ITAT Pune Restores Cash Deposit Case to AO

Sonu Goma Bhangale Vs ITO (ITAT Pune)

Assessee, an individual, did not file return for AY 2010-11. Based on cash deposits of Rs.42,64,155/- in Godavari Laxmi Co-op Bank, notice u/s 148 was issued. Assessee filed return declaring Rs.1,25,840/- as income & agricultural income of Rs.65,00,000/-. AO completed reassessment u/s 143(3) r.w.s.147 accepting the returned figures. Subsequently, PCIT revised this order u/s 263 on 30.03.2020 directing AO to verify the source of cash deposits & agricultural income claim. AO thereafter framed order u/s 147 r.w.s.263 making addition of Rs.47,57,055/- as unexplained cash credits & assessed income at Rs.48,82,895/-.

CIT(A) upheld the addition, holding that the claim of agricultural income was unsubstantiated. The order notes that assessee produced handwritten slips without dates, signatures or addresses, furnished no quantitative details of banana/cotton yield, & failed to submit any bills or vouchers for seeds, fertilizers, labour, irrigation or transportation. CIT(A) also noted no linkage between alleged agricultural receipts & bank deposits. The claimed Rs.10 lakh land-advance was held inconsistent & unproved. CIT(A) found repeated non-compliance of notices u/s 142(1) & confirmed invocation of section 68.

Before Tribunal, Assessee submitted that complete details—cash deposit/withdrawal summary, agricultural land documents (7/12 extract), & sale proceeds—were already furnished but not properly verified by AO despite explicit directions in the 263 order. Tribunal noted that the matter had undergone two rounds of assessment & a 263 revision, but AO still did not meaningfully verify agricultural operations, land holding, crop yield, cash flow pattern or the peak credit. Tribunal observed that even CIT(A) failed to evaluate these facts in a proper manner.

Given the serious factual disputes & availability of supporting material, Tribunal held that interest of justice required one more opportunity. Tribunal set aside CIT(A)’s order & restored matter to AO for de novo adjudication. AO was directed to examine agricultural produce, land holding, sale receipts, dates of deposits, & cash withdrawals & then pass a fresh order after granting due opportunity. Legal grounds were treated as not pressed since the matter was being remanded. Appeal allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal at the instance of the assessee is directed against the order of National Faceless Appeal Centre (NFAC)/ Commissioner of Income Tax (Appeals), Delhi [“CIT(A)”], dated 17/09/2025 passed under section 250 of the Income Tax Act, 1961 (“Act”), which is arising out of assessment order framed u/s.147 r.w.s. 263 of the Act, dated 22/09/2021 for the Assessment Year (AY) 2010-11.

2. Brief facts of the case are that assessee is an individual and did not file return of income for A.Y. 2010-11. Based on the information about cash deposit of Rs. 42,64,155/- in the savings bank account held with Godavari Laxmi Cooperative Bank, Jalgaon, the assessee was served notice u/s. 148 of the Act. In compliance to which, return of income was furnished on 24/07/2017 declaring income of Rs. 1,25,840/- and agricultural income of Rs. 65,00,000/-. The Ld.AO completed the assessment proceedings u/s.143(3) r.w.s. 147 of the Act vide order dated 22/12/2017 accepting the returned income. This reassessment order dated 22/12/2017 became subject matter of revisionary proceedings u/s. 263 of the Act. Ld. PCIT vide order dated 30/03/2020 has given directions to the Ld.AO for carrying out necessary verification of the source of alleged cash deposit and claim of agricultural income made by the assessee in the income tax return and accepted by the Ld.AO. In compliance to the directions given by the Ld. PCIT in the order u/s. 263 of the Act, Ld.AO again carried out assessment proceedings and concluded the proceedings making addition for unexplained cash deposit of Rs. 47,57,055/- and assessed the income of Rs.48,82,895/-

3. Dissatisfied with the action of Ld.AO, assessee preferred appeal before the Ld.CIT(A), however, addition made by the Ld.AO has been confirmed by the Ld.CIT(A) observing as follows:-

“I have carefully considered the facts of the case, the assessment order, the order of the learned PCIT u/s 263, and the elaborate submissions filed by the appellant during assessment as well as appellate proceedings. The issues for determination are whether the appellant has satisfactorily explained the nature and source of the cash deposits of Rs. 47,57,055/- in his bank account, and whether the Assessing Officer was justified in invoking section 68.

The appellant has claimed substantial agricultural income of Rs. 65 lakhs (net) from cultivation of banana and cotton. However, the evidentiary value of the materials produced is highly questionable:

- The receipts furnished are handwritten slips without date, PAN, address, or signature of purchasers. Several entries are overwritten and lack basic details to prove genuineness.

Mere ownership of agricultural land does not ipso facto prove earning of agricultural income of such magnitude. In absence of verifiable evidence, the claim is unsubstantiated and cannot be accepted.

The appellant has relied upon a registered sale deed to claim that Rs. 10,00,000/-received as advance should be treated as source of deposits. However:

The appellant has not reconciled this advance with bank deposits. No evidence was famished to establish that the said amount was indeed deposited in the same account.

The timing of receipt and its reflection in the bank account remains unproved.

Significantly, in his later explanation of deposits, the appellant himself omitted this advance, thereby creating inconsistency in his submissions.

Thus, the explanation regarding advance against land sale remains unsupported and cannot be accepted as a valid source.

The conduct of the appellant also merits consideration. The AO issued several statutory notices dated 05.08.2021, 17.08.2021, 26.08.2021, and 09.09.2021 under section 142(1), followed by a final show-cause dated 16.09.2021. Despite these opportunities, the appellant failed to file complete and credible evidence.

Though he cited health and technical difficulties, the fact remains that sufficient time was granted, and yet, no confirmations from purchasers, no genuine bills for inputs, and no reconciliation of deposits were produced. Non-compliance with statutory notices cannot be condoned when large unexplained deposits are in question. The burden of proof lies squarely on the assessee, and the failure to discharge it justifies the AO’s action.

In view of the above, the claim of agricultural income is unsubstantiated and the explanation regarding land advance is inconsistent and unproved. The failure to comply with notices demonstrates inability to substantiate claims. Mere ownership of land and age of the appellant cannot substitute the legal requirement of proof under section 68 of the Act. Therefore, The AO has rightly held that cash deposits of Rs. 47,57,055/- constitute unexplained cash credits u/s 68 of the Act.

4. Aggrieved with the order Ld.CIT(A), assessee is now in appeal before this Tribunal.

5. Learned counsel for the assessee apart from making the arguments on legal issue, further made reference to paper book running into 86 pages and submitted that assessee has all necessary details for sale of banana and cotton, cash deposits and withdrawal summary, and also 7/12 extract and that the source of alleged cash deposit is duly explained. He submitted that Ld.AO has not verified these details in proper manner and prayed for affording one more opportunity to go before the Ld.JAO.

6. On the other hand, Ld. Departmental Representative (DR) supported the order of Ld.CIT(A).

7. We have heard rival contentions and perused the records placed before us. The assessee is aggrieved with the findings of Ld.CIT(A) confirming the addition on an unexplained cash deposit of Rs. 47,57,055/-. On going through the history of this case, admittedly, assessee had passed through two rounds of assessment proceedings before the Ld.AO and also revisionary proceedings u/s. 263 of the Act before the Ld. PCIT. Learned counsel for the assessee submitted that cash withdrawal from bank from time to time and the source of cash deposits arising from the sale of agricultural produce has been placed before the lower authorities. It is also submitted that even the peak deficit is only Rs.6,90,000/- He also submitted that assessee holds 47 acres of agricultural land which is duly supported by 7/12 extract. We have also gone through the summary of cash deposits and withdrawal from bank, placed in paper book at page Nos. 75 & 76. Considering all these details, we find that Ld.AO has not carried out the verification properly as directed by the Ld. PCIT in the order u/s. 263 of the Act. Even Ld.CIT(A) has also not dealt with these facts in a proper manner in the impugned order.

8. Therefore, under these given facts and circumstances of the case, we deem it appropriate to afford one more opportunity to the assessee to place all these details before the Ld.JAO, who shall also go through these details properly and examine the details of sale of agricultural produce vis-à-vis land holding by the assessee and also examine cash deposits and withdrawal summary and thereafter decide the issue in accordance with law and pass a denovo assessment order. Though, assessee has not raised any specific legal ground, however during the course of hearing, he made submissions on legal issues, but fairly admitted that if the issue is restored to the file of Ld.AO for afresh adjudication, then does not intend to press the legal issue. Therefore, legal issues are dismissed as not pressed. Needless to mention that Ld.JAO shall grant fair opportunity of hearing to the assessee before framing assessment and assessee shall also not take unnecessary adjournments unless otherwise required for reasonable cause. The findings of Ld.CIT(A) are set aside. We, accordingly, allow the grounds of appeal for statistical purposes.

9. In the result, appeal of the Assessee is allowed for statistical purposes.

Order pronounced in the open Court on 27.11.2025.