B.M. SUBBANNA,BANGALORE vs. DCIT,CENTRAL CIRCLE-1(1) BANGALORE, BENGALURU

आदेश / ORDER

PER SHRI WASEEM AHMED, ACCOUNTANT MEMBER: These two appeals are filed by the assessee pertaining to A.Y. 2015-16 and 2016-17, arising from a common order of the learned Commissioner of Income Tax (Appeal)-11, Bengaluru (hereafter the ld. CIT(A)), passed under section 250 of the Income Tax Act, 1961.

2.1 The assessee submitted that the delay was neither intentional nor deliberate and was due to circumstances beyond his control. He accordingly prayed that the delay of 163 days may be condoned, and the appeal may be admitted for adjudication on merits.

4.1 Similarly, the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC) has held that ordinarily a litigant does not stand to benefit by filing an appeal belatedly. Refusing to condone a genuine delay may result in a meritorious matter being rejected at the threshold, whereas condonation would only result in the matter being decided on merits after hearing both parties. The Hon'ble Supreme Court has also emphasised that substantial justice should be preferred over technical considerations where the delay is not deliberate or mala fide.

4.2 Applying the above principles to the facts of the present case, we are satisfied that the assessee has shown sufficient cause for the delay. The delay has occurred mainly on account of his medical condition and there is no material before us suggesting that the assessee deliberately delayed filing the appeal or gained any undue advantage by doing so. We are, therefore, of the view that the matter should be decided on merits rather than being rejected at the threshold on the ground of limitation. No prejudice would be caused to the Revenue if the delay is condoned and the appeal is heard on merits. On the other hand, refusal to condone the delay would deprive the assessee of an opportunity to have his grievances to be examined on merits. Accordingly, we condone the delay of 163 days in filing both the appeals and admit the appeal for adjudication on merits.

First, we take up ITA No. 1043/Bang/2026 pertaining to A.Y. 2015-16 as a lead case.

4.3 The assessee, in the appeal memo, has raised as many as 8 Grounds of appeal, raising issues on legality as well as on merit. The assessee also filed an application for admission of additional grounds. However, we first proceed to deal with the issue raised through Ground No. 3 of the appeal on the merit of the addition of Rs. 15,36,000/- u/s 69A of the Act on account of cash deposit.

4.4 The relevant facts are that the assessee is an individual and an advocate by profession. The assessee is a non-filer of income tax. He was subject to survey proceedings u/s 133A of the Act on 01-03-2019. Consequence of the survey proceedings, the assessee filed his return of income comprising professional income of Rs. 20,65,325/-, house rent income of Rs. 6,64,506/- and LTCG of 20,49,168/- only.

4.5 During the assessment, the AO noted that the assessee had made a cash deposit of Rs. 37.98 lakh. Further, during the survey, he admitted the cash deposit of Rs. 15.35 lakh as undisclosed income. Furthermore, the AO noted that the assessee failed to substantiate that the cash deposit of Rs. 37.98 lakh was out of business or from explained sources. Hence, the AO made an addition of Rs. 37.98 lakh to the total income under section 69A of the Act.

6.1 The learned CIT(A) accepted the assessee's claim regarding cash deposit of Rs. 15.36 lakh only during the year. However, the argument regarding the sources of deposit was not admitted for the reason that the assessee has not maintained books of account, and therefore no credence was given to the assessee’s claim. Thus, the learned CIT(A) confirmed the addition to the extent of Rs 15.36 lakh only.

8.1 The learned AR further submitted that the learned CIT(A) himself has deleted the addition of cash deposit in the A.Y. 2012-13 and 2013-14 on the reasoning that declared professional receipts are higher than the cash deposits. The learned AR prayed that since rent receipts and professional receipts are already offered to tax and accepted, then adding a cash deposit against them will amount to double taxation.

10.1 The assessee has explained that the cash deposit was made out of cash receipts from his professional and rental income, which were duly disclosed in the return of income. The assessee also pointed out that he had withdrawn Rs. 2.70 lakh from the bank during the relevant period, which was available with him for subsequent redeposit. The Ld. AR has further submitted that the professional receipts and rental receipts declared by the assessee were much higher than the cash deposit in question.

10.2 We find merit in the submissions of the assessee. The undisputed position is that the assessee has declared professional receipts of Rs. 29,50,060/- and rental receipts of Rs. 11,09,938/-. These receipts have not been rejected or treated as bogus by the Revenue. The assessee has specifically stated that the professional receipts included cash receipts and that such cash was subsequently deposited into the bank account. Therefore, when the assessee has disclosed sufficient receipts from known sources and the same have been accepted by the Revenue, the explanation that the cash deposit was out of such receipts cannot be rejected merely on suspicion.

10.3 We also find that the assessee had made cash withdrawals of Rs. 2.70 lakh from the bank during April to October 2014. Such withdrawal also constitutes an identifiable source of cash available with the assessee for subsequent redeposit. The Revenue has not brought any material on record showing that the amount so withdrawn was utilised elsewhere and was not available with the assessee.

10.4 The Ld. CIT(A) rejected the explanation mainly on the ground that the assessee had not maintained books of account. In our view, non-maintenance of books, by itself, cannot lead to the conclusion that every cash deposit made by the assessee is unexplained. The question to be examined u/s 69A of the Act is the nature and source of the money found to be owned by the assessee. In the present case, the assessee has identified the sources of the cash deposit, namely professional receipts, rental receipts and earlier cash withdrawals from the bank. These sources are not unaccounted or undisclosed sources. It is pertinent to note that the professional receipts shown in cash were sufficient to justify the source of cash deposits in bank.

10.5 It is also relevant that the assessee had declared professional receipts which were substantially higher than the cash deposit of Rs. 15.36 lakh. The Ld. AR has also brought to our notice that in AYs 2012-13 and 2013-14 that the Ld. CIT(A) had accepted a similar explanation and deleted the additions after noticing that the professional receipts declared by the assessee were higher than the cash deposits. While each assessment year has to be decided on its own facts, this past conduct of the assessee is certainly a relevant circumstance while examining the explanation furnished in the present year.

10.6 In our considered view, the Revenue cannot accept the professional and rental receipts declared by the assessee as genuine and at the same time treat the cash deposited out of those receipts as unexplained without bringing any contrary material on record. If the Revenue was of the view that the cash receipts forming part of the declared professional or rental receipts were not actually representing the impugned deposit of cash in bank, it was required to bring some material in support of such conclusion. No such material has been brought before us.

10.7 Further, the fact that the assessee did not maintain books of account may justify close/ detailed examination of the cash deposits, but it cannot by itself be a ground for making an addition u/s 69A of the Act. There has to be some material to show that the cash represented an income or money from a source other than the disclosed receipts. In the present case, no such independent material has been brought on record.

10.8 We also find that the AO had initially proceeded on an incorrect figure of cash deposits of Rs. 37.98 lakh. The Ld. CIT(A) himself accepted that the actual cash deposit during the year was Rs. 15.36 lakh alone. Once the correct amount of deposit is identified, the explanation regarding its source also has to be examined with reference to the actual cash flow of the assessee and not merely on the basis of the absence of books.

10.9 Considering the totality of the facts, we are of the view that the assessee has furnished a reasonable explanation regarding the source of the cash deposit. The professional receipts and rental receipts were disclosed in the return and accepted by the Revenue. The assessee had also made cash withdrawals from the bank. The total receipts declared by the assessee were substantially higher than the cash deposit in question. There is no material to establish that the impugned cash deposit represented any undisclosed income of the assessee. In these circumstances, treating the entire cash deposit of Rs. 15,36,000/- as unexplained money merely because the assessee did not maintain books of account, in our view, is not justified. Such an addition would also result in taxing the same receipts once as disclosed professional/rental receipts and again as unexplained money, which cannot be sustained in the facts of the present case. Accordingly, we set aside the order of the Ld. CIT(A) and direct the AO to delete the addition of Rs. 15,36,000/- made u/s 69A of the Act. Hence issue raised by the assessee in Ground No. 3 is hereby allowed.

10.10 Since we have allowed the substantive ground of the assessee on the merits, the other grounds raised by the assessee on the question of law are either not pressed or have become redundant. Accordingly, the same are hereby dismissed as infructuous or not pressed.

Coming to ITA No. 1044/Bang/2026 for A.Y. 2016-17

14.1 The learned CIT(A) observed that the assessee had withdrawn cash amounting to Rs. 22 lakhs and 11 lakhs from ICICI Bank and SCB Bank respectively during the months of March-April and May-June 2015. On the contrary, the cash was deposited during the months of August and October 2015. The learned CIT(A) found that the assessee has not provided the mapping of the deposits and withdrawals. It is highly unlikely that a person would withdraw cash, keep it for 4 to 5 months, and redeposit the same. Hence, the learned CIT(A) confirmed the addition made by the AO.

16.1 The learned AR argued that the AO and learned CIT(A) did not bring evidence to show that cash withdrawn was utilised or invested elsewhere but treated the subsequent cash deposit as unexplained merely for the lack of mapping of each withdrawal and deposit not provided, viz-a-viz there was a gap of 4 to 5 months between withdrawal and deposit. He argued that the withdrawals are higher than the deposits and the direct source of the deposit. He submitted that there is no prescribed time limit under the statute to redeposit the unutilised withdrawal. In this regard, the learned AR referred the decision of the Tribunal in the case of Ganapathi P Aneerselvam vs ITO in ITA No. 609/Chny/2025, dated 27.06.2025, Govindasamy Sasikala vs The ITO, in ITA No. 3913/Chny/2025, vide order dated 13.07.2026 and Mr. Shanmugam Ethiraj Vs The Income Tax Officer ITA No.822/Chny/2020.

18.1 We find that a similar issue had arisen in the case of the assessee for AY 2015- 16. The facts of the present year also need to be considered in that background. The assessee has declared professional income of Rs. 31,14,000/- and income from house property of Rs. 7,10,334/- during the year under consideration. It is important to appreciate that the professional income and income from house property are income figures and, therefore, the corresponding gross professional receipts and gross rental receipts would necessarily be higher than the income so declared. Thus, the assessee had substantial disclosed receipts during the year which could reasonably result in availability of cash.

18.2 The assessee's explanation is that the cash deposits were made out of earlier cash withdrawals from his bank accounts. The record shows that the assessee had withdrawn Rs. 22 lakhs from ICICI Bank and Rs. 11 lakhs from Standard Chartered Bank during March-April and May-June 2015. The cash deposits were subsequently made during August and October 2015. The Ld. CIT(A) rejected the explanation mainly because the assessee had not furnished one-to-one mapping of each withdrawal with each subsequent deposit and because there was a gap of about four to five months.

18.3 In our considered view, the approach of the Ld. CIT(A) is too narrow. There is no requirement in the Act that every cash withdrawal must be specifically mapped with a subsequent cash deposit or that an assessee must redeposit the unutilised cash within a prescribed period. The relevant question is whether the assessee had sufficient cash available from explained sources and whether there is any material to show that the withdrawn cash was utilised elsewhere.

18.4 In the present case, the assessee had withdrawn substantial cash of Rs. 40.17 lakh between 06.03.2015 and 08.07.2015, whereas the cash deposits during the period from 16.05.2015 to 31.12.2015 were Rs. 35.82 lakh. Thus, the cash withdrawals were higher than the subsequent cash deposits. The majority of the deposits were made in August and October 2015. These facts support the assessee's explanation that the deposits could have been made out of the cash already available with him.

18.5 We also find considerable force in the argument of the Ld. AR that neither the AO nor the Ld. CIT(A) has brought any material on record to establish that the cash withdrawn by the assessee was actually utilised or invested elsewhere. The Revenue has proceeded mainly on the assumption that a person would not normally retain cash for four or five months. Such an assumption, by itself, cannot be the basis for making an addition u/s 69A of the Act when the assessee has demonstrated sufficient explained cash withdrawals and also has substantial disclosed professional and rental receipts.

18.6 The assessee had professional income of Rs. 31,14,000/- and income from house property of Rs. 7,10,334/-. As noted above, these are net income figures, and the corresponding gross receipts would be higher. Therefore, the overall cash- generating capacity of the assessee cannot be examined merely with reference to the returned income. The professional receipts and rental receipts have to be considered while examining the availability of cash. This aspect assumes significance because the assessee has been consistently earning income from profession and house property.

18.7 Further, the assessee's total cash withdrawals of Rs. 40.17 lakh were higher than the cash deposits of Rs. 35.82 lakh. Therefore, even if the deposits are considered independently, the withdrawals were sufficient to cover the deposits. There is no finding by the Revenue that the assessee had made any corresponding investment, expenditure or other utilisation of the withdrawn cash which would make its subsequent availability impossible.

19.1 The Ld. CIT(A) also expected the assessee to establish a direct mapping between each withdrawal and each deposit. In our view, such one-to-one mapping is not necessary in every case, particularly when there are continuous cash withdrawals and deposits over a period of time. What is relevant is the overall availability of cash. If the total explained cash available with the assessee is sufficient to cover the deposits and there is no evidence of utilisation elsewhere, the mere absence of one-to-one mapping cannot justify an addition u/s 69A of the Act.

19.2 The Ld. AR has also relied upon various decisions of the Tribunal, including the decisions in Ganapathi P. Aneerselvam v. ITO, Govindasamy Sasikala v. ITO and Mr. Shanmugam Ethiraj v. ITO, in support of the proposition that there is no prescribed time limit for redepositing unutilised cash withdrawals. We find that the principle emerging from these decisions supports the assessee's contention that the Revenue cannot reject an otherwise reasonable explanation merely because the cash was redeposited after a few months. The relevant finding of the Tribunal in the case of Ganapathi P. Aneerselvam v. ITO (supra) is extracted as under:

“it is to be noted that there is no statutory or judicially prescribed time limit within which cash must be redeposited to be considered explained. The mere existence of a time gap, without any corroborative evidence of alternate use of funds, cannot be a valid ground to disbelieve the assessee’s explanation. Furthermore, there is no legal bar on an assessee retaining cash in hand for a reasonable period, particularly when the source of such cash is accounted for and traceable through bank withdrawals.” 19.3 Considering the facts as a whole, we find that the assessee had sufficiently explained sources of cash. He had substantial professional and rental receipts, besides substantial cash withdrawals from his bank accounts. The total cash withdrawals of Rs. 40.17 lakh were higher than the cash deposits of Rs.35.82 lakh. There is no material on record to show that the withdrawn cash was spent, invested or otherwise utilised before the deposits were made.

19.4 In these circumstances, we are of the considered view that the assessee has satisfactorily explained the source of the cash deposits. The addition has been made mainly on the basis of suspicion arising from the time gap between withdrawal and deposit and the absence of one-to-one mapping. Such circumstances, without any positive evidence showing utilisation of the withdrawn cash elsewhere, are not sufficient to sustain an addition u/s 69A of the Act. Accordingly, we set aside the order of the Ld. CIT(A) and direct the AO to delete the addition of Rs. 35.36 lakh made u/s 69A of the Act. Hence, the issue raised in ground No. 3 by the assessee is accordingly allowed.

19.5 Since we have allowed the substantive ground of the assessee on the merits. The other grounds raised by the assessee on the question of law are either not pressed or have become redundant. Accordingly, the same are hereby dismissed as infructuous or not pressed.

Order pronounced in the open court on 13th August, 2026 Sd/- Sd/- SANDEEP SINGH KARHAIL WASEEM AHMED JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore Dated: 13th August 2026 Vms Copy to: B M SUBBANNA, NO 13 S G RESIDENCY NO. 41 3RD CROSS KAVERI LAYOUT TAVAREKERE 1 MAIN ROAD, BENGALURU-560029, KARNATAKA DCIT, CENTRAL CIRCLE-1(1) BANGALORE, 2 C,.R. BUILDING,BANGALORE, BENGALURU-560001, KARNATAKA 3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE By Order

ASSISTANT REGISTRAR / I.T.A.T., BANGALORE