Section 69 Addition Remanded After ITAT Condones Filing Delay

In this case, the assessee, an individual engaged in agricultural activities and trading business, filed a return declaring income of Rs. 4.34 lakh for A.Y. 2020-21. Based on information from the Insight Portal, the assessing officer reopened the case under Section 148 due to a high-value land purchase of Rs. 76.01 lakh, wherein the assessee held a 50% share of Rs. 38 lakh. During the assessment, the assessee furnished bank statements, ledger accounts, and a purchase deed to explain the source of investment.

However, the Assessing Officer treated the amount as unexplained under Section 69, citing a mismatch in names between bank entries and the purchase deed and the non-reflection of the asset in the proprietorship’s balance sheet. On appeal, the CIT(A) dismissed the case in limine due to a 23-day delay, rejecting the assessee’s explanation that the delay occurred due to religious travel (Mahakumbh) and inability to access communications.

Issue Raised: Whether (i) the delay of 23 days in filing the appeal should be condoned and (ii) the addition under Section 69 for the unexplained investment in land was justified?

Tribunal’s Ruling: The ITAT Ahmedabad condoned the delay and set aside the order of the CIT(A), holding that a minor delay should not deprive the assessee of adjudication on merits. The Tribunal emphasised that the explanation, though not perfect, was bona fide and not mala fide and relied on settled principles that substantial justice must prevail over technicalities. On merits, the Tribunal observed that the assessee had prima facie explained the source of investment through loans from a credit society, borrowings from relatives, and own funds, all routed through banking channels.

It also noted that the objection regarding non-reflection in the proprietorship’s balance sheet was misplaced, as the land was a personal investment. However, considering the need for verification of supporting documents, the Tribunal restored the matter to the Assessing Officer for limited verification of evidence already on record, with a direction to decide afresh after granting proper opportunity to the assessee.

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