KUDLI MADAPPA AMARANATH,SHIVAMOGGA vs. INCOME TAX OFFICER, WARD 1 & TPS, SHIVAMOGGA

ITA 1744/BANG/2026Status: DisposedITAT Bangalore22 September 2026AY 2021-224 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 1,09,900/- (referred to as Rs. 9,01,900/- in the facts but clarified as Rs. 1,09,900/- in the discussion of the issue) on account of cash deposits was unjustified. The Tribunal reasoned that when the source of cash deposits was explained as withdrawals from the assessee's own bank account held as a reserve, the onus shifted to the Revenue to prove that the withdrawn amounts were spent elsewhere or were unavailable for redeposit. Since the Revenue failed to place any material to demonstrate that the earlier cash withdrawals were spent or invested or otherwise unavailable, the addition made by the AO was based on surmises and assumptions without incriminating material. The Tribunal also considered the affidavit from the friend regarding the deposit of Rs. 1,90,000/-. Therefore, the addition was quashed, and the grounds raised by the assessee were allowed.

What were the facts?

The assessee, Kudli Madappa Amaranath, filed his return of income for Assessment Year 2021-22 declaring a total income of Rs. 40,450. The Assessing Officer (AO) noted that the assessee claimed exempt income of Rs. 23,05,343/- under section 10(12), though he received Rs. 16,89,573/- as PF and Rs. 6,15,770/- as earned leave. The AO was satisfied with the explanation for these amounts and treated them as exempt. The AO also observed cash deposits of Rs. 10,30,400/- into the assessee's SBI account. The assessee explained these deposits as withdrawals made earlier for holding as a reserve. The AO, not satisfied, added Rs. 9,01,900/- (net of withdrawals) to the total income. The CIT(A) upheld the AO's order. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of Rs. 9,01,900/- made by the Assessing Officer and sustained by the CIT(A) on account of cash deposits into the bank account is justified, considering the assessee's explanation that these were from earlier cash withdrawals held as reserve? (Question of law and fact, concerning Section 68 of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that cash withdrawals of Rs. 5,00,000/- on 22-10-2019 and Rs. 5,00,000/- on 29-01-2020 were held as a reserve for emergencies and were subsequently redeposited during the impugned Financial Year. The sources of cash deposits were properly explained, making the addition unjustified. The assessee also submitted an affidavit from a friend regarding the deposit of Rs. 1.90 lakhs. Revenue's Contention: The Revenue contended that the assessee could not hold the withdrawn cash for more than 7 to 8 months before redepositing it into the bank account.

Which sections of the Income-tax Act were involved?

Section 10(12),Section 143(3),Section 142(1),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI BALAKRISHNAN S & SHRI SOUNDARARAJAN K.

For Respondent: Shri. Pradeep S - Addl. CIT
Pronounced: 22.09.2026

PER SHRI BALAKRISHNAN S, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of Ld. Commissioner of income tax (A), NFAC, vide DIN: ITBA/NFAC/S/250/2025-26/1086527793(1) dated 25-Feb-2026 for the Assessment Year 2021-22, arising out of the Order passed under section 143(3) of the Act, dated 21.12.2022. 2. Briefly stated, facts of the case are the assessee a retired government employee filed hi

The order continues below.

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