Mayanna Jayaram Amithanjali Vs ITO (ITAT Bangalore)
Bangalore ITAT Remands Section 69A Addition; Directs Verification of Claim That Cash Deposits Belonged to Mother-in-Law’s Liquor Business
The Bangalore Bench of the Income Tax Appellate Tribunal considered the appeal of Mayanna Jayaram Amithanjali for Assessment Year 2020-21 against the order dated 15 October 2025 passed by the National Faceless Appeal Centre, which had upheld the assessment order dated 19 February 2025 passed under sections 147 read with 144 and 144B of the Income-tax Act, 1961. The appeal before the Tribunal was delayed by two days, which was condoned after the Tribunal found sufficient cause.
The reassessment proceedings originated from information received by the Income Tax Department regarding cash deposits of Rs. 81,19,700 in the assessee’s Axis Bank account. A notice under section 148A(b) was issued on 28 February 2024. As there was no response, notice under section 148 followed. The assessee subsequently filed a return on 25 March 2024 declaring income of Rs. 4,71,289 under section 44AD on gross business receipts of Rs. 36,25,300. Since the assessee did not respond to subsequent statutory notices and reminders, a show-cause notice under section 144 was issued on 9 December 2024. In response dated 28 January 2025, the assessee submitted financial records relating to her mother-in-law, Smt. M. H. Padmavathi, and her husband, Shri K. S. Raghu Kumar.
According to the assessee, the cash deposits were made on behalf of her mother-in-law, who carried on a liquor business through licensed liquor shops. It was explained that during the period when Smt. Padmavathi was hospitalized and unwell, business cash collections were temporarily deposited into the assessee’s bank account for operational convenience. The deposits were stated to have been utilized for purchase of liquor stock from Karnataka State Beverages Corporation Limited and for payment of salaries and other business expenses. The Assessing Officer sought additional details, including the income-tax return, bank accounts, audit report, cash book, bank reconciliation and bank statements of Smt. Padmavathi. Although certain accounts and audit records were furnished, the Assessing Officer held that no bank-wise reconciliation linking the deposits with the sales disclosed in Smt. Padmavathi’s return had been produced and that complete bank statements were not furnished. Consequently, total bank credits of Rs. 1,15,45,327, comprising the original cash deposits and additional credits noticed during reassessment, were treated as unexplained money under section 69A. After considering the returned income, the total income was assessed at Rs. 1,20,16,620.
Before the Commissioner (Appeals), the assessee reiterated that the deposits represented funds belonging to her mother-in-law and that some credits represented amounts received from her husband for household and business-related expenses. The assessee furnished a balance sheet of Smt. Padmavathi, trading and profit and loss account, a fourteen-page liquor purchase ledger showing purchases from Karnataka State Beverages Corporation Limited during financial year 2019-20, and the tax audit report under section 44AB together with the trading account, profit and loss account and balance sheet of Guru Shree Wines, the proprietary concern of Shri K. S. Raghu Kumar. The Commissioner (Appeals), however, upheld the assessment, holding that the assessee had failed to explain the source of the credits appearing in her bank account during the financial year.
Before the Tribunal, the authorised representative filed written submissions along with an 80-page paper book. It was contended that the deposits did not represent the assessee’s undisclosed income but consisted substantially of cash collections and business funds of Smt. Padmavathi, who conducted liquor business through two licensed shops. Owing to her illness, the assessee’s bank account was used temporarily for operational convenience, after which payments were made towards Karnataka State Beverages Corporation Limited, salaries and other business expenses. It was further submitted that part of the credits represented funds received from the assessee’s husband for household requirements and incidental business payments. The assessee relied upon financial statements, tax audit reports, trial balances, trading and profit and loss accounts, balance sheets and liquor purchase registers relating to Smt. Padmavathi and Shri K. S. Raghu Kumar. It was argued that the authorities had not questioned the existence or genuineness of the liquor business, the purchases from Karnataka State Beverages Corporation Limited or the financial records. According to the assessee, the addition had been made solely because complete bank-wise reconciliation, bank statements and contra ledger accounts had not been furnished. It was also submitted that the Commissioner (Appeals) had not conducted any further verification despite the material produced. Reliance was placed upon an affidavit of Smt. Padmavathi and the coordinate bench decision in Mala v. ITO (ITAT Bangalore), ITA No. 1956/Bang/2025 (Assessment Year 2017-18), dated 8 December 2025.
The Departmental Representative supported the orders of the Assessing Officer and the Commissioner (Appeals), submitting that the assessee had failed to establish the source of the cash deposited in her bank account.
After examining the material, the Tribunal noted that the assessee had produced her Axis Bank account showing deposits and payments made to Karnataka State Beverages Corporation Limited, the liquor purchase account of Guru Shree Bar and Restaurant, the return of income of Smt. M. H. Padmavathi for Assessment Year 2020-21 declaring total income of Rs. 31,07,310 and turnover of Rs. 8,53,70,599 with audited books of account, and an affidavit in which Smt. Padmavathi stated that she owned two licensed liquor shops, was unable to personally manage the business because of age and ill health, had used the assessee’s bank account only for operational convenience, and that the cash collections and payments related to her liquor business and had been recorded in her books of account. The Tribunal also noted the assessee’s reliance upon the coordinate bench decision in Mala v. ITO, wherein a similar issue had been restored to the Assessing Officer for verification.
The Tribunal observed that the issue requiring determination was whether the cash deposited in the assessee’s bank account was chargeable to tax in her hands. It held that the explanation furnished by the assessee required verification. It directed that if, upon examination, the Assessing Officer found that the cash deposited belonged to the assessee’s mother-in-law and formed part of the turnover accounted for in her hands, no addition would be warranted in the assessee’s hands. The Assessing Officer was directed to verify the relevant records, and the assessee was directed to produce the necessary documents to facilitate such verification. If the Assessing Officer concluded that the money belonged to the mother-in-law, the corresponding addition was directed to be deleted in the assessee’s hands. Accordingly, the Tribunal restored the matter to the file of the Assessing Officer and allowed the appeal for statistical purposes. The order was pronounced on 30 July 2026.
