50 lakh into his IDBI Bank account. The AO treated the same credits as unexplained money under Section 69A of the Income Tax Act, 1961, and completed the assessment under Section 144 r.w.s. 147 of the Act.

The matter had earlier been remanded by the Tribunal in July 2023, with directions to decide the case on its merits and examine evidence concerning a donation of Rs 50,000 to the Prime Minister’s National Relief Fund.

During the fresh assessment proceedings, the AO issued a show-cause notice dated March 4, 2025, fixing the hearing for March 10, 2025. However, the AO passed the assessment order dated March 8, 2025, before the scheduled hearing. The AO maintained the addition of Rs 21.50 lakh, stating that the assessee had not satisfactorily explained the bank credits or provided the required donation evidence. The National Faceless Appeal Centre (NFAC) subsequently dismissed the assessee’s appeal.

During the personal hearing before the ITAT, the assessee contended that the impugned assessment order was invalid, as it was passed before the scheduled hearing, which is an explicit violation of the principles of natural justice. The Tribunal agreed that an effective opportunity to present evidence and explanations had not been provided. It also observed that the claims regarding the donation proof and explanations for bank credits required factual verification.

It was noted by the Tribunal that "the assessee has claimed before the appellate authorities that proof regarding the payment of Rs.50,000/- towards Prime Minister’s National Relief Fund had been furnished/communicated earlier in response to notice u/s 142(1) of the Act dated 01.03.2025 , and that the bank account with explanation regarding the credits were also submitted during the proceedings."

Accordingly, the ITAT set aside both the assessment order dated March 8, 2025, and the appellate order. The matter is remanded back to the AO for fresh consideration, with direction to issue a speaking order after providing an adequate hearing opportunity to the assessee. The appeal was allowed for statistical purposes.