Maradi Jagadeesha Vs ITO (ITAT Bangalore)
Cleaning Farmland, Facing a Tax Addition: Farmers’ Confirmations Secure Relief
Cash deposits explained through service receipts
The Bangalore ITAT deleted an addition of ₹3,22,000 under section 69A, holding that the assessee had furnished adequate documentary evidence explaining the nature and source of cash deposited in his bank accounts. The evidence included confirmation letters from farmers, their names and complete addresses, Aadhaar cards and proof of ownership of agricultural land.
The assessee’s explanation was that he earned money by cleaning and developing agricultural land for cultivation. These were receipts for services rendered to farmers. The Tribunal accepted that the documents established both the nature of the receipts and the persons from whom they had been received.
The decision highlights the importance of examining supporting evidence in its entirety before treating a bank deposit as unexplained money under section 69A.
Reassessment and the disputed deposits
The assessee had not previously filed a return of income. Following information concerning financial transactions with Karnataka Gramin Bank, reassessment proceedings were initiated through a notice under section 148 dated 25 March 2024.
In response, the assessee filed his return on 7 May 2024, declaring total income of ₹2,40,320. During the proceedings, the Assessing Officer obtained information from the bank under section 133(6) and examined cash deposits in accounts maintained with Karnataka Gramin Bank and State Bank of India.
