Haralur Narayana Reddy Nagaraj Vs ITO (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, on June 9, 2025, provided partial relief to assessee Haralur Narayana Reddy Nagaraj, reducing an unexplained cash deposit addition by ₹10.50 lakh. The case involved cash deposits made during the demonetisation period in Assessment Year 2017-18, where the assessee claimed the funds originated from prior bank withdrawals.
The case began when the assessee filed his return of income, which was selected for limited scrutiny due to a cash deposit of ₹16,50,000 in his Karnataka Bank account during demonetisation. The Assessing Officer (AO) rejected the assessee’s explanation that the cash came from earlier withdrawals, stating a lack of documentary evidence. Consequently, the AO made an addition of ₹13,52,710 to the returned income, completing the assessment ex-parte under Section 143(3) of the Income Tax Act, 1961, and determining the total income at ₹16,50,000.
The assessee appealed to the National Faceless Appeal Centre (NFAC), arguing that the cash deposits were indeed sourced from prior withdrawals from the same bank account. He presented a summary of cash deposits and withdrawals, relying on the bank statement. However, the CIT(A) dismissed the appeal without considering this evidence, asserting it was “additional evidence” for which no formal application for admission had been filed.
