Unexplained ₹49.50 Lakh Cash Deposit: ITAT Sends Case back to AO for Verification [Read Order]
Given the conflicting claims, the tribunal ruled that if the deposits were indeed from business activities, the addition under Section 69A could not stand
![Unexplained ₹49.50 Lakh Cash Deposit: ITAT Sends Case back to AO for Verification [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/01/ITAT-ITAT-Bangalore-Income-Tax-Appellate-Tribunal-Unexplained-Cash-Deposit-Taxscan.jpg "Unexplained ₹49.50 Lakh Cash Deposit: ITAT Sends Case back to AO for Verification [Read Order]")
The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) remanded a case involving an unexplained cash deposit of ₹49.50 lakh to the Assessing Officer ( AO ) for verification. Gangaiah Nagaraju,appellant-assessee, was found to have made a cash deposit of Rs.49,45,800 and received contract income of Rs.3,03,315, with tax deducted at source. A notice under section 148 was issued...
The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) remanded a case involving an unexplained cash deposit of ₹49.50 lakh to the Assessing Officer ( AO ) for verification.
Gangaiah Nagaraju,appellant-assessee, was found to have made a cash deposit of Rs.49,45,800 and received contract income of Rs.3,03,315, with tax deducted at source. A notice under section 148 was issued on 29.3.2019 due to the assessee's failure to file a return.
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After issuing a notice under section 133(6) to Indian Overseas and Corporation Banks, the appellant explained that the cash deposit was borrowed from friends for house construction. However, the assessee could not justify the source of the deposit. The AO rejected the explanation, disallowed the peak credit request, and added Rs.49,45,800 under section 69A and Rs.3,03,325 for contract receipts from Form 26AS, determining total taxable income of Rs.52,49,115 in the reassessment order passed on 14.9.2021.
The assessee appealed to the Commissioner of Income Tax(Appeals)[CIT(A)], stating he was in the waste paper recycling business with a turnover of Rs.72,04,820, and that the cash deposit was from business income. He argued that the contract income of Rs.3,03,325 should be taxed at an estimated profit of 8% instead of 100%. The assessee also clarified that the actual cash deposit was Rs.47,81,800, challenging the AO's addition.
The CIT(A) found the assessee's claim inconsistent, noting no return was filed and no evidence was provided for the business. As a result, the CIT(A) confirmed the addition of Rs.49,45,800 and did not address the contract income issue.
The assessee aggrieved by the decision appealed before the tribunal.
The two member bench comprising Prakash Chand Yadav ( Judicial Member ) and Prashant Maharishi ( Vice President ) reviewed the case and found that the appeal involved a cash deposit of ₹49,50,000 in two bank accounts. The assessee claimed a lower deposit amount and stated that the funds came from a waste paper business. A certificate from KKGS Sangh, submitted for the first time, confirmed supplies worth ₹74,48,810.
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Since the lower authorities doubted the business claim due to inconsistent statements and non-filing of returns, the tribunal held that if the deposits were from business activities, the addition under Section 69A could not stand. To verify this, it restored the matter to the AO for examination. If satisfied, the officer was directed to compute the taxable income accordingly.
In short,the appeal filed by the assessee was allowed for statistical purposes.
To Read the full text of the Order CLICK HERE
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