ITAT Bangalore Partly Deletes Addition on Cash Deposits Treated as Unexplained Money
Background of the Dispute
The case concerns an assessee, an employee of Wipro Limited, who had not filed a return of income for Assessment Year (AY) 2011-12. The reassessment proceedings culminated in an addition on account of cash deposits, which was challenged before the Income Tax Appellate Tribunal, Bangalore Bench.
The appeal, ITA No. 2270/Bang/2025, was filed by Shri Pradip Kumar Roy against the order dated 31.07.2025 passed by the Joint Commissioner of Income Tax, Appeals-4, Mumbai. The impugned appellate order had upheld the reassessment framed by the ITO, Ward-5(3)(7), Bengaluru under Section 143(3) read with Section 147 of the **Income Tax Act, 1961`.
The central controversy before the Tribunal was whether the cash deposit of ₹31,17,500/- in the assessee’s bank account could validly be treated as unexplained money under Section 69A / unexplained cash credit under Section 68, despite the assessee’s explanation that it arose from the sale consideration of a residential house.
Grounds Raised by the Assessee
In the appeal, the assessee challenged the order of the CIT(A) on multiple legal and factual grounds, broadly contending:
The amount of ₹31,17,500/- represented part of the sale consideration of a house property sold for ₹61,00,000/- on 07.07.2010 and therefore could not be taxed as unexplained money under
Section 69A.
Reliance was placed on CIT v. Kulwant Rai [291 ITR 36 (Delhi)].A sum of ₹29,15,000/- was deposited in cash in the bank on 07.07.2010, the very date of execution of the sale deed, evidencing a direct link between the sale consideration and the bank deposit.
Reliance: CIT v. P.K. Noorjahan [237 ITR 570 (SC)].The reassessment resulted in double taxation, since the Assessing Officer had already accepted the computation of long-term capital gain on the full sale price of ₹61,00,000/- (after considering cost and
Section 54investment), while simultaneously treating part of the same amount as unexplained.
Reliance: ITO v. Raj Kumar Agarwal [108 com 339 (ITAT Kolkata)].The assessee had discharged the initial burden of proving the nature and source of the cash deposits, rendering addition under
Section 68/Section 69Aunsustainable.
Reliance: CIT v. Orissa Corporation (P) Ltd. [159 ITR 78 (SC)].Alternatively, even if there was any technical lapse, once the transaction was fully disclosed and assessed under the head “Capital Gains”, invoking
Section 68/Section 69Aon the same sum amounted to a double addition.
Reliance: ACIT v. Kulwant Singh [85 com 112 (ITAT Amritsar)].The assessee also argued that if he had been allowed to file a return of income, he would have shown the entire sale consideration of ₹61,00,000/-, claimed exemption under
Section 54, and no effective tax outgo would have arisen; hence there was no real loss to the Revenue, and a technical lapse should not give rise to an unjust tax burden.
Reliance: CIT v. Vegetable Products Ltd. [88 ITR 192 (SC)].It was further contended that the order of the CIT(A) was contrary to facts and settled legal principles.
Reliance: CIT v. Reliance Petroproducts Pvt. Ltd. [322 ITR 158 (SC)].
Initiation of Reassessment Proceedings
Non-filing of Return and Notice under Section 148
The assessee had not filed a return of income for AY 2011-12. Based on information suggesting non-filing, the Assessing Officer (AO) initiated reassessment proceedings and issued notice under Section 148 on **30.03.2018`.