BANGALORE NAGARAJ VISHWANATH,BENGALURU vs. ITO WARD 5(3)(3), BENGALURU

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER

ITA No.1642/Bang/2025 Assessment Year: 2017-18 Bangalore Nagaraj Vishwanath, Vs. The Income Tax Officer, 42, Nirmala Nilaya, 3rd Main Road, Ward – 5(3)(3), Samrat Layout, Arakere, Bengaluru. Bengaluru – 560 076. PAN – AEWPN 6301 F APPELLANT RESPONDENT Assessee by : Shri Prakyat JS, AR Revenue by : Shri N Balusamy, JCIT (DR) Date of hearing : 18.06.2026 Date of Pronouncement : 06.08.2026 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of the CIT-A vide order dated 19/06/2025.

ITA No.1642/Bang/2026 Page 2 of 7 u/s 139(1) of the Act. The return was selected for limited scrutiny through CASS.

4.1 Furthermore, the AO observed that during the year the assessee made cash deposit of Rs. 99,28,000/- in his bank account as well as made withdrawal of Rs. 45,89,000/-only. The substantial cash deposit of Rs. 13 Lakh and 46 Lakh was made as on 30-06-2016 and 6th October 2016 respectively. The assessee claimed that the source of impugned two cash deposit was out sale of vehicle and cash belonging to his uncle namely Mr. KC Chikkanaiah. However, the assessee claim was not accepted and accordingly, the AO after considering the assessee’s income from salary and business as well cash withdrawal and day to expenses added a sum of Rs. 60 lakh as unexplained investment on account of cash deposit.

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ITA No.1642/Bang/2026 Page 3 of 7 lakh was deposited out of sale proceeds of old vehicle. Likewise, the sum of Rs. 46 lakhs deposited, belonged to his uncle and same was paid back to his uncle account on the same day through RTGS. The assessee contended that the remaining amount was out of withdrawal made from the bank. However, the learned CIT(A) rejected the assessee’s submission and confirmed the addition made by the AO.

7.1 Likewise, with respect to source of cash deposits, out of sale of old vehicle at OLX, it was submitted that vehicle Fiate Linea having registration No. KA51MD744 was sold to one Smt. Neha Bhargava for Rs. 3,65,000/- on 15th June 2016. Likewise, vehicle XUV 500 having registration No. KA51MH0773 was sold to Sobek Auto India Pvt Ltd (Olx Cashmycar) for Rs. 8.55 Lakh. In support of the claim copy of car delivery note, sale receipt and receipt from Olx Cashmycar is submitted which is available at pages 56 to 59 of the paper book.

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ITA No.1642/Bang/2026 Page 4 of 7 7.2 Regarding the cash deposit of Rs. Rs. 46 lakhs, it was submitted that there were some unforeseen technical failures at his uncle bank account (Karnataka Bank). Therefore, cash was deposited into his bank account which was immediately transferred to his uncle account through RTGS. In support a copy of notarized MOU dated 7th October 2016 from his uncle was submitted stating that cash belonged to him (the uncle) which he has duly offered to tax in his return for A.Y. 2017-18. Accordingly, it was contended that the impugned cash deposit cannot be treated as income of the assessee. if any addition is required to be made as per the provisions of the Act with respect to cash amount of Rs. 46 lakhs, it shall need to be made in the hand of his uncle Mr. KC Chikkanaiah being the right person.

7.3 Without prejudice the above submission on merit of the addition, it was also contended that it was a case of limited scrutiny. The AO exceeded his jurisdiction by converting the same into complete scrutiny without getting necessary approval from higher authority.

7.4 The learned Departmental Representative (DR) supported the orders of the Assessing Officer as well as the learned CIT(A). It was submitted that the assessee had failed to discharge the primary onus cast upon him under the Act to satisfactorily explain the source of the substantial cash deposits made in his bank account. The learned DR, therefore, prayed that the order of the learned CIT(A) be upheld.

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ITA No.1642/Bang/2026 Page 5 of 7 AO on account of cash deposits in the bank account of the assessee. The facts show that the AO observed cash deposits of Rs. 99,28,000 in the bank account of the assessee and cash withdrawals of Rs. 45,89,000 during the year. The AO further noticed two major cash deposits of Rs. 13,00,000 and Rs. 46,00,000. The assessee explained that the deposit of Rs. 13,00,000 was out of sale proceeds of old vehicles and the deposit of Rs. 46,00,000 belonged to his uncle, namely Shri K.C. Chikkanaiah, which was immediately transferred to the account of the said uncle through RTGS. The AO did not accept the explanation of the assessee. The Ld. CIT(A) also confirmed the addition.

8.1 Before us, the assessee has filed a paper book containing documents and evidences. From the certificate of M/s Mallikarjun & Co., Chartered Accountants, dated 11.07.2025, it is seen that the total cash deposits during the year were Rs. 80,37,000 and not Rs. 99,28,000 as taken by the AO. The cash withdrawals were shown at Rs. 42,07,500 only. Thus, at the threshold itself, the computation made by the AO suffers from factual mistake.

8.2 With respect to the alleged cash deposit of Rs. 13,00,000, the assessee has furnished documentary evidence to show that Fiat Linea vehicle bearing registration No. KA51MD744 was sold to Smt. Neha Bhargava for Rs. 3,65,000 on 15.06.2016. The assessee has also filed documents to show that XUV 500 bearing registration No. KA51MH0773 was sold to Sobek Auto India Pvt. Ltd. / OLX Cashmycar for Rs. 8,55,000. The copies of delivery note, sale receipt and OLX Cashmycar receipt support the explanation of the assessee. Therefore, the source of cash deposit to this extent stands reasonably explained.

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ITA No.1642/Bang/2026 Page 6 of 7 8.3 With respect to the cash deposit of Rs. 46,00,000, the assessee has explained that the said cash belonged to his uncle Shri K.C. Chikkanaiah. Due to technical issues in the bank account of the uncle maintained with Karnataka Bank, the cash was deposited in the bank account of the assessee and immediately transferred to the uncle through RTGS on the same day. The assessee has filed a notarized memorandum / confirmation dated 07.10.2016 from the uncle stating that the cash belonged to him and that the same was offered in his return of income for A.Y. 2017-18. The bank trail also supports the explanation that the money did not remain with the assessee and was immediately transferred to the account of the uncle. Once the identity of the person, the nature of receipt and the immediate transfer are supported by documentary evidence, the said amount cannot be treated as unexplained money of the assessee merely because the cash was first deposited in his bank account.

8.4 It is also settled that the addition cannot be made merely on the basis of gross cash deposits without considering the cash withdrawals, cash flow and the explanation of the assessee. In the present case, substantial withdrawals were available. The assessee has also explained the major deposits by filing supporting evidence. The AO has not brought any independent material to show that the cash deposits represented undisclosed income of the assessee. Suspicion, howsoever strong, cannot take the place of evidence.

8.5 Considering the totality of facts and circumstances, we hold that the assessee has satisfactorily explained the source of cash deposits. The addition of Rs. 60,00,000 made by the AO and confirmed by the Ld. CIT(A) is, therefore, not sustainable. Accordingly, the AO is directed to delete the

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ITA No.1642/Bang/2026 Page 7 of 7 addition of Rs. 60,00,000. Hence, the ground of appeal of the assessee is allowed.

Order pronounced in court on 6th day of August, 2026

Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 6th August, 2026 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order

Asst. Registrar, ITAT, Bangalore

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