ITAT Agra Remands Section 69A Addition on Bank Withdrawals, Deletes Consequential Section 271AAC Penalty
In a significant judicial pronouncement, the Income Tax Appellate Tribunal (ITAT), Agra Bench, has delivered a crucial ruling in the case of Rampal Singh Vs ITO. The tribunal addressed the contentious issue of treating cash withdrawals as unexplained money under Section 69A of the Income Tax Act, 1961, and the procedural necessity of evaluating additional evidence submitted under Rule 46A of the Income Tax Rules, 1962.
The tribunal's decision, dated 07.07.2026, resolved two interconnected appeals: ITA No. 248/Agr/2026 concerning the quantum addition and ITA No. 249/Agr/2026 regarding the consequential penalty. Ultimately, the ITAT restored the quantum addition for fresh adjudication while outright deleting the penalty levied under Section 271AAC(1).
Background of the Dispute
The assessee, an individual engaged in the business of supplying and selling cow fodder, did not file an Income Tax Return (ITR) for the Assessment Year (AY) 2018-19. The assessee maintained that his income for the relevant period fell below the basic exemption limit, thereby absolving him of the statutory obligation to file a return.
However, the Assessing Officer (AO) received specific intelligence regarding substantial cash movements in the assessee’s Canara Bank account. The financial data indicated a cash deposit of ₹2,00,000 alongside massive cash withdrawals amounting to ₹1,07,73,000.
Initiation of Reassessment Proceedings
Based on this information, the AO initiated reassessment proceedings. A notice under Section 148 of the Income Tax Act, 1961 was issued on 26.03.2022. This was subsequently followed by statutory notices under Section 142(1) and a formal show-cause notice.
Due to a lack of response from the assessee, the AO proceeded to frame an ex-parte assessment on 01.03.2023. Invoking the provisions of Section 144 read with Section 147, the AO aggregated both the deposits and the withdrawals, resulting in a total addition of ₹1,09,73,000.