MAYANNA JAYARAM AMITHANJALI,BENGALURU vs. INCOME TAX OFFICER, WARD 4(2)(1), , BENGALURU

आदेश / ORDER

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT:

1 This appeal by the assessee, Mayanna Jayaram Amithanjali, relates to assessment year 2020-21 and is directed against the appellate order dated 15 October 2025 passed by the National Faceless Appeal Centre, Delhi, [ the ld. CIT (A)] whereby the learned CIT(A) dismissed the assessee’s appeal against the assessment order dated 19 February 2025 passed under section 147 read with sections 144 and 144B of the Income Tax Act, 1961. 2 The Assessee has raised the following grounds of appeal:

3 Briefly stated, the facts are that the assessee, an individual, did not file her return of income for the relevant year. Based on information received by the Income Tax Department that cash of ₹81,19,700 had been deposited in her Axis Bank account, reassessment proceedings were initiated by issuing notice under section 148A(b) of the Income Tax Act on 28 February 2024. As there was no response, notice under section 148 was issued, and the assessee thereafter filed her return on 25 March 2024 declaring income of ₹4,71,289 under section 44AD on gross business receipts of ₹36,25,300. The assessee remained non-responsive to subsequent statutory notices and reminders. Consequently, a show-cause notice under section 144 was issued on 9 December 2024, to which the assessee replied on 28 January 2025, enclosing financial records relating to her mother-in-law, Smt. M. H. Padmavathi, and her husband, Shri K. S. Raghu Kumar. It was submitted that the cash had been deposited on behalf of her mother-in-law, who was carrying on liquor business through licensed shops, during the period when she was hospitalized. The deposits were stated to have been used for purchase of stock, including purchases from Karnataka State Beverages Corporation Limited, and for payment of salaries and other business expenses. The Assessing Officer called for further details, including the income-tax return, bank accounts, audit report, cash book, bank reconciliation and bank statements of Smt.

Padmavathi. Though certain accounts and audit records were furnished, the Assessing Officer held that no categorical bank-wise reconciliation of cash deposits and other credits with the sales admitted in Smt. Padmavathi’s return had been produced, and that complete bank statements were not furnished. Accordingly, the total bank credits of ₹1,15,45,327 were treated as unexplained money under section 69A and added to the assessee’s income. After considering the returned income, the total income was assessed at ₹1,20,16,620 by order dated 19 February 2025 passed under section 147 read with sections 144 and 144B of the Act. 4 Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A) and reiterated that the deposits in her bank account represented funds belonging to her mother-in-law, Smt. M. H. Padmavathi. It was further submitted that certain amounts were received from her husband, Shri K. S. Raghu Kumar, for household and business-related expenses. The assessee furnished a one-page balance sheet of Smt. Padmavathi as on 31 March 2021, along with the trading and profit and loss account. The learned CIT(A) was also provided with a 14-page ledger account of liquor purchases showing purchases made by the assessee’s mother-in-law from Karnataka State Beverages Corporation Limited during financial year 2019-20. In addition, the assessee produced the tax audit report under section 44AB, trading and profit and loss account, and balance sheet of Shri Guru Shree Wines, proprietary concern of her husband, Shri K. S. Raghu Kumar. The learned CIT(A), however, rejected these submissions and upheld the Assessing Officer’s action, holding that the assessee had failed to explain the source of credits in her bank account during the financial year. The appeal was accordingly dismissed. 5 Aggrieved, the assessee has preferred the present appeal before us. The appeal is delayed by two days. The assessee has filed a condonation petition, and on perusal thereof, we find that the delay was due to sufficient cause. The delay is therefore condoned and the appeal is admitted. 6 Shri Bhuvan M., Chartered Accountant and authorized representative of the assessee, filed written submissions along with an 80-page paper book. His principal contention is that the bank deposits did not represent the assessee’s undisclosed income. According to him, a substantial portion of the deposits comprised cash collections and business funds of the assessee’s mother-in- law, Smt. M. H. Padmavathi, who was carrying on liquor business through two licensed shops. During the relevant period, Smt. Padmavathi was unwell and, for operational convenience, certain cash collections of the business were temporarily deposited in the assessee’s bank account and thereafter used to purchase liquor stock from Karnataka State Beverages Corporation Limited and to pay salaries and other business expenses. It was also submitted that part of the credits represented amounts received from the assessee’s husband, Shri K. S. Raghu Kumar, for household requirements and incidental business payments. The authorized representative further submitted that, during assessment as well as appellate proceedings, the assessee furnished financial statements, tax audit reports, trial balances, trading and profit and loss accounts, balance sheets and liquor purchase registers relating to Smt. Padmavathi and Shri Raghu Kumar. The authorities below did not find the existence of the liquor business, purchases from Karnataka State Beverages Corporation Limited, or the financial records to be non-genuine or fabricated. Therefore, the addition made by the revenue authorities could not be sustained. He submitted that the Assessing Officer rejected the explanation mainly because complete bank-wise reconciliation, Smt. Padmavathi’s bank statements and contra ledger accounts were not furnished, and that this alone formed the basis for adding the entire bank credit of ₹1,15,45,327. He further contended that the learned CIT(A) confirmed the addition without conducting further verification or properly considering the assessee’s request to examine the accounts of Smt. Padmavathi and Shri Raghu Kumar. He also submitted that corroborative evidence was produced before the learned CIT(A) to show that the cash deposits were connected with the liquor business and that purchases were made from Karnataka State Beverages Corporation Limited. Thus, according to him, both the purchase trail and sales trail were available, and mere credits in the bank account could not be taxed as unexplained money when the assessee had shown that the funds belonged to her mother- in-law. Shri Bhuvan relied on the written submissions, the paper book filed before us, the decision of the coordinate bench in mala v. ITO, ITA No. 1956/Bang/2025, and the affidavit filed by Smt. M. H. Padmavathi. 7 The learned Departmental Representative, Shri Nishant Agarwal, Joint Commissioner of Income Tax, strongly supported the orders of the lower authorities. He submitted that the assessee had failed to establish the source of the cash deposited in her bank account and, therefore, the addition made by the Assessing Officer was rightly confirmed by the learned CIT(A). 8 We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee is an individual. During reassessment proceedings, the issue initially related to cash deposits of ₹81,19,700 in the assessee’s Axis Bank account. The Assessing Officer thereafter noticed further credits of ₹34,25,627, taking the aggregate bank credits requiring explanation to ₹1,15,45,327. In response to notice under section 148, the assessee filed her return declaring income of ₹4,71,289 under section 44AD of the Act on gross receipts of ₹36,25,300. The assessee explained that the bank deposits did not represent her undisclosed income. According to her, a substantial portion of the deposits comprised cash collections and business funds of her mother-in-law, Smt. M. H. Padmavathi, who was carrying on liquor business through two licensed shops. During the relevant period, Smt. Padmavathi was unwell and, for operational convenience, cash collections of the liquor business were temporarily deposited in the assessee’s bank account and thereafter used to purchase liquor stock from Karnataka State Beverages Corporation Limited and to pay salaries and other routine business expenses. It was further submitted that certain credits represented amounts received from the assessee’s husband, Shri K. S. Raghu Kumar, for household requirements. To substantiate the claim, the assessee produced her Axis Bank account, in which the deposits were reflected, and from which payments were stated to have been made to Karnataka State Beverages Corporation Limited. The relevant payment entries were also pointed out. The assessee also produced the liquor purchase account of Guru Shree Bar and Restaurant, showing purchases from Karnataka State Beverages Corporation Limited. In support of the explanation, the assessee furnished the return of income of Smt. Padmavathi, PAN AAKPP0697G, for assessment year 2020-21, declaring total income of ₹31,07,310 and turnover of ₹8,53,70,599; the books of account were audited. The assessee also filed an affidavit of Smt. M. H. Padmavathi stating that she owned two licensed liquor shops and carried on the liquor business during financial year 2019-20, and that the income from that business belonged to her. In the affidavit, Smt. Padmavathi stated that, due to old age, ill health and medical difficulties, she could not personally manage the day-to-day operations of the business and therefore used the assessee’s bank account only for operational convenience. She further stated that the cash collections deposited in, and payments made from, the assessee’s bank account were connected with her liquor business and were utilized for purchase of liquor stock from Karnataka State Beverages Corporation Limited, payment of salaries and other regular business expenses. She affirmed on oath that the amounts did not represent the assessee’s personal or undisclosed income but belonged to her, and that the liquor business transactions had been accounted for in her books. The assessee also relied on the decision of the coordinate bench in ITA No. 1956/Bang/2025 for assessment year 2017-18, dated 8 December 2025, wherein the issue was restored to the Assessing Officer to verify the bank statements, payments made to Karnataka State Beverages Corporation Limited and other supporting documents, and decide the matter in light of the observation that the money belonged to the assessee’s mother-in-law. 9 The issue in this appeal is whether the cash deposited in the assessee’s bank account is chargeable to tax in her hands. The assessee has explained that the money belonged to her mother-in-law, who was carrying on the business of a liquor wine shop and bar. It was further submitted that the entire income relating to the cash deposits was accounted for by the mother-in-law, and that payments for regular business expenses and liquor purchases were made from the assessee’s bank account. This explanation requires verification. If, on examination, the Assessing Officer finds that the cash deposited in the assessee’s bank account belonged to her mother-in-law and formed part of the turnover accounted for in the mother-in-law’s hands, no addition is warranted in the hands of the assessee. The Assessing Officer shall examine this aspect, and the assessee is directed to produce the relevant records to facilitate such verification. If the Assessing Officer concludes that the money belonged to the assessee’s mother-in-law, the corresponding addition shall be deleted in the assessee’s hands. Accordingly, to this extent, the appeal of the assessee on all grounds is restored to the file of the Assessing Officer. 10 In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 30.07.2026.

Sd/- Sd/-

SANDEEP SINGH KARHAIL PRASHANT MAHARISHI JUDICIAL MEMBER VICE PRESIDENT Bangalore Dated: 30.07.2026.

Copy to: MAYANNA JAYARAM AMITHANJALI, NO. 333, 5TH CROSS, GUNASHREE NILAYA 1 OPP HLRC, WHITEFIELD, BENGALURU-560066, KARNATAKA INCOME TAX OFFICER, WARD 4(2)(1), , BMTC BUILDING, KORAMANGALA, 2 BENGALURU-560040, KARNATAKA 3 THE PCIT / CIT, 4 THE CIT(APPEALS) 5 THE D.R., ITAT, BANGALORE BENCH

BY ORDER

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