GANDODI JAYANNA,BELLARY vs. INCOME TAX OFFICER, WARD-1 & TPS, HOSAPETE

PDF · subscribers
ITA 2604/BANG/2025Status: DisposedITAT Bangalore05 October 2026AY 2017-188 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay of 47 days, adopting a liberal and justice-oriented approach, noting the assessee's senior citizen status, reliance on a consultant, and the Revenue's lack of serious objection. Regarding the addition of Rs. 12,00,000, the Tribunal held that the assessee's explanation was reasonable and probable. It reasoned that the assessee's undisputed ownership of substantial agricultural land held for several years could not be disregarded, even if agricultural income was not explicitly shown in the ROI for the year under consideration. The Tribunal noted that the trading business commenced only during the year, and the Revenue had not brought any material to show any other source for the unexplained money. The fact that the AO accepted a portion of the deposit as explained further supported the assessee's claim. Therefore, the Tribunal set aside the CIT(A)'s finding and directed the AO to delete the addition of Rs. 12,00,000. The ground raised by the assessee was allowed.

What were the facts?

The assessee, Gandodi Jayanna, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18. The appeal was filed with a delay of 47 days, which the assessee attributed to a senior citizen's reliance on a local consultant who failed to timely communicate the appellate order. The Revenue did not strongly object to the condonation of delay. The core dispute involved an addition of Rs. 12,00,000 made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961, representing unexplained cash deposited in the assessee's bank account during the demonetisation period. The AO had accepted Rs. 4,50,000 of the deposit as explained by prior cash withdrawals.

What were the issues?

1. Whether the Tribunal should condone the delay of 47 days in filing the appeal, considering the assessee's submission of sufficient cause. - Assessee's contention: The delay was due to a senior citizen's reliance on a local consultant who failed to communicate the appellate order, and the delay was neither deliberate nor intentional. Relied on *Collector, Land Acquisition v. Mst. Katiji & Others* for a liberal approach. - Revenue's contention: No serious objection to condonation, leaving it to the Bench's discretion. 2. Whether the Ld. CIT(A) erred in confirming the addition of Rs. 12,00,000 made by the AO under Section 69A of the Act in respect of cash deposited in the bank account during the demonetisation period, when the assessee claimed it was from agricultural income and past savings. - Assessee's contention: The cash deposit represented accumulated agricultural income and past savings, supported by ownership of 12.42 acres of agricultural land and commencement of a trading business during the year. Relied on *P.K. Noorjahan*. - Revenue's contention: Not explicitly recorded, but implicitly challenged the assessee's explanation by not objecting to the AO's addition and the CIT(A)'s confirmation.

Which sections of the Income-tax Act were involved?

Section 69A,Section 44AD,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

PER SHRI WASEEM AHMED, ACCOUNTANT MEMBER: The present appeal filed by the assessee pertaining to A.Y. 2017-18 is directed against the order of the learned Commissioner of Income Tax (Appeals) (hereafter, the Ld. CIT(A)) u/s 250 of the Income Tax Act, 1961 (hereafter, the Act) vide order dated 31.07.2025.

2.

At the outset, we note that there is a delay of 47 days in filing the present appeal before the Tribunal. The assessee has filed a condonation petition dated 14.11.2025 seeking condonation of the delay. The Ld. AR submitted that the assessee is a senior citizen residing in a village and was depending on a local consultant to attend to his income-tax matters. It was 1 submitted that the local consultant failed to communicate the appellate order and the requirement to file a further appeal with the tax consultants in Bengaluru within time. Thereafter, when the assessee came to know about the position, he contacted a consultant in the city and took steps to file the present appeal. It was thus submitted that the delay occurred due to the above circumstances and was neither deliberate nor intentional. The Ld. AR requested that the delay of 47 days may be condoned, and the appeal may be decided on merits. In support of the prayer, the Ld. AR relied upon the decision of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC), wherein the Hon'ble Supreme Court emphasized that a liberal and justice-oriented approach should be adopted while considering an application for condonation of delay.

3.

The Ld. DR, on the contrary, submitted that he has no serious objection to the condonation of delay and left the issue to the discretion of the Bench.

4.

We have considered the rival submissions of both the parties and perused the condonation petition dated 14.11.2025. The assessee is a senior citizen residing in a village and as explained before us, depended on a local consultant to handle his tax matters. The delay is stated to have occurred because the local consultant did not communicate the matter in time to the tax consultants at Bengaluru. On becoming aware of the requirement to file a further appeal, the assessee approached a consultant in the city and thereafter took steps to file the present appeal.

4.1 We have also considered the principle laid down by the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC), wherein it was held that the expression "sufficient cause" should receive a liberal construction so as to advance substantial justice. The Hon'ble Supreme Court also observed that ordinarily a litigant does not stand to benefit by filing an appeal belatedly and that a matter should, as far as possible, be decided on merits rather than being rejected on a technical ground of limitation. Considering the explanation furnished, the period of delay of 47 days and the fact that the Ld. DR has not raised any serious objection, we are of the opinion that the assessee had sufficient cause for not filing the appeal within the prescribed time. The delay does not appear to be deliberate or with any intention to gain any undue advantage. We, therefore, condone the delay of 47 days and admit the appeal for adjudication on merits.

5.

The only issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition of Rs. 12,00,000 made by the AO u/s 69A of the Act in respect of cash deposited in the bank account during the demonetisation period.

5.1 The relevant facts are that the assessee is an individual and claimed to be running a proprietary concern in the name and style of Kodi Basaveshwara Traders. During the demonetisation (from 9th November 2016 to 30th December 2016), the assessee deposited cash of Rs. 16,50,000/- in his current bank account held with SBI.

5.2 Subsequently, the assessee filed the ROI for A.Y. 2017-18 on 31st March 2018, declaring business receipts of Rs. 6,43,730/- and offering income of Rs. 90,123/- under section 44AD of the Act. The case was selected for scrutiny under CASS on the issue of cash deposited during the demonetisation period. During the assessment proceedings, the chartered accountant appearing on behalf of the assessee submitted that the assessee belonged to an agricultural family and that the cash deposited in the bank account was from agricultural income.

5.3 However, the AO noticed that the assessee declared business income under section 44AD of the Act in the return. When asked about the nature of business carried out during the year and proof of registration of the business under VAT, etc., the assessee changed his stance from business income to agricultural income, which he never claimed in ROI. Accordingly, the AO rejected the assessee’s submission that he is engaged in agricultural activity and that the cash was deposited from agricultural income. The AO held that the assessee failed to explain the source of the cash deposit of SBN during demonetisation. However, from the bank statement, the AO noticed that the assessee had withdrawn cash of Rs. 3,00,000/- and Rs. 1,50,000/- on 28.10.2016 and 07.11.2016, respectively. Since the impugned cash withdrawal of Rs. 4.5 lakh was made a few days before the demonetisation. The AO accepted the source of the cash deposit to that extent. The remaining cash deposit of Rs. 12 lakh was treated as unexplained income under section 69A of the Act and added to the assessee's total income.

6.

The aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that he operates 3 bank accounts, i.e. 2 savings bank accounts and 1 current bank account, in which cash was deposited during the year. Further submitted that he has held agricultural land of 12.42 acres for the past several years, out of which certain agricultural land was purchased in 1994 & 1997, and certain land was ancestral land received on partition. He has been cultivating crops like papaya, pomegranate, groundnut, maize, etc. In support of his claim, the assessee submitted the RTC/ROR form.

6.1 The assessee further submitted that during the year, he started the business of trading in maize & other agricultural produce, for which a current account was opened on 17- 10-2016. Hence, the year under consideration is the first year of business, and accordingly, for the first time, has filed ROI. In support of the business of trading in maize, the assessee submitted copies of VAT returns filed for each quarter of the year 2016-17.

6.2 The assessee claimed that cash was held for the purpose of purchase of land, but the deal did not materialise, and the same was deposited into the impugned current bank account. Further, the assessee, on the strength of the above facts, contended that he has no source of income other than agricultural income to generate unaccounted/unexplained money which needs to be brought under the tax net. To support his contention, the assessee relied on the judgment of the Hon’ble Supreme Court in P.K. Noorjahan, reported in [1999] 237 ITR 570, wherein it was held that since the assessee has no source to generate undisclosed income, the money cannot be treated as undisclosed credit.

6.

The Ld. CIT(A), however, was not satisfied with the explanation furnished by the assessee. The Ld. CIT(A) observed that the RTC/ROR furnished by the assessee did not contain information regarding the crops cultivated during the year under consideration. The RTC/ROR form only contains certain details relating to the years 2018-19 and 2019-20. Hence, held that it did not establish the agricultural operations carried out by the assessee during the year under consideration. The Ld. CIT(A) also observed that the VAT return form submitted is not duly dated and signed by the assessee. Therefore, the genuineness of the same cannot be relied upon. Further, the VAT registration was taken w.e.f. September 2015, but the assessee did not file any ITR for A.Y. 2016-17.

6.1 Regarding the decision of the Hon’ble Supreme Court in P.K. Noorjahan (supra) relied upon by the assessee, the Ld. CIT(A) observed that in that case, an addition was made u/s 69 of the Act, whereas in the case of the appellant assessee, the addition is made u/s 69A of the Act. Therefore, the case laws relied upon by the assessee are not applicable. Accordingly, the Ld. CIT(A) held that the assessee failed to explain the sources of cash deposits out of trading business. Hence, confirmed the addition made by the AO.

7.

Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.

7.1 The Ld. AR before us submitted that the authorities below have not properly appreciated the evidence furnished by the assessee. It was submitted that the assessee owns about 12.42 acres of agricultural land and the Record of Rights clearly establishes the ownership of such agricultural land. As the ROR/RTC was downloaded or generated at a later point in time, it reflects the crop information as of that time. It was further submitted that the details of the crops grown during the year under dispute are independently verifiable from the “Bhoomi” website maintained by the Government of Karnataka. According to the Ld. AR, a simple query on the said portal would display the crop details for F.Y. 2016-17. Therefore, the Ld. AR submitted that the Ld. CIT(A) was not justified in drawing an adverse inference merely because the subsequently generated Record of Rights did not contain the crop details for the year under consideration.

7.2. The Ld. AR further submitted that the assessee's explanation could not have been rejected merely because agricultural income had not been separately shown in the return of income. According to him, the ownership of substantial agricultural land and the surrounding circumstances ought to have been examined before treating the entire balance cash deposit as unexplained.

7.3 The Ld. AR also relied upon the decision of the Hon'ble Supreme Court in CIT v. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC). The Ld. AR submitted that the Ld. CIT(A) rejected the reliance on the said decision only on the ground that the judgment was rendered in the context of section 69 of the Act and not section 69A of the Act. According to the Ld. AR, such distinction is not justified since sections 69 and 69A of the Act are pari materia in material respects and the principle laid down by the Hon'ble Supreme Court would equally apply while considering an addition u/s 69A of the Act. Therefore, the principle laid down in the said case is applicable to the present facts of the assessee.

8.

The Ld. DR, on the contrary, vehemently supported the orders of the authorities below. The Ld. DR submitted that the assessee had not produced sufficient evidence to establish that the amount of Rs. 12,00,000/- represented agricultural income or business receipts. It was further submitted that agricultural income was not shown in the return of income.

9.

We have considered the rival submissions of both the parties and perused the materials available on record. The dispute is regarding the addition of Rs. 12,00,000/- u/s 69A of the Act. The said amount represents part of the cash deposited by the assessee in his bank account during the demonetisation period.

9.1 It is an undisputed fact that the assessee is holding agricultural land measuring about 12.42 acres. As per the assessee, part of the land was purchased in the years 1994 and 1997. Certain other lands were received on partition of ancestral properties. The assessee's claim of holding the land since 1994 is not controverted by the Ld. DR. The assessee has also produced RTC/ROR records in support of the ownership of the agricultural lands. Therefore, the fact that the assessee was holding agricultural land for several years cannot be ignored.

9.2 The assessee has explained that prior to the year under consideration, his source of income was agricultural activity. The assessee also stated that no ROI was filed in the earlier years because there was no taxable source of income requiring filing of the return. In our view, merely because agricultural income was not separately shown in the ROI for the year under consideration, the existence of agricultural land and the possibility of agricultural income cannot be completely disregarded.

9.3 We further notice that the business activity of the assessee commenced during the year under consideration. The assessee started trading in maize and other agricultural produce. A current bank account for the business was opened only on 17.10.2016. The assessee has also placed on record the VAT returns in support of the trading activity. The material shows that the business sales of Rs. 6,43,730/- were made during the last quarter of the financial year, namely, January to March 2017. The income from such business was offered to tax u/s 44AD of the Act. The assessee had declared business receipts of Rs. 6,43,730/- and income of Rs. 90,123/- u/s 44AD of the Act.

9.4 These facts are relevant. The current account was opened only on 17.10.2016, and the trading activity had commenced during the year. On the other hand, the agricultural land had been held by the assessee for several years. Therefore, the source of the cash available with the assessee cannot be examined only with reference to the newly commenced trading business.

9.5 The Ld. CIT(A) rejected the claim of agricultural income mainly for the reason that the RTC/ROR produced by the assessee did not contain the details of crops for the year under consideration and that agricultural income was not disclosed in the ROI. However, in our considered view, these circumstances by themselves are not sufficient to conclude that the assessee had no agricultural income at all. The ownership of substantial agricultural land is not in dispute. The assessee has also explained that the RTC/ROR was generated subsequently and therefore did not reflect the crop details for the relevant year. It was also submitted that the crop details for F.Y. 2016-17 were capable of verification from the Bhoomi portal maintained by the Government of Karnataka.

9.6 It is also relevant that the Revenue has not brought any material on record to show that the assessee had any other source from which unexplained money of Rs. 12,00,000/- could have been generated. The assessee was holding agricultural land for several years. His business commenced only during the year under consideration. In the preceding years, there is nothing on record to show the existence of any other taxable source of income. These surrounding circumstances cannot be ignored while considering the explanation of the assessee.

9.7 In the present case, the assessee has established the ownership of substantial agricultural land held for several years. There is no material to show any other source of income prior to commencement of the trading business. The trading business itself commenced only during the relevant year. The sales from such business were made in the last quarter and the income therefrom has been offered to tax u/s 44AD of the Act. In these circumstances, the explanation that the assessee had accumulated agricultural income and past agricultural savings cannot be rejected merely because agricultural income was not separately disclosed in the ROI.

9.8 We also find that out of the total cash deposit of Rs. 16,50,000/-, the AO himself accepted Rs. 4,50,000/- as explained with reference to the cash withdrawals made shortly before demonetisation. The balance amount of Rs. 12,00,000/- was treated as unexplained only because the agricultural source was not accepted. Considering the agricultural landholding of the assessee, the absence of any other established source of income in the earlier years, the commencement of the trading business only during the year, and the overall facts and circumstances, we are of the view that the explanation furnished by the assessee is reasonable and probable.

9.9 Therefore, on the peculiar facts of the case, the cash deposit of Rs. 12,00,000/- is reasonably explained as arising out of agricultural income earned during the year and agricultural savings accumulated from the earlier years. Accordingly, we set aside the finding of the Ld. CIT(A) and direct the AO to delete the addition of Rs. 12,00,000/- made u/s 69A of the Act. Hence, the ground raised by the assessee is allowed.

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

Order pronounced in the open court on 5th October, 2026.

Sd/- Sd/- KESHAV DUBEY WASEEM AHMED JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore Dated: 5th October, 2026 Vms Copy to: GANDODI JAYANNA, D NO.36, WARD NO.2 MORABA KUDLIGI 1 TALUK, BALLARI-583135, KARNATAKA

INCOME TAX OFFICER, WARD-1 & TPS, AYAKAR BHAVAN, M J NAGAR, 1ST 2 CROSS,DAM ROAD,, HOSPET-583203, KARNATAKA

3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE By Order

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

P G Digitally signed by P G RAJANI RAJANI Date: 2026.10.22 15:54:44 +05'30' 8

More judgments on Section 69A

All 15,297 judgments and leading authorities on Section 69A →

Recent GST High Court judgments

Search GST case law →