Man wins Rs 14L unexplained cash case for this..
The Income Tax Appellate Tribunal (ITAT) Bangalore has granted a taxpayer’s appeal, stating that Section 69A (which deals with unexplained cash deposits) is only applicable when the taxpayer is identified as the owner of the unexplained money. However, in this case the taxpayer's records showed this cash in his books and they were audited also.
The case was brought to ITAT Bangalore, after Mr. Srinivasappa, a petrol pump owner from Chikkaballapur Taluk, Karnataka. He had appealed against an order issued by an income tax assessing officer (AO) wherein the tax officer had added Rs 14.1 lakh to his income, citing unexplained cash deposits under Section 69A of the Income-tax Act, 1961. The CIT (A) also upheld the tax officer's order.
The tax officer pointed out that Mr. Srinivasappa’s bank accounts reflected some cash deposits, namely Rs 7.4 lakh in SBI and Rs 6.7 lakh in HDFC Bank and thus the tax officer classified these amounts as unexplained money under Section 69A. The CIT(A) upheld this addition by holding that Mr. Srinivasappa failed to clarify the source of these cash deposits.
Chartered Accountant (Dr.) Suresh Surana says that in this case [ITA No. 1118/Bang/2025, AY 2017–18], the Assessing Officer (AO) noticed certain cash deposits totaling Rs 14.10 lakh in the assessee’s (Srinivasappa) SBI and HDFC bank accounts and treated the same as unexplained money under Section 69A of the Income-tax Act, 1961. The CIT(A) upheld this addition, observing that the assessee (Srinivasappa) had not satisfactorily explained the source of these deposits.
According to Surana, the assessee (Srinivasappa) is a proprietor of a petrol pump business with a turnover exceeding Rs 37 crore. He contended before the Tribunal that all the alleged cash deposits were duly recorded in his books of account, which were audited under the tax act. Srinivasappa even furnished detailed cash books, reconciliation statements, and date-wise summaries to demonstrate that the deposits were part of his business receipts. He further pointed out that the AO had not even mentioned the specific bank account numbers or identified the deposits accurately, despite the presence of multiple accounts with large turnover.
According to Surana, the Bangalore ITAT found that the AO’s addition was factually unsustainable and legally incorrect. It held that since the assessee’s (Srinivasappa) books of account were properly maintained, audited, and produced, and the cash deposits in question were reflected in those books, the provisions of Section 69A were inapplicable.
The Tribunal observed that the AO had not provided any clear basis for alleging that the cash deposits were unexplained particularly when the total deposits across the assessee’s bank accounts ran into several crores, making the disputed figure of Rs. 14.10 lakh insignificant in context.
The ITAT also noted that the AO had not identified the specific bank account number or verified the entries in the cash book before drawing conclusions. Once the assessee had furnished complete evidence, including the audited financials and reconciliation statements, there was no justification to remand the matter or sustain the addition.
According to Surana Srinivasappa, the taxpayer won the case because the ITAT Bangalore concluded that the cash deposits were fully explained through the books of account and thus fell outside the scope of Section 69A.
Surana says: "This section applies only when the money is not recorded in the books and the source remains unexplained. In the given case, the assessee’s (Srinivasappa) audited records clearly reflected the deposits as part of regular business receipts, and no discrepancies were identified. Accordingly, the addition of Rs. 14.10 lakh was held to be unwarranted and unsustainable, and the Tribunal directed its deletion in full, reaffirming that Section 69A cannot be invoked where the source of cash is already accounted for in the taxpayer’s regular books."
Also read: Landowner earns Rs 1.82 crore from mango sales, tax dept issues notice and adds Rs 1.2 crore as unexplained cash credit; ITAT Bangalore gives relief
Srinivasappa runs a petrol pump business with a turnover over Rs 37 crore
Before the ITAT Bangalore, the Authorised Representative (AR) of Srinivasappa filed a detailed paper book consisting of 163 pages.
Mr. Srinivasappa has demonstarted that all relevant details were submitted to the CIT(A) beforehand. These details included summaries of cash balances organised by date and the cash book, where the cash deposits were accurately recoded. Mr. Srinivasappa operates a petrol pump business with a turnover exceeding Rs 37 crore. The books of accounts are duly audited. The disputed deposits are reflected in these books and in the income tax return (ITR).
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Additionally, Mr. Srinivasappa pointed out that the tax officer has not specified any particular bank account number where the supposed cash deposits were made. As such, there are significant deposits in the bank accounts running into several crores. Hence, the figures quoted by the tax officer appears inconsistent. This indicates a lack of thorough consideration by the tax officer.
On the other hand, the ld. Departmental Representative (DR) argued that since the assessee (Srinivasappa) did not cooperate at earlier stages, the case should be sent back to the AO for a fresh review.
Also read: Wife gets tax notice for purchasing Rs 51 lakh property but not filing ITR, she fights back and wins in ITAT Ahmedabad
ITAT Bangalore says this about the cash
ITAT Bangalore in its judgement (ITA No.1118/Bang/2025) dated October 8, 2025 said that from the preceding discussion, they note that the assessee (Mr. Srinivasappa) has filed the ITR declaring an income of Rs 32 lakh (32,76,230) against the turnover of Rs 37 crore (37,21,21,916).
ITAT Bangalore said that it is also the admitted position that the books of accounts of the assessee (Mr. Srinivasappa) are duly audited. According to the assessee (Mr. Srinivasappa), the cash deposits in the SBI bank account runs into several crores of rupees especially in the OD account.
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ITAT Bangalore said that besides, there were two more bank accounts in the SBI where the cash deposits were of few thousand rupees only in the year under dispute. Thus, it was contended by the assessee (Mr. Srinivasappa) that the basis of alleging that there is cash deposited in the SBI bank account amounting to Rs 7.4 lakh is vague and without any basis.
ITAT Bangalore said that similarly, the cash deposits in the HDFC bank account were much more than the amount alleged by the tax officer (AO).
ITAT Bangalore says: “Accordingly, we are of the view that the basis of alleging unexplained cash deposit in the bank account of the assessee and treating the same as unexplained money under section 69A of the Act is devoid of any merit, particularly in the circumstances when the AO has not referred the cash deposit in any particular bank account number. As such, there was no bank account number mentioned by the AO except the name of the bank where cash was deposited. Accordingly, we do not find any merit in the finding of the authorities below.”
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ITAT Bangalore judgement
ITAT Bangalore said that it is also pertinent to note that the question arises whether Revenue (income tax department) should be given another opportunity when the assessee (Mr. Srinivasappa) has already filed all necessary details.
ITAT Bangalore said: “In our considered view, once the assessee (Mr. Srinivasappa) has furnished complete evidence such as audited accounts, cash book, and reconciliation, there is no justification to remand the matter. The addition is made on the same cash which is recorded in the books. The net cash position is already disclosed. When the cash deposits are fully explained through the books of accounts, section 69A has no application.”
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ITAT Bangalore said: “Section 69A applies only when the assessee is found to be the owner of unexplained money not recorded in the books. That is not the case here. Therefore, we are of the clear view that the addition was made by the AO and confirmed by the ld. CIT(A) is not sustainable either in fact or in law. Hence, the addition of Rs 14,10,000 is hereby deleted. Thus, the ground of appeal of the assessee is hereby allowed. In the result, the appeal of the assessee is hereby allowed. Order pronounced in court on 8th day of October, 2025.”
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When is Section 69A invoked?
Surana says that Section 69A provides that if an assessee is found to be the owner of any money, bullion, jewellery, or valuable article that is not recorded in the books of account, and the assessee cannot satisfactorily explain the source, the value of such assets may be deemed to be the income of the assessee for that financial year. In essence, the section applies only when:
The case was brought to ITAT Bangalore, after Mr. Srinivasappa, a petrol pump owner from Chikkaballapur Taluk, Karnataka. He had appealed against an order issued by an income tax assessing officer (AO) wherein the tax officer had added Rs 14.1 lakh to his income, citing unexplained cash deposits under Section 69A of the Income-tax Act, 1961. The CIT (A) also upheld the tax officer's order.
The tax officer pointed out that Mr. Srinivasappa’s bank accounts reflected some cash deposits, namely Rs 7.4 lakh in SBI and Rs 6.7 lakh in HDFC Bank and thus the tax officer classified these amounts as unexplained money under Section 69A. The CIT(A) upheld this addition by holding that Mr. Srinivasappa failed to clarify the source of these cash deposits.
Chartered Accountant (Dr.) Suresh Surana says that in this case [ITA No. 1118/Bang/2025, AY 2017–18], the Assessing Officer (AO) noticed certain cash deposits totaling Rs 14.10 lakh in the assessee’s (Srinivasappa) SBI and HDFC bank accounts and treated the same as unexplained money under Section 69A of the Income-tax Act, 1961. The CIT(A) upheld this addition, observing that the assessee (Srinivasappa) had not satisfactorily explained the source of these deposits.
According to Surana, the assessee (Srinivasappa) is a proprietor of a petrol pump business with a turnover exceeding Rs 37 crore. He contended before the Tribunal that all the alleged cash deposits were duly recorded in his books of account, which were audited under the tax act. Srinivasappa even furnished detailed cash books, reconciliation statements, and date-wise summaries to demonstrate that the deposits were part of his business receipts. He further pointed out that the AO had not even mentioned the specific bank account numbers or identified the deposits accurately, despite the presence of multiple accounts with large turnover.
According to Surana, the Bangalore ITAT found that the AO’s addition was factually unsustainable and legally incorrect. It held that since the assessee’s (Srinivasappa) books of account were properly maintained, audited, and produced, and the cash deposits in question were reflected in those books, the provisions of Section 69A were inapplicable.
The Tribunal observed that the AO had not provided any clear basis for alleging that the cash deposits were unexplained particularly when the total deposits across the assessee’s bank accounts ran into several crores, making the disputed figure of Rs. 14.10 lakh insignificant in context.
The ITAT also noted that the AO had not identified the specific bank account number or verified the entries in the cash book before drawing conclusions. Once the assessee had furnished complete evidence, including the audited financials and reconciliation statements, there was no justification to remand the matter or sustain the addition.
According to Surana Srinivasappa, the taxpayer won the case because the ITAT Bangalore concluded that the cash deposits were fully explained through the books of account and thus fell outside the scope of Section 69A.
Surana says: "This section applies only when the money is not recorded in the books and the source remains unexplained. In the given case, the assessee’s (Srinivasappa) audited records clearly reflected the deposits as part of regular business receipts, and no discrepancies were identified. Accordingly, the addition of Rs. 14.10 lakh was held to be unwarranted and unsustainable, and the Tribunal directed its deletion in full, reaffirming that Section 69A cannot be invoked where the source of cash is already accounted for in the taxpayer’s regular books."
Also read: Landowner earns Rs 1.82 crore from mango sales, tax dept issues notice and adds Rs 1.2 crore as unexplained cash credit; ITAT Bangalore gives relief
Srinivasappa runs a petrol pump business with a turnover over Rs 37 crore
Before the ITAT Bangalore, the Authorised Representative (AR) of Srinivasappa filed a detailed paper book consisting of 163 pages.
Mr. Srinivasappa has demonstarted that all relevant details were submitted to the CIT(A) beforehand. These details included summaries of cash balances organised by date and the cash book, where the cash deposits were accurately recoded. Mr. Srinivasappa operates a petrol pump business with a turnover exceeding Rs 37 crore. The books of accounts are duly audited. The disputed deposits are reflected in these books and in the income tax return (ITR).
Also read: Retired employee denied tax exemption on Rs 13 lakh leave encashment, ITAT Jaipur restores tax benefit under new Rs 25 lakh limit
Additionally, Mr. Srinivasappa pointed out that the tax officer has not specified any particular bank account number where the supposed cash deposits were made. As such, there are significant deposits in the bank accounts running into several crores. Hence, the figures quoted by the tax officer appears inconsistent. This indicates a lack of thorough consideration by the tax officer.
On the other hand, the ld. Departmental Representative (DR) argued that since the assessee (Srinivasappa) did not cooperate at earlier stages, the case should be sent back to the AO for a fresh review.
Also read: Wife gets tax notice for purchasing Rs 51 lakh property but not filing ITR, she fights back and wins in ITAT Ahmedabad
ITAT Bangalore says this about the cash
ITAT Bangalore in its judgement (ITA No.1118/Bang/2025) dated October 8, 2025 said that from the preceding discussion, they note that the assessee (Mr. Srinivasappa) has filed the ITR declaring an income of Rs 32 lakh (32,76,230) against the turnover of Rs 37 crore (37,21,21,916).
ITAT Bangalore said that it is also the admitted position that the books of accounts of the assessee (Mr. Srinivasappa) are duly audited. According to the assessee (Mr. Srinivasappa), the cash deposits in the SBI bank account runs into several crores of rupees especially in the OD account.
Also read: Wife hid her Rs 1 lakh monthly salary; Madras High Court cuts her maintenance payment from Rs 15,000 to Rs 10,000
ITAT Bangalore said that besides, there were two more bank accounts in the SBI where the cash deposits were of few thousand rupees only in the year under dispute. Thus, it was contended by the assessee (Mr. Srinivasappa) that the basis of alleging that there is cash deposited in the SBI bank account amounting to Rs 7.4 lakh is vague and without any basis.
ITAT Bangalore said that similarly, the cash deposits in the HDFC bank account were much more than the amount alleged by the tax officer (AO).
ITAT Bangalore says: “Accordingly, we are of the view that the basis of alleging unexplained cash deposit in the bank account of the assessee and treating the same as unexplained money under section 69A of the Act is devoid of any merit, particularly in the circumstances when the AO has not referred the cash deposit in any particular bank account number. As such, there was no bank account number mentioned by the AO except the name of the bank where cash was deposited. Accordingly, we do not find any merit in the finding of the authorities below.”
Also read: Wife to get late husband’s job on compassionate grounds despite being over the eligibility age limit, Karnataka High Court order
ITAT Bangalore judgement
ITAT Bangalore said that it is also pertinent to note that the question arises whether Revenue (income tax department) should be given another opportunity when the assessee (Mr. Srinivasappa) has already filed all necessary details.
ITAT Bangalore said: “In our considered view, once the assessee (Mr. Srinivasappa) has furnished complete evidence such as audited accounts, cash book, and reconciliation, there is no justification to remand the matter. The addition is made on the same cash which is recorded in the books. The net cash position is already disclosed. When the cash deposits are fully explained through the books of accounts, section 69A has no application.”
Also read: Rs 80 lakh gift from brother-in-law lands man in tax trouble; here’s how he won the case
ITAT Bangalore said: “Section 69A applies only when the assessee is found to be the owner of unexplained money not recorded in the books. That is not the case here. Therefore, we are of the clear view that the addition was made by the AO and confirmed by the ld. CIT(A) is not sustainable either in fact or in law. Hence, the addition of Rs 14,10,000 is hereby deleted. Thus, the ground of appeal of the assessee is hereby allowed. In the result, the appeal of the assessee is hereby allowed. Order pronounced in court on 8th day of October, 2025.”
Also read: Retired govt employee claims Rs 20 lakh gratuity tax exemption; I-T Dept imposes Rs 2.2 lakh penalty; ITAT Cochin rules in her favour
When is Section 69A invoked?
Surana says that Section 69A provides that if an assessee is found to be the owner of any money, bullion, jewellery, or valuable article that is not recorded in the books of account, and the assessee cannot satisfactorily explain the source, the value of such assets may be deemed to be the income of the assessee for that financial year. In essence, the section applies only when:
- The assessee is found to be the owner of the money or asset;
- The item is not recorded in the books; and
- The assessee fails to provide a satisfactory explanation about its source.
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