RAGHAVENDRA DAVANAGERE NAGARAJ,HARIHAR V. ITO, DAVANAGERE

ITA 2378/BANG/2025

AI Insights

The case involves Shri Raghavendra Davanagere Nagraj, who appealed against the order of the National Faceless Appeal Centre, which had confirmed the additions made by the Assessing Officer regarding unexplained cash deposits, agricultural income, unsecured loans, and gifts received. The Tribunal noted that the Assessee had submitted additional evidence during the appellate proceedings, which was not adequately considered due to the non-submission of a remand report by the Assessing Officer. The Tribunal decided to restore the matter to the Assessing Officer for a detailed examination of the new evidence and proper adjudication.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 836629 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 25-10-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE; GANESH R GHALE
• Assessee Lawyers: SRISAMARTH
• Keywords: Business income; Additional evidence; Gift
• Section: 144; 142(1); 131; 44AD

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE – PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No. 2378/Bang/2025 Assessment Year : 2017-18 Shri Raghavendra Davanagere Nagraj, Siddeshwara Nilaya, Shivamoga Road, Harihar, Harihar, Karnataka – 577 601. PAN: ASLPN4396D Vs. The Income Tax Officer, Ward-1, Davangere. APPELLANT RESPONDENT Assessee by : Shri Srisamarth, CA Revenue by : Shri Ganesh R Ghale - Advocate, Standing Counsel for Revenue Date of Hearing : 17-12-2025 Date of Pronouncement : 12-02-2026 ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1. ITA No. 2378/Bang/2025 is filed by Shri Raghavendra Davanagere Nagaraj for Assessment Year 2017-18 as the Appellate Order passed by the National Faceless Appeal Centre, Delhi dated 08.08.2025 wherein the Assessment Order passed u/s. 144 of the Income Tax Act was challenged and Appeal of the Assessee was dismissed. 2. Briefly stated the facts shows that the Assessee is a non filer of tax return, information is received that during demonetization period, the Assessee has made a cash deposit of Rs. 11,00,000/- in account no. 5202 with State Bank of India. Notice u/s. 142(1) was issued to the Printed from counselvise.com ITA No. 2378/Bang/2025 Page 2 of 6 Assessee, summons u/s. 131 was also issued, further letters were also issued but no reply was received. However, on 21.09.2019, reply was received that Assessee is carrying the wholesale business dealing in food grains. He submitted a computation of total income along with the balance sheets etc., u/s. 44AD of the Act. The Ld. Assessing Officer obtained details from the bank where from information is received that Rs. 13,00,000/- was deposited in cash out of which Rs. 11,00,000/- were during the demonetization period. Assessee was asked to explain the sources of such cash. He submitted that during cleaning of almirahs and the trunks, he found cash in his house and the same was deposited in the bank. The Ld. Assessing Officer further asked the information stating that these replies are not convincing and also issued a show cause notice which was not responded to. However, the Ld. Assessing Officer found that Assessee has shown an agricultural income of Rs. 6,00,000/- and further has shown unsecured loan of Rs. 5,00,000/- along with the gift from his sister of Rs. 9,00,000/-. The Ld. Assessing Officer also questioned the Assessee about these details which were not replied to and therefore along with the cash deposit of Rs. 11,00,000/- during demonetization period, he also made addition of Rs. 20,00,000/- of the above sum us/. 69A of the Act and passed an Assessment Order u/s. 144 of the Act on 02.12.2019 at the total income of Rs. 35,54,930/- accepting the computation u/s. 44AD of Rs. 4,54,930/-. 3. Aggrieved with the same, Appeal was filed before the Ld. CIT(A). The Ld. CIT(A) confirmed the addition of Rs. 11,00,000/- for the reason that during the course of appellate proceedings, the Assessee stated that the above cash on hand was available out of the business activity,whereas during the course of assessment proceedings, he submitted that the above sum was found while cleaning the almirah and trunks. With respect to Rs. 6,00,000/- as agricultural income, the Assessee submitted land holding certificate in the name of the father Printed from counselvise.com ITA No. 2378/Bang/2025 Page 3 of 6 of the Assessee. The Ld. CIT(A) held that these are the additional documents furnished before him which were forwarded to the Ld. Assessing Officer for submitting the remand report. However, despite many reminders, the Ld. Assessing Officer did not submit any reply. Therefore, the Ld. CIT(A) perused the material available before him. The Assessee furnished certificate of land holding but did not submit the details of agricultural produce and therefore in absence of proper evidence, he confirmed the same. With respect to Rs. 5,00,000/- on account of unsecured loan, the Assessee submitted before him the confirmation letter from Shri Pradhan B. Bhanushali. As this was the additional evidence, the Ld. CIT(A) send for the remand report which was not submitted and therefore he decided the issue on the merit. As the Assessee failed to submit the bank account statement of the creditor as well as of the Assessee and non furnishing the information of the creditor, the addition of Rs. 5,00,000/- was confirmed. With respect to the gift of Rs. 9,00,000/- from his sister, the Assessee submitted family tree but did not submit anything such as the sources of the funds with the sister and therefore, he confirmed the addition of Rs. 9,00,000/- also. Accordingly, the Appeal of the Assessee was dismissed. 4. Against this, the Assessee is in appeal before us. The Ld. Authorized Representative submitted a paper book containing 175 pages. (i) Regarding the cash deposit in the bank account, the Assessee submitted that the amount of Rs. 11,00,000/- deposited in the bank account is out of the cash sales. He submitted that the cash sales of the Assessee is Rs. 18,83,547/- and further Assessee has cash withdrawal of Rs. 12,44,800/- from the bank account and therefore the depositof Rs. 11,00,000/- in the bank account is out of the sale proceeds which is already offered as sales consideration by the Assessee and therefore same cannot be audited once again. He further referred to the bank statement of State Bank of India to show Printed from counselvise.com ITA No. 2378/Bang/2025 Page 4 of 6 that total cash deposit is Rs. 20,51,552/- which is part of the cash withdrawn from the bank also. Such documents were shown at page no. 79 and 80 of the paper books. (ii) Regarding the agricultural income, he submitted that Assessee's father was having the agricultural land and now the Assessee is cultivating the same. He gave details of the agricultural produce at two locations Sherapura and Agasanakatte. He submitted that the 7 acre of land is at Sherapura and 9 acre of land is atAgasanakatte. He stated that at Sherapura, paddy was grown and at Agasanakatte, Maize was grown. The sale of maize is for Rs. 1,40,000/- and sale of paddy is for Rs. 4,60,000/-. He further produced the details of the agricultural crop also which is placed at page no. 117 and 118 of the paper book. (iii) With respect to the loan of Rs. 5,00,000/-, he gave a confirmation from Shri Pradhan B. Bhanushali having the Permanent Account Number of AEEPB 6156 N who is also a return filer and regularly assessed to income tax. The bank account of the Assessee was also produced. (iV) With respect to the gift of Rs. 9,00,000/- from sister of the Assessee, he submitted that the sources of funds available with the sister is also explained in form of details submitted at page 171-175. He also stated that gift from the sister is always exempted and therefore such gift could not have been taxed in the hands of the Assessee. 5. Ld AR submitted that all these details were submitted before the ld CIT (A) but same were considered in part and in absence of remand Report , the claim of the assessee was dismissed. He submitted that had the ld AO submitted the Remand report complete claim of the assessee would have been examined and then decided in accordance with law. Non submission of remand report despite asking by the dl CIT (A) has jeopardized the claim of the assessee. Printed from counselvise.com ITA No. 2378/Bang/2025 Page 5 of 6 6. The Ld. Departmental Representative submitted that the Assessee is producing altogether difference facts before the Tribunal but did not explain all these facts before the Ld. lower authorities. 7. We have carefully considered the rival contention and perused the orders of the Ld. lower authorities. We find that in this case, the Assessee submitted certain additional evidence during the appellate proceedings which were sent back to the Ld. Assessing Officer for submitting the remand report. For a long period of time, the Ld. CIT(A) waited for the remand report of the Ld. Assessing Officer, but no such report was submitted. Had it upon examining the report of the Ld. Assessing Officer, where ld AO could have examined the complete details and reached at the conclusion whether the explanation given by the Assessee is correct or not. Ld. CIT(A) merely examined the evidence and rejected the same. 8. In this present case, with respect to the cash deposit in the bank account, the claim of the Assessee is that it is out of his business receipt, the agricultural income shown by him is also supported by the land holding as well as the details of produce sold. The sum of Rs. 5,00,000/- received from other party is supported by a confirmation letter and also stating that the lender is having the Permanent Account Number and regularly assessed to income tax. Further, the loan amount is stated to be received from banking channel and it is stated to be shown in the bank statement of the Assessee. Further, with respect to the gift received from the sister was also not examined. Naturally, if the gift is genuine, same is not chargeable to tax in the hands of the Assessee as it is from the relative. Further, this evidence are required to be examined by the Ld. Assessing Officer. 9. Therefore, in the interest of justice, we restore all these additions back to the file of the Ld. Assessing Officer with a direction to the Assessee to submit the requisite details before the jurisdictional Printed from counselvise.com ITA No. 2378/Bang/2025 Page 6 of 6 Assessing Officer within 120 days from the date of this order. The Ld. Assessing Officer may examine the same, carry out verification, if need to be, and then decide the issue in accordance with the law. The Assessee may also avail the opportunity of personal hearing if he desires so. 10. In the result, Appeal filed by the Assessee is allowed for statistical purposes. Order pronounced in the open court on 12th February, 2026. Sd/- (KESHAV DUBEY) Sd/- (PRASHANT MAHARISHI) JUDICIAL MEMBER VICE-PRESIDENT Bangalore, Dated, the 12th February, 2026. *TNTS* Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "