Bangalore ITAT affirms Section 69A addition where assessee failed to substantiate source of cash deposits

Background of the dispute

The matter in Hem Kumar Vs ITO (ITAT Bangalore) concerns an assessment for A.Y. 2018-19, where substantial cash movements in the bank account of the assessee prompted the Income Tax Department to reopen the assessment. The case ultimately turned on the assessee’s continued failure to participate in proceedings and his inability to demonstrate the origin of cash deposits, leading to an addition under Section 69A of the Income Tax Act 1961.

The appeal before the Bangalore Bench of the ITAT arose from an order of the NFAC, Delhi dated 14/07/2025, wherein the first appellate authority had dismissed the assessee’s appeal on limitation, and the assessment order treating cash deposits as unexplained money had remained undisturbed.

Initiation of reassessment under Section 148

No original return filed

The assessee, an individual, had not filed any return of income for A.Y. 2018-19 within the prescribed time. On the basis of information available with the Department showing sizeable cash withdrawals and deposits in his bank account, the Assessing Officer (AO) initiated reassessment proceedings.

Proceedings under Section 148A and Section 148

  1. The AO first invoked the scheme of Section 148A and passed an order under Section 148A(d) authorising issuance of notice under Section 148.
  2. Following this, a notice under Section 148 was issued to the assessee for the relevant year, calling upon him to furnish a return of income and explain the transactions flagged by the Department.

Belated return in ITR-1 and non-compliance thereafter

In response to the reassessment notice, the assessee eventually filed a return in ITR-1. However, he did not engage further with the assessment proceedings:

  • He failed to respond to subsequent statutory notices issued by the AO.
  • No explanation or supporting documents were offered for the cash deposits reflected in the bank account.

Assessment proceedings and addition under Section 69A

Bank statement obtained through Verification Unit

Due to the assessee’s continued silence, the AO sought independent verification. The bank statement of the assessee was obtained through the Department’s Verification Unit. On analysing those statements, the AO noticed cash deposits of significant amounts for which no explanation had been furnished.

Ex parte assessment order

Since the assessee:

  • did not attend the hearings,
  • did not file any written submissions, and
  • did not respond even to notice issued by speed post,

the AO proceeded to complete the assessment ex parte.

The AO concluded that the amounts deposited in the assessee’s bank account represented income that had not been disclosed, and, in the absence of any evidence explaining their nature and source, treated the same as unexplained money under Section 69A.

Accordingly:

  • The deposits were brought to tax under Section 69A.
  • Assessment was completed in the assessee’s name determining income inclusive of this deemed unexplained money.

First appeal before CIT(A): dismissed as time-barred

Delay of 141 days with no condonation request

Aggrieved by the assessment, the assessee filed an appeal before the Ld. CIT(A) (NFAC). However, the appeal suffered from a procedural defect:

  • The appeal was filed after a delay of 141 days beyond the statutory time limit.
  • In Form 35, the assessee declared that there was no delay in filing the appeal.
  • No separate application for condonation of delay was filed.
  • No supporting documents or reasons were submitted to justify the belated filing.

Non-response to CIT(A)’s notices

On examining the appeal, the Ld. CIT(A) noticed the delay and issued notices calling upon the assessee to:

  • explain the delay, and
  • furnish evidence, if any, to support condonation.

Despite these notices:

  • The assessee did not respond.
  • No written submissions or evidence were placed on record.