Sakleshpur Niranjan Sowmya Vs ITO (ITAT Bangalore)
Catering Receipts and Grandmother’s Jewellery Offered to Explain ₹39.28 Lakh Cash Deposits: Bangalore ITAT Orders Verification
Confirmations and affidavits require examination; the assessee must establish the business, ownership of jewellery and cash transactions
A list of customers and purchaser affidavits may support an explanation for cash deposits, but their contents must be tested against the underlying transactions. The Bangalore ITAT adopted that approach in Sakleshpur Niranjan Sowmya v. ITO, ITA No. 549/Bang/2026, order dated 21 September 2026, for AY 2020–21.
The assessee sought to explain cash deposits of ₹39.28 lakh principally through catering receipts and the sale of jewellery said to have come from her grandmother. The Assessing Officer had added the deposits under section 69A, and the CIT(A) rejected her explanation. Before the Tribunal, the assessee produced confirmations and affidavits that had not been examined by the lower authorities. The Tribunal restored the cash-deposit issue to the AO for fresh adjudication. It did not delete the addition on the strength of those documents alone.
The assessee’s explanation
The assessee said she worked as a cook for old-age homes and families, undertook small catering assignments, and sold homemade products such as chutneys and pickles. During reassessment proceedings, she was asked to explain cash deposits and other bank transactions. She furnished bank statements, a computation and an affidavit referring to receipts from the sale of old jewellery. She also claimed income from catering work and employment with Rajlaxmi Traders.
The AO sought further documentary evidence, including party-wise details and the identities of buyers of gold and silver. He considered the material insufficient and treated ₹39,28,000 deposited in a co-operative bank and Karnataka Bank as unexplained. The order also records a separate addition of ₹4,678 towards bank interest. The assessment was completed on a total income recorded as ₹42,99,920.
In the first appeal, the assessee filed confirmation letters concerning catering receipts and jewellery sales. The CIT(A) was not satisfied that she had established a catering business with turnover of ₹17,30,000. It pointed, among other matters, to the absence of local approvals and details of expenditure on equipment and other requirements. The CIT(A) also rejected her explanation that the jewellery sold had been received from her grandmother and declined to admit additional evidence under Rule 46A.
What was placed before the Tribunal
Before the ITAT, the assessee gave a more detailed account of the claimed sources. Her representative attributed ₹17,30,000 to catering receipts and ₹18,35,750 to jewellery sales, and also referred to ₹3,62,250 as interest income. He relied on confirmations from persons said to have paid for catering services, an affidavit from the assessee’s father, details of the ornaments, and affidavits or confirmations from nine stated purchasers of gold.
The Department opposed the claim. It argued that the assessee had not adequately proved either that she conducted the asserted catering activity or that she possessed jewellery available for sale. In its view, the addition should remain.
The Tribunal recognised that the new documents were relevant to the source of the deposits, but found that they had not been verified by the lower authorities. It therefore required an examination of the people who issued the confirmations, the statements in the affidavits and the assessee’s complete computation.
Catering receipts: business and profit both require proof
For the claimed catering receipts, the Tribunal directed the AO to examine whether the assessee actually carried on the business, who engaged her services, what she received and what expenses she incurred. It placed the burden on the assessee to establish the activity, its gross receipts, the related expenditure and the persons for whom she catered.
This inquiry matters because explaining a bank deposit as a business receipt raises a further question about the income arising from that receipt. The Tribunal directed examination of both the origin of the money and the profit from the asserted activity. It did not accept the customers’ confirmations as conclusive merely because they had been filed.
Jewellery sales: ownership and purchasers must be checked
The assessee’s father stated in an affidavit that, after his mother’s death, the assessee received gold and silver articles. The assessee also identified nine persons to whom gold was said to have been sold for ₹18,35,750. The Tribunal directed the AO to verify whether she had received the ornaments from her grandmother and whether the alleged sales took place.
The stated purchasers had reportedly paid in cash. Their identity, ability to make the payments and the genuineness of the transactions therefore required examination. The assessee must support both ends of the explanation: possession of jewellery before the sale and receipt of sale proceeds from identifiable buyers.
The Tribunal restored the ground concerning the cash addition to the AO for a fresh decision. Its separate grounds challenging initiation of reassessment under section 148 were dismissed because they were not argued. The appeal was recorded as partly allowed.
Author’s comment
This decision offers the assessee an opportunity to prove her case; it is not a finding that the catering and jewellery explanations are true. The useful point is the Tribunal’s direction to examine relevant fresh evidence rather than resolve a substantial cash-deposit dispute without testing the named customers and purchasers.
A workable explanation on remand will require a transaction-wise reconciliation between dates of services or sales, cash receipts, bank deposits and the income offered to tax. For the jewellery, evidence of inheritance or prior possession and credible confirmation of each sale will be central. For catering, the scale of activity and related costs will need support. The result will depend on what that verification establishes.
Citation caution: The uploaded order gives inconsistent dates for the reassessment order and records a return-filing date that appears later than the assessment. Those procedural dates should be checked against the underlying notices and orders before being reproduced in a filing.
Cases Discussed
- CIT v. Orissa Corporations Private Limited, 156 ITR 78 — distinguished on the facts; the Tribunal held that the assessee could not derive benefit from the precedents relied upon unless the lower authorities first examined the facts and evidence produced by her.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT BANGALORE
1. This appeal is filed by Sakleshpur Niranjan Sowmya (assessee/appellant) for assessment year 2020-21 against the appellate order dated 15 December 2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [the ld CIT( A)], which dismissed the appeal filed by the assessee against the reassessment order dated 28 April 2025 passed under section 147 of the Income Tax Act read with section 1443 of the Act by the assessment unit of the Income Tax Department, determining the total income of the assessee at ₹ 4,099,920.
2. The Assessee has raised the following grounds of appeal:
1. The order passed by the Learned Assessing Officer u/s 147 and confirmed by the First Appellate Authority is bad in law.
2. The Notice issued by the Income Tax Officer, Ward-1, Hassan u/s 148 on 24.03.2024 is not valid and without jurisdiction.
3. The Learned Assessing Officer and FAA have erred in making addition of Rs. 39,28,000/- u/s. 69A of the Act.
4. The Appellant craves permission to add, delete or alter any of the grounds at the time of hearing.
3. Briefly stated, the assessee resides in Hassan, Karnataka, and works as a cook for old-age homes, dependent families, and small catering functions. She also sells homemade products such as chutneys and pickles. She had not filed any return of income up to assessment year 2020-21 and filed a return for the first time for that year. The Assessing Officer found that, during the year, the assessee had made cash deposits of ₹17 lakh in her bank account, time deposits of ₹90 lakh, and earned interest of ₹ 3,07,095. Since no return had been filed, reassessment proceedings were initiated by issuing a notice under section 148 of the Act on 24 March 2024. The assessee responded by filing her return on 17 October 2025, declaring income of ₹ 15,98,350. During the assessment proceedings, notices were issued calling for various details. The assessee furnished a computation of total income and bank statements, and was asked to explain the sources of the cash deposits, time deposits, and bank interest. On 13 December 2024, she submitted details of the time deposits and cash deposits, along with the computation of income and an affidavit regarding receipts from the sale of old jewellery. She also stated that she was engaged in a catering business and worked with Rajlaxmi Traders, earning salary income. The assessee was again asked to furnish party- wise details and documentary evidence, including details of the buyers of gold and silver. However, she did not provide the required evidence. The Assessing Officer also issued a notice under section 133(6) to the co- operative bank in which the sums were deposited. As the assessee failed to furnish concrete documentary evidence despite several notices, the Assessing Officer treated cash deposits of ₹ 39,28,000 in the co- operative bank and Karnataka Bank Limited as unexplained and also made an addition of ₹ 4, 678 towards bank interest. The Assessing Officer accordingly passed the assessment order on 28 February 2025, determining the assessee’ s total income at ₹ 42,99,920.
4. Aggrieved, the assessee appealed to the learned CIT(A), who, by order dated 15 December 2025, dismissed the appeal. Before the learned CIT(A), the assessee filed confirmation letters in support of receipts from catering services and the sale of gold ornaments, totalling ₹41,76,980. The learned CIT(A) held that the assessee had not produced evidence to establish that she was engaged in a catering business generating turnover of ₹17,30,000, particularly in the absence of approvals from local authorities or details of expenditure incurred on equipment and other requirements. Accordingly, the explanation regarding the catering business was rejected. The learned CIT(A) also rejected the explanation that the gold ornaments sold by the assessee had been received from her grandmother. The assessee’s application for admission of additional evidence under Rule 46A was likewise rejected. Consequently, the appeal was dismissed, and the assessee is now in appeal before us.
5. The learned authorised representative, Shri Ravish Rao, Chartered Accountant, filed a paper book of 107 pages and submitted that the assessee carried on a catering business, from which she received cash of ₹17,30,000. He further submitted that the assessee sold jewellery received from her grandmother for ₹18,35,750 and earned interest income of ₹3,62,250, aggregating to ₹39,28,000. He contended that the assessee had sold gold jewellery to several persons, whose confirmations were placed on record, and therefore the additions made by the lower authorities deserve to be deleted. He also referred to the affidavit of the assessee’s father, confirmations from the purchasers, and stock details relating to the gold ornaments sold. In addition, he relied on details of the assessee’s catering business to explain the cash deposits of ₹17,30,000.
6. The learned departmental representative, Shri Sundeep Kumar H.S., Assistant Commissioner of Income Tax, strongly supported the orders of the lower authorities. He submitted that the authorities had rightly rejected the assessee’s claim that she was engaged in a catering business or that the amounts received represented proceeds from the sale of ornaments to different persons. He further contended that, in the absence of supporting evidence, the assessee’s explanation regarding the catering activity could not be accepted. Likewise, there was no evidence to show that she possessed gold ornaments available for sale. He therefore submitted that the addition made by the Assessing Officer and confirmed by the learned CIT(A) deserved to be sustained.
7. We have carefully considered the rival submissions. The assessee claims that she carried on a catering business and that the cash deposits of ₹17,30,000 arose from that activity. In support, she has filed confirmations from parties alleged to have paid cash for catering services. However, these confirmations were not produced before the lower authorities. Apart from an affidavit stating that she was engaged in cooking/catering work, the assessee has not placed sufficient material before the lower authorities to substantiate the business activity or the receipts claimed. Accordingly, the confirmations now filed before us require verification.
8. With respect to the sale of jewellery, the assessee has filed an affidavit from her father stating that, on the demise of his mother, i.e., the assessee’s grandmother, the assessee received gold and silver articles. The assessee has also furnished details of nine purchasers to whom gold was stated to have been sold for ₹18,35,750, along with affidavits from those purchasers. These documents, being relevant to the assessee’s explanation of the source of the deposits, require verification.
9. Since these details were not produced before the lower authorities, they require verification in the interests of justice. The persons who issued the confirmations, the contents of the affidavits, and the assessee’s complete computation of income need to be examined. The confirmations relating to the catering activity filed before us are also fresh evidence and must be verified. Further, where the assessee claims that cash deposits of ₹17,30,000 arose from catering receipts, it is necessary to examine whether she in fact carried on such business, as the learned lower authorities have expressed doubt. Accordingly, the origin of the deposits, the expenses incurred, and the profit resulting therefrom must be examined. The burden is on the assessee to prove that she carried on the catering business, to establish the gross receipts and related expenses, and to identify the persons who availed her catering services. The learned Assessing Officer shall examine the details after the assessee furnishes the necessary evidence and decide the issue afresh.
10. With respect to the sale of gold ornaments, the affidavits of the assessee and her father constitute fresh evidence before us. The assessee has also filed affidavits and confirmation letters from the purchasers. As these purchasers are stated to have paid an aggregate cash sum of ₹18,35,000 to the assessee, their identity, creditworthiness, and the genuineness of the transactions require examination. It is also necessary to verify whether the assessee had, in fact, received the gold ornaments from her grandmother. The burden is on the assessee to substantiate these transactions with proper evidence. The learned Assessing Officer shall examine the material produced by the assessee and decide the issue afresh in accordance with law.
11. Although the assessee has relied on several judicial precedents, including CIT v. Orissa Corporations Private Limited, 156 ITR 78, those decisions are distinguishable on the facts. Therefore, the assessee cannot derive any benefit from those judgments unless the lower authorities first examine the facts of the present case and the evidence produced by her.
12. In the result, ground No. 3 of the appeal is restored to the file of the Assessing Officer for fresh adjudication.
13. Ground Nos. 1 and 2, relating to the initiation of proceedings under section 148, were not argued before us and are therefore dismissed.
14. In the result, appeal filed by the Assessee is partly allowed as indicated above.
Order pronounced in the open court on 21st September, 2026.
