Archive · 5 Sep 2026
Bengaluru Woman Wins Tax Dispute Over ₹25 Lakh Deposit
Madegonda Nagarathna put ₹25 lakh in her bank account in 2016.
Tax officials wondered where the money came from.
They noticed that she had sold a property shortly before making the deposit.
Nagarathna said the money was savings collected from earlier bank withdrawals by her and her husband.
The tax officer did not accept that explanation and treated the money as unexplained income.
An appeals authority agreed with the officer.
Nagarathna then took the case to ITAT Bangalore.
The tribunal accepted that the earlier withdrawals could explain the deposit.
It said a time gap does not automatically make the explanation untrue when the money can be traced to identifiable bank withdrawals.
Madegonda Nagarathna deposited ₹25 lakh at Corporation Bank’s Nrupathunga Road branch on June 29, 2016.
The income tax officer linked the deposit to a property sale made a few weeks earlier and treated it as unexplained money under Section 69.
Nagarathna said the money came from savings accumulated through earlier withdrawals from her and her husband’s bank accounts.
Her representative cited withdrawals of ₹13.17 lakh by Nagarathna and ₹11.95 lakh by her husband over the preceding two years.
ITAT Bangalore ruled in her favour on August 17, 2026, saying identifiable bank withdrawals can explain a later cash deposit despite a time gap.
- Who
- Madegonda Nagarathna, a Bengaluru resident and BESCOM employee, and the income tax authorities; her representative was Sheetal Borkar.
- What
- A tax dispute over whether a ₹25 lakh cash deposit was unexplained money or savings from earlier bank withdrawals.
- When
- The deposit was made on June 29, 2016; ITAT Bangalore ruled in Nagarathna’s favour on August 17, 2026.
- Where
- The deposit was made at Corporation Bank’s Nrupathunga Road branch in Bengaluru, and the appeal was heard by ITAT Bangalore.
- Why
- The tax authorities questioned the deposit because it followed a property sale by a few weeks, while Nagarathna said it came from accumulated withdrawals and savings.
Nagarathna’s position
Income tax department’s position
Source of the deposit
Nagarathna’s position
Nagarathna said the ₹25 lakh came from savings accumulated through earlier withdrawals from her and her husband’s bank accounts.
Income tax department’s position
The department argued that there was insufficient evidence that the withdrawn cash had been set aside and remained available when the deposit was made.
Effect of the property sale
Nagarathna’s position
Her representative maintained that the bank and loan statements supported the explanation based on earlier withdrawals and savings for a house property.
Income tax department’s position
The assessing officer and department counsel linked the deposit’s timing to the recent property sale and said it could represent undisclosed cash received beyond the amount stated in the sale deed.
Treatment under tax law
Nagarathna’s position
Nagarathna relied on the Karnataka High Court judgment in Smt. P Padmavathi vs ITO, which accepted cash deposits sourced from earlier bank withdrawals.
Income tax department’s position
The assessing officer treated the amount as unexplained money under Section 69, and the Commissioner of Appeals upheld that addition before the tribunal reversed the outcome.
- Deposit amount
- ₹25 lakh
- Deposit date
- June 29, 2016
- Bank branch
- Corporation Bank, Nrupathunga Road branch
- Tax provision invoked
- Section 69 of the Income-tax Act
- Claimed withdrawals
- ₹13.17 lakh withdrawn by Nagarathna and ₹11.95 lakh by her husband over the preceding two years
- Final ruling
- ITAT Bangalore ruled in Nagarathna’s favour on August 17, 2026
- Tribunal’s reasoning
- A deposit can be explained through identifiable withdrawals from disclosed bank accounts even when there is a time gap