Sayibbi Shaik Vs ITO (ITAT Visakhapatnam)
Summary: The Visakhapatnam ITAT restored to the Assessing Officer for de novo adjudication the issues concerning addition of ₹54,16,000 towards cash deposits under Section 69A, ₹10,00,000 towards time deposit under Section 69, and enhancement of ₹16,50,000 by the CIT(A) under Section 251(2), in respect of AY 2016-17. The assessee, a housewife and non-filer, had explained that ₹46,57,000 of the cash deposits represented cash withdrawn earlier from the very same bank accounts, while the balance of ₹7,59,000 was received from her husband and agricultural receipts, and had claimed that the fixed deposits were renewals of deposits made in earlier years. The AO rejected these explanations for want of supporting documentary evidence, and the CIT(A), after the assessee did not comply with notices issued on five occasions, confirmed the additions and enhanced the assessment by ₹16,50,000. Before the Tribunal, the assessee also challenged the reassessment proceedings and jurisdictional issues, while contending that the sources of the deposits had been explained. The Tribunal noted that, before the AO, the assessee had made only a bald assertion without relevant supporting evidence and that the proceedings before the CIT(A) had been ex parte. However, considering the assessee’s claim that the cash deposits arose from previous cash withdrawals and that the time deposit was a renewal, the Tribunal held that the assessee should receive one more opportunity to establish the sources. It therefore set aside the CIT(A)’s order and restored the issue to the AO for de novo consideration after providing one more opportunity to furnish relevant evidence, including a cash-flow statement explaining the sources of the cash and time deposits. The appeal was allowed for statistical purposes.
Visakhapatnam ITAT Restores ₹80.66-Lakh Bank Deposit Additions: Housewife Given Fresh Opportunity to Prove Cash Recycling, Spousal Gift and FD Renewal
The Visakhapatnam ITAT restored to the AO the additions concerning cash deposits of ₹54.16 lakh, a ₹10-lakh fixed deposit, and the CIT(A)’s enhancement of ₹16.50 lakh. The assessee, a housewife, contended that ₹46.57 lakh of the cash deposits arose from earlier withdrawals from the same bank accounts, while the balance represented amounts received from her husband and agricultural receipts. She also claimed that the ₹10-lakh fixed deposit was merely a renewal of an earlier deposit, and not a fresh investment during the relevant year.
The Tribunal observed that the assessee had made only a bald assertion before the AO without sufficient supporting evidence and had failed to participate in the appellate proceedings despite several notices, resulting in an ex parte order by the CIT(A). Nevertheless, considering her claim that the deposits could be reconciled through earlier withdrawals and that she had not received an effective opportunity to establish the sources, the Tribunal considered it appropriate to grant one final opportunity.
Accordingly, the CIT(A)’s order was set aside and the entire matter was restored to the AO for de novo adjudication. The assessee was directed to produce supporting evidence, including a proper cash-flow statement, bank records, evidence concerning amounts received from her husband and proof that the fixed deposit was only a renewal. The appeal was allowed for statistical purposes.
List of Cases Discussed / Relied Upon
- Smt. Prameela Pasumarthi Vs DCIT,(2025) 146 TLC 365; (2025) 180 taxmann.com 131 — cited in the assessee’s ground concerning issuance of reassessment notices by the Jurisdictional Assessing Officer under the faceless mechanism.
- Kankanala Ravindra Reddy Vs ITO,(2023) 156 taxmann.com 178 (Telangana) — cited in the assessee’s ground concerning jurisdiction of the JAO to issue reassessment notices under Section 151A.
- Sanath Kumar Murali Vs. Income-tax Officer,[2023] 152 taxmann.com 231 (Karnataka); [2023] 294 Taxman 80 (Karnataka); [2023] 455 ITR 370 (Karnataka) — cited in support of the contention concerning quantification of income chargeable to tax for reassessment under Section 149.
- GKN Drive Shaft (India) Ltd. vs ITO,259 ITR 19 (SC) — cited in the assessee’s grounds concerning supply of material/reasons and procedural requirements in reassessment proceedings.
- Kolakaluru Primary Agricultural Cooperative Credit Society Limited vs ITO,(2025) ITA No.456/Viz/2025 dated 05/12/2025 — cited in the assessee’s ground concerning issuance of reassessment notices by the JAO/FAO.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 25.11.2025, pertaining to the assessment year 2016-17.
2. The grounds raised by the assessee read as under:
“1. The order of Ld. AO (NFAC) u/s 147 rms 143(3) rws 144B and appellate order u/s 250 is contrary to the facts and law applicable to the facts of the case.
2. Double taxation Impermissible in IT Act:
The Ld. CIT(A) has grossly erred in enhancing unknown credit of Rs. 16,50,000/- without bringing the document/entry on record without informing by way of questionnaire in any annexure & wrongly made addition & without calling for any explanation arbitrarily for the cash deposits of Rs. 16.50 Lacs without supplying a documentary evidence as per the Hon’ble SC in GKN drive shafts India Ltd vs ITO (2002) 159 ITR 19, and the same is not as per the provisions of sec 148A rws 147 rws 1448, as the amount of Rs. 16,50,000 is infact included in Rs. 54,16,000 as assessed by Ld AO (NFAC), and without any findings or contrary documentary evidence confirming the addition as per the order of Ld. AD of Rs. 54,16,000/-is null & void.
3. Notices issued by JAO without Jurisdiction;
The Ld AO has erred in applying correct law while doing assessment as JAO has issued notices u/s 148A to Sec 148 without having jurisdiction and has violated the provisions of sec 1448 as FAO has the authority the jurisdiction to issue such notices and the Ld JAO cannot issue such notices and is violative of sec 151A. Therefore, the same is not as per the Jurisdictional AP HC decision wrt JAO & FAO issue as was held in –
-Andhra Pradesh High Court in SMT. PRAMEELA PASUMARTHI vs. DCIT vide (AP. HC):(2025) 146 TLC 365:(2025) 180 taxmann.com 131) on 28 October, 2025.
–Hon’ble High Court of Telangana in the case of Kankanala Ravindra Reddy Vs. ITO & 2 Others, Writ Petition Nos 25903 of 2023, dated 14.09.2023.
-Kolakaluru Primary Agricultural Cooperative Credit Society Limited vs ITO, (2025) ITA No.456/Viz/2025 dated 05/12/2025
4. Presumption of “Income escaped” of Rs. 50 Lacs and mismatch in findings:
The Ld AO (NFAC) has wrongly made presumption of entire cash deposits as Income, since the same may be in the nature of Gift, Agricultural income / exempted income or non-taxable income or a capital receipt and hence Ld AO without bring any thing on record to say these is bad in the eyes of the law as there is no findings at all than just an allegation, and also Ld AO has not appreciated the fact that the element of “income” in “Income escaped” had to be quantified and has to demonstrate the same without an IOTA of doubt u/s 148A(d) before passing an order.
This was held in Hon’ble Karnataka High Court in the case of Sanath Kumar Murali vs. Income-tox Officer [2023] 152 taxmann.com 231 (Karnataka)/[2023] 294 Taxman 80 (Karnataka)/[2023] 455 ITR 370 (Karnataka)[24-05-2023) in support of the assessee’s contention.
The extract of relevant portion
“18. Accordingly, in the present case, the wards found in Section 149 which is ‘Income chargeable to tax must be read in terms of ‘income’ as arising out of the ‘Capitol Goins’ es provided under Section 48 and this is the only manner of understanding the words, ‘Income chargeable to tax under Section 149(1)(b) of 1.T. Act.
19. The contention of the Revenue that under Section 149 what is required to be taken note of, is the income thot has escaped assessment’ being the entirety of sole consideration of Rs.55,77,700/- cannot be accepted, in light of the express words in the statutory provision Income chargeable to tax…… which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more’. It cannot be stated that since the stage at which the notice is issued is at a premature stage, the entirety of consideration of Rs.55,77,700/- ought to be token note of. A plain reading of Section 48 would provide that the entirety of sole consideration does not constitute ‘income. The memorandum explaining the provisions of Finance Act, 2021 does not in any way lead to giving a different interpretation to the words, “income chargeable to tax. The words used under Section 149 for the purpose of extended time limit is to be interpreted in terms of the plain wordings of Section 149 and cannot be construed differently while relying on any executive instruction.
6. Mechanical approvals obtained and not shared with assessee:
The Ld. JAO had erred in obtaining the approval from higher authority being mechanical & without application of mind and not reproduced in assessment order to check the directions issued makes the entire assessment null & void.
7. Null findings of Ld AO (NFAC)
The Ld AO has erred in reclassifying the Cash deposits in Bank as “Income Escaped” as per the dumb chart provided in SCN u/s 148A(b), without bringing contrary evidence, even otherwise sec 148A(a) becomes mandatory which the Ld AO has not issued for enquiry as per prescribed procedure to be issued in case of doubts.
8. HIGH PITCHED ASSESSMENT & NON-APPLICATION OF MIND:
The Ld AO (NFAC) has erred in not applying his mind and passed the impugned erroneous order/intimation u/s 147 rws 144 rws 1448 summarily on suspicion & in arbitrary manner being a high pitched assessment without providing bank statements & other documents gathered and without sharing those documents gathered for formation of belief and Reason to believe for income escapement as per Hon’ble SC in GKN Drive shaft India Ltd vs ITO (2002) vide 259 ITR 19. Therefore, the assessment fails and void ab-initio. The Assessee has returned income of Rs. 4,04,080/-, whereas Ld AO has passed order 54,16,000/- as assessed Income, which is more than 13.5 times (high pitched), though a gift received from husband partly and balance cash deposits were from cash withdrawn from bank.
9. Wrong application of sec 69 & Illegal jurisdiction:
The Ld AO is not justified in adding the total credits in bank as “Unexplained Investment u/s 69 instead of Sec 69A (Unexplained money), except to the extent of Time deposits only, since the balance amount received through banking channel cannot be unexplained investment though being a gift from relative Le. Spouse of the assessee. Therefore, Ld AD adding entire credits without netting off cash withdrawals in the bank as deemed unexplained Investment, and Ld AO could have applied telescoping/Peak credit theory to the subject for making additions.
10. The Ld AO has levied interest on taxes erroneously u/s 234A & 2348 that may be waived, since the same was arising due to impugned additions in sec 147 rws 144 according to the wrong facts & observations as per the grounds mentioned above.
11. Any other ground that may be urged at the time of hearing.”
3. The brief facts of the case are that, the assessee is a housewife and did not file her original return of income u/s 139 of the Income Tax Act, 1961, for the assessment year 2016-17. The assessment has been subsequently reopened on the basis of Insight Portal information, which suggests that the income chargeable to tax has escaped assessment in respect of cash deposits in bank accounts maintained with State Bank of India, Corporate Centre, and State Bank of Hyderabad, Gunfoundry Branch, and also on account of time deposit of Rs. 10,00,000/- with State Bank of India, Gurazala Branch. The information further showed that, the assessee had earned interest income, which was not offered to tax. Therefore, notice u/s 148 of the Act, dated 21.03.2023, was issued and served on the assessee. In response to the notice, the assessee filed her return of income, declaring total income of Rs. 4,04,080/-. The case was taken up for assessment, and during the course of assessment proceedings, the A.O. noticed that, the assessee had entered into various financial transactions, including cash deposits into different bank accounts maintained with different branches of the banks, and also made term deposit with the bank, and therefore called upon the assessee to file relevant details to explain the source. In response, the assessee submitted that, she had made total cash deposits of Rs. 54,16,000/- into different bank accounts, out of which Rs. 46,57,000/- was from the cash withdrawn from the very same bank accounts. The balance amount of Rs. 7,59,000/- was received from her husband and agricultural receipts. Insofar as the fixed deposits are concerned, she claimed that, the fixed deposits were not made during the relevant financial year and that the fixed deposits standing in her name were renewals of fixed deposits made in earlier years.
4. The A.O., after considering the submissions of the assessee, observed that, although the assessee claimed that the cash deposits were out of cash withdrawals from the very same bank accounts and that the balance amount was received from her husband and agricultural receipts, she failed to substantiate the claim with relevant supporting documentary evidence. The A.O. further noted that, the assessee had also failed to furnish the ITR and bank statement of her husband to explain the nature and source of cash and to establish the identity, creditworthiness, and genuineness of the cash transaction. The A.O. further observed that, the assessee should have furnished details of agricultural land, documentary evidence, and details of agricultural activity and produce to establish her claim. Since the assessee failed to establish the nature and source of the cash deposits with supporting documentary evidence, the A.O. rejected the explanation of the assessee and made an addition of Rs. 54,16,000/- towards unexplained cash deposits in the bank accounts u/s 69A of the Income-tax Act, 1961, and an addition of Rs. 10,00,000/- towards unexplained investment in time deposit with State Bank of India, Gurazala Branch, u/s 69 of the Act.
5. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A) and raised various grounds challenging the additions made by the A.O. During the appellate proceedings, the case was posted for hearing on five occasions, but there was no compliance from the assessee. The assessee neither submitted any details nor sought any adjournment in response to the notices issued. Therefore, the Ld. CIT(A), after considering the relevant material available on record, confirmed the additions made by the A.O. towards cash deposits of Rs. 54,16,000/- in the bank accounts and time deposits of Rs. 10,00,000/-. The Ld. CIT(A) further enhanced the assessment by Rs. 16,50,000/- u/s 251(2) of the Act, on the ground that certain information forming part of the information on the basis of which the assessment proceedings were initiated had not been considered by the A.O. The Ld. CIT(A) issued notice u/s 251(2) of the Act, on 13.11.2025, requiring the assessee to furnish clarification by 20.11.2025, however, the assessee did not comply with the said notice. Accordingly, the Ld. CIT(A) directed the A.O. to enhance the income by a further sum of Rs. 16,50,000/-.
6. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
7. The learned counsel for the assessee, Shri M. Muralidhar, C.A., referring to various grounds, including the legal ground challenging the initiation of reassessment proceedings u/s 147 of the Act, submitted that the A.O. had failed to establish escapement of income with reference to the information available for reopening of the assessment and, thus, the reopening of the assessment, in the given facts of the present case, is invalid. The learned counsel for the assessee further submitted that, the assessee is a housewife, earns interest income and agricultural income, and the source for the cash deposits into the bank accounts has been explained as being out of cash withdrawn from the very same bank account on earlier occasions, for which the assessee had furnished the relevant cash flow statement. Further, the assessee had also explained the source as being out of the amount received from her husband, for which the assessee had furnished the relevant details. The Ld. CIT(A), after considering the relevant submissions, simply sustained the addition made by the A.O. and also enhanced the assessment, even though the source for the cash deposits into the above bank account was out of withdrawals of cash from another bank account. Therefore, he submitted that, the addition made by the A.O. should be deleted and the enhancement of Rs. 16,50,000/- should also be deleted.
8. The learned senior AR for the Revenue, Shri A.P. Babu, on the other hand, supporting the order of the A.O., submitted that before the A.O., the assessee could not file relevant evidence to support her claim regarding the source of cash deposits and time deposits in the bank accounts. He further submitted that, before the Ld. CIT(A) also, despite issuance of notices on various occasions, there was no response from the assessee. From the above, it is very clear that, the assessee does not have anything to say regarding the cash deposits and time deposits. The Ld. CIT(A), after considering the relevant facts, has rightly sustained the additions made by the A.O. and also enhanced the assessment in respect of cash deposits into the bank accounts. Therefore, he submitted that the order of the Ld. CIT(A) should be upheld.
9. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee is a non-filer and had not filed any return of income for the year under consideration u/s 139 of the Act. It is also not in dispute that the assessee had filed return of income in response to notice u/s 148 and declared total income of Rs. 4,14,078/-, which included agricultural income, interest income from bank deposits, interest income from savings bank account and other income. The A.O. made an addition of Rs. 54,16,000/- towards cash deposits into bank accounts on the ground that the assessee had failed to substantiate the source of the cash deposits with relevant supporting evidence. The A.O. had also made an addition of Rs. 10,00,000/- towards time deposit with SBI, Gurazala, as the assessee had failed to substantiate the source of the said deposit. Before the Ld. CIT(A), the case was posted for hearing on various occasions, providing sufficient opportunities to the assessee to furnish the relevant details to substantiate her case. However, the assessee neither furnished any details nor sought any adjournment. Therefore, the Ld. CIT(A) sustained the additions made by the A.O. towards cash deposits and time deposit and also enhanced the assessment by Rs. 16,50,000/- u/s 251(2) of the Act. The learned counsel for the assessee has put forth multiple arguments in support of his claim and also explained the source of the cash deposits into the bank accounts and time deposit. He also claimed that the assessee had explained the source of the cash deposits as being out of previous cash withdrawals from the very same bank accounts. Further, the time deposit made with SBI, Gurazala was only a renewal of the earlier fixed deposit made in the earlier financial years, and this fact had been explained to the A.O.
10. We find that, before the A.O., except for making a bald statement, the assessee had not submitted any relevant supporting evidence to substantiate her claim regarding the source of cash deposits into the bank accounts and time deposits. Before the Ld. CIT(A), the proceedings were ex parte, and the assessee had not submitted any details. Since the assessee claims to have explained the source as being out of previous cash withdrawals, and the proceedings before the Ld. CIT(A) were ex parte, and the assessee did not get an effective opportunity to demonstrate the source for cash deposits and time deposits, in our considered view, in order to give one more opportunity of hearing to the assessee, the issue needs to be set aside to the file of the A.O. Thus, we set aside the order of the Ld. CIT(A) and restore the issue to the file of the A.O., and the A.O. is directed to reconsider the issue de novo after providing one more opportunity to the assessee to file relevant evidences, if any, in support of her claim. The assessee is also directed to submit relevant evidence, including a relevant cash flow statement, if any, to explain the source for cash deposits into the bank accounts and source for time deposits. We order accordingly.
11. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 25th August, 2026.
