The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) granted partial relief on a cash deposit of Rs.35.13 lakh while remanding the vehicle sale claim to the Assessing Officer ( AO ) for further verification due to incomplete documentation. Nandaleke Harindra Shetty,appellant-assessee,an individual, filed a return for AY 2017-18 on August 13, 2017, declaring Rs.11,67,510 as income. During scrutiny, a notice under Section 143(2) was issued on August 9, 2018.

In response to a notice under Section 142(1), the assessee claimed Rs.19,25,000 of the cash deposits were from vehicle sales but provided no supporting evidence. Despite several opportunities, the assessee failed to substantiate the source of Rs.35,13,100 in cash deposits. The AO treated the entire amount as unexplained money under Section 69A and taxed it at the special rate under Section 115BBE. Get a Copy of Income Tax Rules with FREE e-book access, Click here The assessee appealed to the FAA(First Appellate Authority) against the Assessment Order, claiming Rs.19,25,000 was from selling eight vehicles and Rs.13,53,100 was from agricultural income and earlier bank withdrawals. Delivery notes and other supporting documents were submitted. The Commissioner of Income Tax(Appeals)[CIT(A)] rejected the claims, citing incomplete delivery notes and lack of evidence for agricultural income, such as ownership, operations, or sales.

The assessee also failed to provide cash flow details to support the redeposit claim. The appeal was dismissed, and the AO’s findings were upheld. The Tribunal reviewed the submissions and materials on record. It noted that the assessee had made cash deposits totaling Rs.35,13,100 in two Canara Bank accounts during AY 2017-18. The AO had treated the entire amount as unexplained money under Section 69A, as the assessee failed to explain the sources despite multiple opportunities. A single member bench comprising George George K(Vice President) observed that Rs.19,25,000 of the deposits was claimed as proceeds from vehicle sales, supported by delivery notes. However, the CIT(A) rejected this claim due to incomplete details in the notes. The assessee clarified that brokers, not ultimate buyers, signed the delivery notes.

The Tribunal found that the issue of Rs.19,25,000 required further examination and restored it to the AO for reconsideration. Get a Copy of Income Tax Rules with FREE e-book access, Click here For the remaining Rs.13,53,100, the Tribunal acknowledged the net credits in the bank account at Rs.10,88,000 and allowed Rs.3,50,000 as agricultural income, previously accepted by the AO. Additionally, Rs.12,38,000 was attributed to redeposited cash withdrawals, granting the assessee relief of Rs.15,88,000. The Tribunal directed the AO to verify the Rs.19,25,000 claim regarding vehicle sales and take an appropriate decision. The appeal was partly allowed.