Nagaraj Yasodha vs. PCIT (ITAT Bangalore)
AO’s Mechanical Acceptance of Affidavit Fatal: 263 Revision Upheld in Cash Deposit Case – ITAT Bangalore
The Bangalore Bench of the ITAT, in Shri Nagaraj Yasodha vs. Pr. CIT, Bangalore (ITA No.1150/Bang/2025, AY 2015-16, order dated 19-12-2025), upheld the revisionary action u/s 263, holding that the Assessing Officer had passed the reassessment order without proper enquiry into the source of large cash deposits.
In this case, reassessment was initiated on account of cash deposits of ₹75.10 lakh in the assessee’s bank account. During reassessment proceedings, the assessee explained the deposits as arising from sale of agricultural land and past savings, supported mainly by an affidavit and certain documents. The AO accepted the explanation and completed the assessment without making any addition.
The Principal CIT, however, found that the AO had failed to conduct meaningful verification, especially since (i) substantial cash deposits were made prior to the date of sale of land, (ii) the sale consideration was far lower than the cash deposited, and (iii) the assessee’s share in the land was only ₹18 lakh, whereas deposits far exceeded this amount. The AO had merely relied on the affidavit without calling for corroborative evidence.
The Tribunal agreed with the Pr. CIT that this amounted to lack of proper enquiry, rendering the assessment order erroneous and prejudicial to the interest of Revenue. Accordingly, the ITAT upheld the order passed u/s 263 and dismissed the assessee’s appeal
FULL TEXT OF THE ORDER OF ITAT BANGALORE
