Unexplained Cash Deposits: ITAT Upholds Addition After Assessee Fails to Prove Source

The Income Tax Appellate Tribunal (ITAT), Delhi Bench has upheld an addition of Rs. 61.70 lakh made by the Assessing Officer on account of unexplained cash deposits in a bank account, observing that the assessee failed to provide credible evidence regarding the source of the funds and offered contradictory explanations during the proceedings. The bench of Challa Nagendra Prasad (Judicial Member) and M. Balaganesh (Accountant Member) has observed that the assessee had taken multiple inconsistent stands regarding the source of the cash deposits, initially claiming the deposits were from sale of agricultural land, later stating that he did not own agricultural land, and Subsequently asserting that the money belonged to his mother. The dispute relates to Assessment Year 2009–10. The Assessing Officer received Annual Information Return (AIR)information showing that the assessee had deposited ₹61,70,000 in cash in a savings bank account maintained with Indian Bank during the relevant financial year. Several statutory notices were issued to the assessee seeking an explanation regarding the source of the deposits. However, the assessee neither filed a return of income nor responded adequately to the notices. Subsequently, reassessment proceedings were initiated under Section 148 of the Income-tax Act, 1961 after the Assessing Officer recorded reasons and obtained the necessary approval from the competent authority. During reassessment, the assessee claimed that the cash deposits represented sale proceeds from agricultural land. However, he failed to submit any documentary evidence such as land ownership documents or sale deeds to substantiate this claim. Consequently, the Assessing Officer completed the assessment under Section 144 read with Section 147 and treated the cash deposits of ₹61.70 lakh as unexplained income. Aggrieved by the assessment order, the assessee filed an appeal before the National Faceless Appeal Centre (NFAC)and submitted additional evidence under Rule 46A of the Income Tax Rules. Interestingly, during the appellate proceedings the assessee changed his earlier explanation, stating that He did not own any agricultural land, and The cash deposits actually belonged to his mother, who had deposited the money in the joint bank account. The Commissioner (Appeals) called for a remand report from the Assessing Officer to verify these claims. During verification, the department found that a letter submitted by the assessee — purportedly addressed to the Sub-Registrar complaining about undervaluation of agricultural land purchased by a university — was forged. The Sub-Registrar confirmed that no such complaint had been received from the assessee. The appellate authority also noted that the bank account in question was a joint account held by the assessee, his mother, and his late father, with an operating mandate of “either or survivor”. Separate proceedings had also been initiated in the case of the assessee’s mother concerning the same deposits. Considering the inconsistent explanations and lack of credible evidence, the Commissioner (Appeals) dismissed the appeal. While examining the case, the ITAT observed that the appellate authority had carefully considered the remand reports and the documents placed on record. The bench further observed that despite being granted several opportunities during assessment and appellate proceedings, the assessee failed to produce any documentary evidence supporting his claims. The tribunal concluded that the findings of the Commissioner (Appeals) were well-reasoned and based on proper verification of facts. As the assessee could not produce any evidence before the tribunal to contradict these findings, the bench held that no interference was warranted. The ITAT dismissed the appeal and upheld the addition of ₹61.70 lakh as unexplained cash deposits. Case Details Case Title: Kuldeep Versus CIT Citation: JURISHOUR-331-ITA-2026(DEL) Case No.: ITA No. 2963/Del/2023 Date: 11/03/2026 Counsel For Appellant: None Counsel For Respondent: Shri Om Prakash, Sr. DR Click Here To Read Order Read More: Reassessment Based Solely on Investigation Wing Report Without Independent Application of Mind Is Invalid: ITAT

Unexplained Cash Deposits: ITAT Upholds Addition After Assessee Fails to Prove Source

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