ITAT Bangalore overturns unexplained cash addition for Rs 25 lakh deposit
The Bangalore Income Tax Appellate Tribunal ruled that a Rs 25 lakh cash deposit by Mrs Nagarathna was satisfactorily explained, reversing the tax addition under Section 69.
In 2016 Mrs Nagarathna deposited Rs 25 lakh in cash at the Corporation Bank branch on Nrupathunga Road, prompting the Koramangala tax officer to reopen her file and label the amount unexplained under Section 69, citing a nearby property sale. The addition was upheld by the Commissioner of Appeals, leading her to appeal to the ITAT Bangalore. Her counsel, Dr Sheetal Borkar, presented bank and loan statements showing withdrawals of Rs 13.17 lakh and Rs 11.95 lakh by her and her husband, respectively, saved for a house purchase.
The tribunal, referencing a Karnataka High Court precedent, held that a gap between withdrawals and redeposit does not invalidate the explanation absent concrete proof of undisclosed income. Consequently, the addition was removed and her appeal granted on August 17 2026.
Why it matters
The ruling clarifies how cash deposits linked to prior withdrawals can be accepted as legitimate, affecting future tax assessments.
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