A grain trader named Mr Kumar from Rampur made a large cash deposit of Rs 5.2 crore in his bank account and filed an Income Tax Return (ITR) declaring only Rs 7.65 lakh income. This raised many red flags in the income tax department.
The first red flag was raised when Allahabad Bank reported the deposit through its specified financial transaction (SFT) return. Banks in India have to file a list of SFT returns detailing all cash deposits and withdrawals above a specified limit. In Kumar’s case, the Rs 5.2 crore cash deposit triggered this report.
The second red flag was Kumar’s ITR failed to mention this bank account but the Form 3CD attached with the ITR mentioned it. So initially, the Income Tax Assessing Officer (AO) thought that Kumar hid his bank details in the ITR.
Based on this assumption, the AO issued many income tax notices to Kumar asking about this cash deposit and his ITR. When Kumar’s answers didn’t satisfy the tax department, an assessment order was issued on March 30, 2022 by the AO. This order classified the Rs 5.2-crore money as unexplained deposit under Section 69.
Chartered Accountants Manu Gawri, Madhav Gawri, represented Kumar. They told the Income Tax Appellate Tribunal (ITAT), Delhi, that Kumar is in the business of grain trading and in his ITR, he had attached Form 3CD wherein the details of the bank account maintained with Allahabad Bank was shared.
Kumar’s CAs told the ITAT that at the time he filed the ITR, there was no provision for declaring bank account details apart from the bank where the refund was to be granted.
Kumar thought that this won’t be an issue since in any case his bank account was declared in the balance sheet which was attached to the Form 3CD. But the AO made this a big issue and assumed that Kumar did not disclose his bank account in ITR.
Kumar’s CA vehemently argued that since the bank account had been declared and was part of the balance sheet, the conclusion of the AO that it was an escaped income cannot be based on correct facts.
On September 15, 2026, Kumar won the case in ITAT Delhi.
Why did Kumar win the case?
Advocate Somesh Jain from Sachdev & Jain, Advocates said to ET Wealth Online : Kumar succeeded on a jurisdictional point, not on the merits of the cash deposits. A reassessment can be validly initiated only when the Assessing Officer's recorded reasons rest on correct facts. Here, the reasons stated that the assessee had not disclosed his bank account in the return.
ITAT Delhi examined Kumar's ITR for AY 2014-15 and found that it was accompanied by the tax audit report in Form 3CD, in which the Bank account stood disclosed. Jain says that once the foundational fact in the reasons was shown to be incorrect, the assumption of jurisdiction under Section 147/148 as it stood then was vitiated, and the notice as well as the consequent assessment order fell with it.
Do we need to show agricultural income in ITR?
Akhil Chandna, Partner, Global People Solutions Leader, Grant Thornton Bharat said to ET Wealth Online that agricultural income is generally exempt from tax, however, appropriate disclosure in the ITR is still relevant where required by the applicable return form.
The ITR forms contain specific fields/schedules for reporting exempt income, including agricultural income. Such disclosure also assumes importance where agricultural income is considered for partial integration in determining the applicable tax rate on non-agricultural income.
Chandna says: "As a matter of good tax compliance, agricultural income should be appropriately and consistently disclosed in the ITR wherever required by the applicable form."
ITAT Delhi discussion
ITAT Delhi said that on perusal of Kumar’s ITR, they found that the details of the bank account was given in Form 3CD.
ITAT Delhi said: “We further find that the bank account of Allahabad Bank has been duly disclosed in the ITR vide Form 3CD which give details of all bank accounts.”
Thus ITAT Delhi concluded that the reasons for reopening Kumar’s case are based on incorrect facts which have vitiated the assumption of jurisdiction through the notice under Section 148. Thus ITAT Delhi quashed the tax notice and the consequent assessment order as well.
