C S V RENRAJ (HUF),BANGALORE vs. ITO 5(2)(5), BANGALORE

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ITA 931/BANG/2026Status: DisposedITAT Bangalore08 May 2026AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee provided a plausible explanation for the cash deposits through a cash flow statement and banking records. The addition under Section 69A cannot be sustained solely on the absence of detailed documentary evidence when a reasonable explanation is furnished.

What were the facts?

The assessee, CSV Renraj (HUF), engaged in small-scale lending, made cash deposits during demonetisation. The Assessing Officer added these deposits under Section 69A for being unexplained, a view confirmed by the CIT(A).

What were the issues?

Whether cash deposits made during demonetisation are unexplained income under Section 69A when the assessee provides a plausible cash flow explanation.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE

Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K

For Appellant: Shri Gopichand, CA
For Respondent: Shri Ganesh R Ghale, Standing Counsel for assessee
Hearing: 30.04.2026Pronounced: 08.05.2026

PER WASEEM AHMED, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order dated 30.11.2025 passed by the learned Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2017–18 confirming addition of ₹9,40,000 under section 69A of the Income-tax Act, 1961.

2.

The appeal is accompanied by a petition seeking condonation of delay of 28 days in filing the appeal before this Tribunal. It is stated by the assessee that the delay occurred due to the fact that the appellate

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order was communicated electronically through the Income Tax portal and was not immediately noticed by the assessee, who was under a bona fide belief that such orders would also be served physically as in earlier practice. The assessee submits that the delay is neither intentional nor deliberate and occurred due to a genuine misunderstanding regarding electronic communication of orders. Weekly the limited or played for the current donation of the delay in filing the appeal by the assessee.

3.

On the other hand, the learned DR considering the length of delay didn’t not raise any serious objection if the delay is condoned.

4.

We have considered the explanation and find that the delay of 28 days is neither inordinate nor attributable to negligence or mala fide intention. The explanation furnished is reasonable and supported by bona fide circumstances. In view of the settled principle that justice- oriented approach should be adopted in condonation matters, we are satisfied that sufficient cause has been shown. Accordingly, the delay of 28 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits.

4.1 The assessee has challenged the confirmation of addition of ₹9,40,000 made under section 69A of the Act on account of alleged unexplained cash deposits during the demonetisation period.

4.2 The assessee is a Hindu Undivided Family engaged in small-scale lending activities to agriculturists and petty traders. Cash deposits were made in various bank accounts during the relevant previous year. The

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Assessing Officer treated the deposits as unexplained money under section 69A of the Act on the ground that the assessee failed to produce adequate supporting evidence such as books of accounts, loan registers, and borrower confirmations. The CIT(A) confirmed the addition.

5.

Aggrieved by the order of learning CIT-A, the assessee is in appeal before us.

6.

The ld. AR before us assessee submitted that the cash deposits were sourced from interest income from lending activities, recovery of loans from borrowers, opening cash balance and accumulated funds. A cash flow statement was furnished explaining availability of cash prior to deposits. The banking records corroborate the movement of funds. The assessee is a small-scale lender, and formal books were not strictly maintained in the manner expected in organised business setups.

7.

On the other hand, the DR submitted that there were not filed sufficient documents before the authorities below justifying the source of cash deposits in the bank during the demonetisation period. The ld. DR vehemently supported the order of the authorities below.

8.

We have carefully considered the rival submissions and perused the materials on record. It is not in dispute that cash deposits were made in the bank accounts of the assessee. The issue is whether the assessee has been able to satisfactorily explain the source of such deposits. The assessee has furnished a cash flow statement explaining availability of funds through interest income, loan recoveries, and opening balance. The bank statements corroborate the pattern of

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deposits and withdrawals. It is also relevant to note that the assessee is engaged in small-scale lending activities, where transactions are often informal and documentation may not always be maintained in a structured manner. The explanation furnished by the assessee, when viewed in totality along with the cash flow statement and banking records, appears to be plausible and reasonably supported by material on record. The lower authorities have not brought any positive material to disprove the availability of cash or to establish that the deposits represent income from undisclosed sources. The addition has been made primarily on the ground of absence of detailed documentary evidence.

8.1 It is well-settled that an addition under section 69A of the Act cannot be sustained merely on suspicion when a plausible explanation supported by available material is furnished. In view of the above discussion, we hold that the assessee has satisfactorily explained the source of cash deposits of ₹9,40,000. Accordingly, the addition made under section 69A of the Act is deleted. The ground of appeal of the assessee is hereby allowed.

9.

In the result, the appeal of the assessee is allowed.

Order pronounced in court on 8th day of May, 2026

Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 8th May, 2026 / vms /

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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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