Usha Rani Talla Vs ITO (ITAT Hyderabad)
Hyderabad ITAT Deletes ₹12.69 Lakh Demonetisation Cash Addition: Bank Statements Are Independent Third-Party Evidence and Cannot Be Disregarded
The assessee had not filed a return of income for the year. Based on information regarding cash deposits of ₹12,69,522 during the demonetisation period, the AO initiated proceedings. The assessee, an agriculturist owning about 7 acres of agricultural land, explained that the deposits represented repayment of gold/jewel loans out of available cash and earlier bank withdrawals. The AO rejected the explanation and treated the entire ₹12.69 lakh as unexplained money, which was upheld by the CIT(A).
Before the ITAT, the assessee produced the relevant loan account and bank statements. These demonstrated that two loans of ₹5 lakh each were sanctioned on 16.07.2016, the amounts were immediately withdrawn in cash, and the loans were subsequently repaid by cash deposits on 17.11.2016.
The Tribunal placed particular importance on the evidentiary value of the bank statements. It held that a bank statement is independent evidence issued by a third party and is not a self-serving document prepared by the assessee; therefore, its veracity and authenticity cannot simply be disputed. The transactions in the bank statements also corresponded with the loan accounts.
On examining the records, the ITAT found that the source of both the loan repayments and the ₹2.50 lakh cash deposit stood explained from earlier bank withdrawals—particularly ₹10 lakh withdrawn on 16.07.2016 and ₹2.24 lakh withdrawn on 09.09.2016. Accordingly, the entire addition sustained by the CIT(A) was deleted and the assessee’s appeal allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal by the assessee is directed against the order dated 29.09.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC”], Delhi, for the assessment year 2017-2018.
2. The assessee has raised the following grounds of appeal:
1. “The order of the Id. First Appellate Authority confirming the order passed by Ld. Assessing Officer U/s 144 of the I. Act is arbitrary and contrary to the provisions of law and facts of the case.
2. The Id. First Appellate Authority is not justified in confirming addition made u/s 69A treating the entire cash deposit of Rs.12,69,522/- as unexplained money, not appreciating the submissions filed.
3. The Id. First Appellate Authority is not justified in not appreciating the sources for the deposits of cash in Bank during demonetisation period.
4. The appellant prays leave to add or amend or alter any of the grounds at the time of hearing of appeal.”
3. The assessee is an individual and has not filed her return of income for the year under consideration. The Assessing Officer received the information regarding the cash deposit aggregating to Rs.12,69,522/- in the bank account of the assessee during the demonetization period. Accordingly, the Assessing Officer issued notice under section 142(1) of the Income Tax Act [in short “the Act”], 1961 dated 14.03.2018 calling the assessee to file return on or before 31.03.2018. However, the assessee has not filed her return of income within the specified period allowed by the Assessing Officer. Thereafter, the Assessing Officer issued show cause notice calling for specific information and evidence regarding the source of the cash deposit. Finally, the assessee in her reply stated that she is an agriculturist and owned 07.00 acres of agriculture land and source of repayment of the gold loan is from the agricultural income and the balance amount of Rs.2,50,000/- was explained as source of her earlier withdrawal from the bank account. The Assessing Officer did not accept this explanation of the assessee and added the entire cash deposit of Rs.12,69,522/- to the income of the assessee. Assessee challenged the action of the Assessing Officer before the CIT(A) but could not succeed.
4. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the repayment of the loan is clearly evident from the loan account statement wherein an amount was credited as loan of 5 lakh each total amounting to Rs.10 lakhs which was withdrawn by the assessee and then, the loan was repaid on 17.11.2016. The learned Authorised Representative of the Assessee has referred to the Bank Account statement placed at pages 12 to 14 of the paper book. He has further submitted that as regards the remaining amount, there was an withdrawal of Rs.2,24,000/- from Bank Account which was deposited on 21.11.2016. Further, there was a withdrawal of Rs.1,96,000/- on 07.11.2016 therefore, the assessee was having enough amount on account of prior withdrawal and thereafter due to the demonetization of Specified Bank Notes [in short “SBNs”] the assessee has deposited the amount to the extent of Rs.2,50,000/- in the bank account. Thus, the learned Authorised Representative of the Assessee has submitted that the case of the assessee was not properly represented before the authorities below and in fact the loan account statement itself is showing the source and repayment.
5. On the other hand, the learned DR has submitted that the assessee has not produced any evidence before the Assessing Officer and did not file any return of There is a time gap between withdrawal from the bank account and repayment of the loan as well as deposit in the bank account. He has relied upon the orders of the authorities below.
6. I have considered the rival submissions as well as relevant material on record. The Assessing Officer has made an addition of 12,69,000/- in Paras 2 and 3 as under:
6.1 Thus, the Assessing Officer has considered the deposit of 5,09,761/- each towards repayment of loan and further deposit of Rs.2,50,000/- in the bank account total amounting to Rs.12,69,522/- and the same was added to the income of the assessee for want of any explanation on behalf of the assessee. Now the learned Authorised Representative of the Assessee has placed loan account statement of the assessee at Page nos.12 to 15 of the paper book as under:
6.2 Thus, it is clear that the first loan of Rs.5 lakhswas sanctioned on 16.07.2016 which was disbursed on the same date and then withdrawn by the The said loan was repaid by the assessee on 17.11.2016. Similarly, another loan of Rs.5 lakhs was taken on the same date 16.07.2016 and the amount was withdrawn by the assessee from the bank account immediately and thereafter the loan was repaid by depositing the cash on 17.11.2016. The relevant entries in the bank account are as under:
6.3 It is pertinent to note that the Bank Account statement filed by the assessee is an independent evidence and therefore, the same is not a document prepared by the assessee but issued by an independent third party being Bank hence, the veracity and authenticity of the same cannot be disputed. Even otherwise, the transactions are matching with the loan sanctioned and credited in the bank account of the assessee and thereafter immediately withdrawn by the assessee. Having considered the relevant facts and evidence in the shape of loan account and bank account statement of the assessee, it is found that the source of the repayment of the loan as well as the deposit of Rs.2,50,000/- has been explained by the assessee from bank account statement itself being the withdrawal from the bank account of Rs.10 lakhs on 16.07.2016 and Rs.2,24,000/- on 09.09.2016. Hence, the addition made by the Assessing Officer and sustained by the learned CIT(A) is deleted.
7. In the result, appeal of the Assessee is allowed.
Order pronounced in the open court on 07.08.2026.
