ITAT Pune Rules: Full Bank Deposits in Renukamata Society Cannot Be Assessed as Income — Addition Restricted to 2% of Total Deposits

Case Overview

Case Name: Jaydev Mahadev Arya Vs ITO (ITAT Pune)
Assessment Years: 2013-14, 2014-15, and 2015-16
Appeals: ITA No.1271/PUN/2025, ITA No.1272/PUN/2025, ITA No.1273/PUN/2025
Order Date: 16th February, 2026

The Income Tax Appellate Tribunal (ITAT), Pune, delivered a significant ruling in three consolidated appeals filed by the assessee against the orders of the CIT(A)/NFAC, Delhi. At the heart of the dispute lay cash deposits made by the assessee in accounts maintained with M/s. Renuka Mata Multi State Urban Co-operative Credit Society Ltd. — a society that had come under intense scrutiny for allegedly operating as an accommodation entry provider on an "Angadia Model" basis.

The Tribunal held that subjecting the entire quantum of bank deposits to taxation as unexplained income was legally untenable in circumstances where the assessee appeared to be functioning merely as a conduit or a name-lender, and directed the Assessing Officer to adopt 2% of total deposits as the taxable income for all three assessment years.

Background and Facts of the Case

Nature of the Assessee and Deposits Involved

The assessee is an individual who filed his return of income for Assessment Year 2013-14 on 19.09.2013, declaring total income of Rs. 13,72,420/-. The Assessing Officer, upon obtaining information that the assessee had deposited cash of Rs. 32,25,000/- in a savings account held with M/s. Renuka Mata Multi State Urban Co-operative Credit Society Ltd., undertook an analysis of the ITR and ITS details along with the 360-degree profile of the assessee.

Finding that the return did not reflect a true and correct picture of income, and that the sources of such cash deposits were not satisfactorily explained, the Assessing Officer proceeded to reopen the assessment under Section 147 of the Income Tax Act, 1961, by issuing notice under Section 148.

The following additions were made across the three assessment years under consideration:

Assessee's Explanation Before the AO

During the course of assessment proceedings, the assessee submitted that the cash deposits were sourced from sale proceeds of agricultural equipment. A copy of the Profit and Loss Account and Balance Sheet was also placed on record. However, no documentary evidence in the form of sale bills or purchase bills was furnished to substantiate that the alleged sale proceeds had indeed been channelled into the bank account. In the absence of such corroborative material, the Assessing Officer rejected the explanation and treated the entire deposit of Rs. 32,25,000/- as undisclosed income under Section 69A of the Income Tax Act, 1961, thereby determining total income at Rs. 45,97,420/-.

First Appellate Proceedings — CIT(A)/NFAC

Decision of CIT(A)

The CIT(A)/NFAC upheld the additions made by the Assessing Officer. The first appellate authority noted that the assessee had failed to furnish crucial documents despite repeated opportunities being provided through notices issued under Section 250, including:

• Copies of ITRs and PAN details of counter-parties
• Copies of ledger accounts
• Written documentary proof of purchase orders or supply contracts
• Party-wise details of cash received in the bank account
• Confirmation letters from vendors along with their identity and creditworthiness details
• List of krushivators supplied to customers

The CIT(A) observed that the assessee had provided only installation certificates of machinery, which were wholly insufficient to establish the genuineness or source of the deposits. Since the onus of proving the nature and source of the credits lay squarely on the assessee under the provisions of the Act, and since the assessee had failed to discharge that onus with credible material evidence, the addition was confirmed.

Grounds of Appeal Before ITAT

The assessee raised the following grounds before the Tribunal: