Satish Jagannath Rahate Vs Assessing Officer (ITAT Pune)
Cash Deposits Explained by Disclosed Medical Receipts Cannot Be Added Under Section 69A
Background of the Case
The assessee, a medical practitioner, received consultation fees and hospital charges predominantly in cash. He maintained a joint savings bank account with his wife, Smt. Smita Rahate, at Satara District Central Co-operative Bank Ltd., Karhar.
Based on information regarding cash deposits aggregating to ₹8,85,000 during FY 2011–12, the Assessing Officer reopened the assessment by issuing a notice under section 148 on 28 March 2019.
During the assessment proceedings, the assessee explained that the deposits represented professional receipts from OPD consultations and hospital charges. He furnished his return of income, computation, Form 26AS, profit and loss account, balance sheet and bank statement.
Nevertheless, the Assessing Officer treated the entire cash deposits of ₹8,85,000 as unexplained money under section 69A. The first appellate authority confirmed the addition on the ground that adequate documentary evidence supporting the source had not been furnished.
Delay in Filing the Tribunal Appeal
The appeal before the Tribunal was delayed by 135 days. The assessee filed an affidavit explaining the reasons.
After examining the affidavit, the Tribunal found sufficient cause and condoned the delay. It observed that substantial justice was more important than procedural delay and that an assessee ordinarily gained nothing by filing an appeal belatedly.
The Tribunal then proceeded to examine the addition on merits.
Assessee’s Explanation and Supporting Accounts
The assessee’s representative pointed out that the profit and loss account disclosed total professional receipts of ₹9,90,649.
He argued that the disputed bank deposits were sourced from these receipts and had already been accounted for as income from the medical profession. Therefore, treating them again as unexplained money was unjustified.
The representative also drew attention to the assessment order itself, which acknowledged that the assessee had furnished the return, computation, Form 26AS, financial statements and bank statement. The explanation was thus supported by material submitted during the assessment proceedings.
A further contention concerned the joint ownership of the account. The assessee submitted that the same ₹8,85,000 had also been added in his wife’s assessment for AY 2012–13, resulting in duplicate additions. Copies of the relevant orders were furnished before the Tribunal.
The Tribunal recorded that the Revenue’s representative did not rebut the arguments advanced by the assessee.
Tribunal’s Findings
The Tribunal verified that the bank account stood in the names of the assessee and his wife. It also noted that the assessment order expressly recorded the filing of the relevant financial and banking documents.
On examining the profit and loss account, the Tribunal found that the assessee had disclosed professional receipts of ₹9,90,649.
It accepted the explanation that the cash deposits of ₹8,85,000 arose from those professional receipts. Consequently, it held that the addition lacked merit and directed the Assessing Officer to delete it.
The assessee’s appeal was allowed, with final relief on the disputed addition rather than a remand for further verification.
Author’s Comments
Depositing professional collections into a bank account does not create a second source of income. Where the receipts have been disclosed and the bank deposits are satisfactorily connected with them, a separate addition as unexplained money would disregard the explanation and the supporting accounts.
The important feature of this case is that the documents were already before the Assessing Officer. The assessment order acknowledged their submission, and the Tribunal relied on the disclosed professional receipts to accept the source of the deposits. An explanation cannot be rejected without properly examining the material supporting it.
At the same time, the decision should not be reduced to a numerical proposition that every deposit below the annual gross receipts automatically stands explained. The Tribunal accepted the explanation on the facts and record before it. In practical cases, a reconciliation of cash collections, cash expenses, withdrawals and deposits strengthens the connection between professional receipts and banking transactions.
The joint-account issue also deserves attention. The assessee specifically alleged that the entire amount had been added in both spouses’ assessments. However, the Tribunal’s operative reasoning rested on the professional-receipts explanation, and it did not separately decide the duplicate-addition contention or grant relief in the wife’s case.
The principle emerging from the decision is therefore precise: cash deposits accepted as originating from disclosed medical receipts cannot independently be sustained as unexplained money under section 69A. The nature of the profession provides context, while the accounts and banking evidence establish the explanation.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee against the order of the Learned Additional/Joint Commissioner of Income Tax (Appeals)-1, Jaipur [Ld. Addl./JCIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2012-13 on 10.11.2025.
2. There was a delay of 135 days in filing of the appeal before this Tribunal. The assessee filed an affidavit explaining the reasons for delay. We have perused the affidavit and convinced that there was sufficient cause for delay. Substantial justice is more important than procedural delay. No assessee is going to gain by filing the appeal belatedly. Accordingly, delay condoned.
Submission of Ld. AR :
3. The facts of the case submitted by the Ld. AR are as under:
“1. The appellant is an individual and a Medical Practitioner by profession. During the relevant previous year, the appellant was earning income from medical practice and receiving consultation fees and hospital charges predominantly in cash.
2. The appellant maintained a joint savings bank account with his wife, Smt. Smita Rahate, in Satara District Central Co-operative Bank Ltd., Karhar. Cash deposited in the said account represented professional receipts of the appellant and his wife from their respective activities.
3. The assessment was reopened on the basis of information regarding cash deposits aggregating to Rs. 8,85,000/- in the said bank account during F.Y. 2011-12 relevant to Α.Υ. 2012-13.
4. During the assessment proceedings, the appellant explained that the cash deposits were out of professional receipts from OPD consultation fees and hospital charges. The appellant also submitted bank statements, return of income, computation of income and other available records.
5. The Assessing Officer, however, treated the entire cash deposits of Rs. 8,85,000/- as unexplained money under section 69A of the Income-tax Act, 1961 without appreciating that the deposits were made in a joint account and represented professional receipts generated during the normal course of medical practice.
6. Aggrieved by the assessment order passed u/s 143(3) r.w.s. 147, the appellant preferred an appeal before the learned CIT(A).
7. The learned CIT(A) dismissed the appeal mainly on the ground that documentary evidence supporting the source of deposits was not furnished and confirmed the addition of Rs. 8,85,000/- u/s 69A.
8. The appellant submits that the authorities below failed to appreciate the nature of the appellant’s profession, the fact that cash receipts are normal in medical practice, and that the deposits were made in a joint account belonging to both spouses. The addition has been made merely on presumptions and without conducting any independent enquiry.
9. Being aggrieved by the order of the learned CIT(A), the appellant prefers the present appeal before the Hon’ble Tribunal.”
3.1 The Ld. AR submitted that the addition made by the Assessing Officer (AO) in the assessment order regarding cash deposits is Rs.8,85,000/- is bad in law. The Ld. AR submitted as per the profit and loss account filed by the assessee during the assessment proceedings the total receipts of the assessee was Rs.9,90,649/-. The Ld. AR invited our attention to the assessment order wherein in para 6 it is specifically mentioned by the AO that the assessee submitted copy of ITR, computation of income, 26AS, Profit and Loss Account, Balance Sheet and bank statement. The Ld. AR submitted that the cash credit pertains to medical profession and it has been disclosed in the profit and loss account. Therefore, no addition can be made. The Ld. AR also submitted that the bank account was in the name of Satish Jagannath Rahate i.e. the assessee and his wife Smita Rahate. The AO has made addition of Rs.8,85,000/- in the case of Smita Rahate for AY 2012-13 and the assessee for AY 2012-13. Thus, there is double addition. The Ld. AR filed copy of the same.
Submission of Ld. DR :
4. The Ld. DR had not uttered a single sentence to rebut the arguments advanced by the Ld. AR.
Findings and Analysis :
5. We have heard both the parties and perused the records. In this case, the only issue is addition of Rs.8,85,000/- made by the AO in the assessment order. As per the assessment order, the assessee received information from ITO (I&C) Kolhapur regarding cash deposits of Rs.8,85,000/- in The Satara District Co-operative Bank Ltd. Karhar. The AO issued notice u/s 148 of the Act dated 28.03.2019. During the assessment proceedings, the assessee submitted that copy of the bank statement is in the name of assessee and his wife Smita Rahate. It is mentioned in the assessment order that the assessee filed copy of Income Tax Return, statement of computation of income, 26AS, profit and loss account, balance sheet and extract of bank account statement during the assessment proceedings. We have noted that the total professional receipt as per the profit and loss account is Rs.9,90,649/-. Therefore, we agree with the Ld. AR that the amount of Rs.8,85,000/- is out of professional receipt. There is no merit in the addition made by the AO. Accordingly, we direct the AO to delete addition of Rs.8,85,000/-.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 12th October, 2026
