Bangalore ITAT Deletes Section 69A Addition and Allows Section 80-IA Deduction — Consistency Principle Applied

Case Reference

Smt. Rejiya Saleem v. ITO
Tribunal: Income Tax Appellate Tribunal, Bangalore
Assessment Year: 2017-18
Order Pronounced: 22nd June, 2026

Background and Context

This matter came before the Bangalore Bench of the Income Tax Appellate Tribunal by way of an appeal filed by the assessee challenging the order passed by the National Faceless Appeal Centre (NFAC), Delhi dated 04/02/2025 pertaining to Assessment Year 2017-18.

The assessee is an individual who had filed her return of income on 20/03/2018. Two distinct issues arose for consideration before the Tribunal:

  1. Addition of unexplained cash deposits under Section 69A of the Income Tax Act, 1961
  2. Disallowance of deduction claimed under Section 80-IA of the Income Tax Act, 1961 in respect of infrastructure development activities relating to a solar energy project

Both issues had been decided adversely against the assessee by the Assessing Officer and subsequently confirmed by the CIT(A). The Tribunal, upon a thorough examination of facts and documents on record, extended complete relief to the assessee on both counts.

Issue I: Addition Under Section 69A — Unexplained Cash Deposits

Facts and Assessee's Explanation

During the course of scrutiny proceedings, the Assessing Officer raised queries regarding certain cash deposits made into the assessee's bank account. The assessee offered a two-fold explanation:

  • A portion of the deposits represented agricultural income of the assessee.
  • The remaining cash was deposited by her brother, Mr. Muhammed Sirajuddin, on multiple occasions for the purpose of funding his daughter's education. When the daughter failed to secure the requisite academic scores and the educational plan did not proceed, the amount was returned to him. The cash was subsequently re-deposited into the assessee's account on 06/10/2016.

In support of this explanation, the assessee furnished:

  • A confirmation letter from her brother Mr. Muhammed Sirajuddin
  • Income Tax Returns of Mr. Muhammed Sirajuddin demonstrating adequate financial capacity
  • Bank statements of the assessee evidencing the deposit and subsequent withdrawal of the amounts
  • A Medical Report of the brother and land documents showing his rubber plantation, which were submitted as additional evidence before the Tribunal

Assessing Officer's Action

Despite the documentary evidence placed before him, the Assessing Officer rejected the explanation in its entirety and treated the cash deposits as unexplained money under Section 69A of the Income Tax Act, 1961. The CIT(A) upheld this addition without independently examining the supporting material.

Tribunal's Analysis and Findings