₹41.69 lakh cash deposit and no ITR: What ITAT Bangalore’s ruling means for taxpayers who miss tax notices

A Bengaluru taxpayer who claimed that his wife and father paid his expenses and that he was unaware of income-tax proceedings has failed to get relief from the Income Tax Appellate Tribunal (ITAT), Bangalore, in a case involving ₹41.69 lakh in unexplained cash deposits.

The ITAT Bangalore dismissed his appeals as time-barred after refusing to condone a delay of nearly four years. The order was passed on 17 August 2026 by a bench comprising accountant member Waseem Ahmed and judicial member Keshav Dubey.

The case involved ITA Nos. 3154/Bang/2024, 3155/Bang/2024 and 3156/Bang/2024, along with connected penalty proceedings.

The taxpayer, referred to as Reddy in the proceedings, said his annual income was below ₹5 lakh and that his only source of income was rent. He claimed that his wife and father bore his living expenses. According to him, he therefore did not regularly file income-tax returns or check his email and income-tax e-filing account.

The Income Tax Officer, however, made an addition of ₹41.69 lakh under Section 69A of the Income-tax Act as unexplained cash deposits. A further ₹3.69 lakh was added as unexplained credits and ₹1.50 lakh as income from business or profession. Interest was also levied and penalty proceedings were initiated.

Taxpayer said he discovered tax proceedings while applying for visa

Reddy said he became aware of the assessment and penalty proceedings only in March 2023, when he was applying for a visa to travel overseas.

He claimed that the embassy required income-tax returns as part of the visa process, following which he discovered the pending tax proceedings. He then consulted a tax professional and filed appeals.

He cited his limited knowledge of income-tax proceedings, his low income, failure to regularly check his email or the e-filing portal and disruption caused by the Covid-19 pandemic as reasons for the delay.

However, the quantum appeal was filed after a delay of around 1,480 days, while the two penalty appeals were delayed by around 1,298 days each.

The Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, refused to condone the delay. Reddy then approached the ITAT Bangalore.

The Tribunal also rejected his explanation. It noted that Reddy had filed income-tax returns for earlier assessment years, which did not support his claim of being unaware of income-tax compliance.

The ITAT also took note of the fact that Reddy had sold a property for ₹39 lakh in an earlier year without filing an ITR for the relevant assessment year.

The Tribunal rejected his contention that earning less than ₹5 lakh meant that he was not required to file an ITR. It noted that the applicable basic exemption limit for the relevant period was lower.

ITAT did not decide whether ₹41.69 lakh cash was unexplained

A key point in the ruling is that the ITAT did not examine the merits of the ₹41.69 lakh addition.

The appeals were dismissed because the Tribunal refused to condone the delay in filing them. As a result, it did not decide whether Reddy had actually established the source of the cash deposits or whether the additions made by the Assessing Officer under Section 69A and the other provisions were correct on merits.

The ITAT referred to the Supreme Court's decision in Sheo Raj Singh (Deceased) through LRs & Others v Union of India, concerning condonation of delay. The Tribunal noted that a long delay can be condoned where sufficient and credible cause is established, but the discretion cannot be exercised merely on grounds of sympathy.

In Reddy's case, the Tribunal found that the reasons given did not adequately explain the prolonged period of inaction. It therefore upheld the refusal to condone the delay and dismissed the appeals as time-barred.

Consequently, the assessment and penalty orders remained undisturbed.

For taxpayers, the case highlights the importance of monitoring income-tax communications and acting within statutory appeal deadlines. Simply remaining unaware of an order or failing to check the e-filing portal does not, by itself, establish sufficient cause for an extended delay.

Reddy may challenge the ITAT's decision before the jurisdictional High Court under Section 260A if the matter involves a substantial question of law. However, the ITAT ruling itself does not amount to a finding that the entire ₹41.69 lakh was conclusively unexplained; the Tribunal did not reach that question because the appeals failed on limitation.