SUDHAKAR LAKSHMI,BENGALURU vs. ITO WARD-2(1)(1),BLR, BENGALURU

ITA 1555/BANG/2026Status: DisposedITAT Bangalore24 September 2026AY 2017-20186 pages
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What did the Tribunal hold?

The Tribunal held that in the interest of justice, the assessee should be granted an opportunity to furnish further documents to support her claim of sufficient source for the cash deposits. The Tribunal noted that the AO and CIT(A) had not specifically informed the assessee about the type of documents required. Therefore, the order of the lower authorities regarding the quantum addition was set aside, and the issue was remitted to the jurisdictional AO for fresh adjudication after providing a reasonable opportunity of being heard. Regarding the penalty under Section 272A(1)(d), the Tribunal observed that the assessment was completed based on various documents filed by the assessee pursuant to Section 142(1) notices, and the AO did not claim non-cooperation. Considering the quasi-criminal nature of penalty proceedings and the fact that the assessment was not made under Section 144, the Tribunal took a lenient view and set aside the penalty order, deleting the penalty. The Tribunal expressly left undecided the exact quantum of income, as it was remitted.

What were the facts?

The assessee, Ms. Sudhakar Lakshmi, an individual, is in appeal before the ITAT against the orders of the NFAC, Delhi for Assessment Year 2017-18. The Assessing Officer (AO) initiated proceedings under Section 148 after the assessee made cash deposits of Rs. 1,65,22,500/- without filing a return. The assessee subsequently filed a return, claiming actual cash deposits were Rs. 55,07,500/-. She attributed these deposits to rental income, money lending advances, tuition fees, and tailoring classes, providing financial statements from A.Ys. 2013-14 to 2016-17. The AO, unsatisfied, treated the entire cash deposits as income and levied tax. The CIT(A) upheld the AO's order. A penalty under Section 272A(1)(d) was also levied and confirmed by the CIT(A). The assessee filed appeals against both the quantum and penalty orders.

What were the issues?

1. Whether the AO and CIT(A) erred in not granting the assessee a proper opportunity to furnish further documentary evidence to substantiate the source of cash deposits into her bank account, thereby making an addition to her income under Section 147 read with Section 143(3) of the Income Tax Act, 1961? (Mixed question of law and fact) 2. Whether the penalty levied under Section 272A(1)(d) of the Income Tax Act, 1961, for non-compliance with notices under Section 142(1) is sustainable when the assessment was completed based on materials furnished by the assessee and considering the quasi-criminal nature of penalty proceedings? (Question of law) Assessee's Contentions: - The assessee argued that she has sufficient sources for the cash deposits, including interest, rental income, tuition, and tailoring classes. She claimed that further supporting documents were available but were not sought by the AO or CIT(A), and therefore, prayed for an opportunity to furnish them. She also highlighted a discrepancy in the initial cash deposit figure stated by the AO. Revenue's Contentions: - The revenue argued that the assessee was a non-filer and did not produce complete details before the authorities, justifying the AO's assessment. - For the penalty, the revenue contended that the assessee admittedly failed to respond to some notices under Section 142(1), warranting the penalty.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(2),Section 142(1),Section 272A(1)(d),Section 143(3),Section 147,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI SOUNDARARAJAN K.

PER SHRI SOUNDARARAJAN K., JUDICIAL MEMBER:

These are the appeals filed by the assessee challenging the separate orders of the NFAC, Delhi both dated 10/02/2026 in respect of the A.Y. 2017-18. Ms. Sudhakar Lakshmi

2.

Both these appeals are heard together and are being disposed of by way of this common order for the sake of convenience. The common facts are narrated hereunder and the decision has bee

The order continues below.

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