In Altaf Ali Baig Moghal v. ITO, the Hyderabad Bench of the Income Tax Appellate Tribunal reportedly deleted a ₹11,65,000 addition after finding that the same funds had been counted once when deposited in a bank and again when they were later encashed from a fixed deposit. The ruling turned on the transaction trail in that case; an FD maturity credit is not automatically explained if the original source of the money cannot be established.
What the Hyderabad ITAT reportedly decided
The reported decision treats an FD encashment as the return of funds already in the bank, not as a second, independent introduction of money. TaxGuru reproduces the Tribunal’s reasoning as saying that “the subsequent encashment of fixed deposit cannot be considered as a fresh deposit in the bank account.” The Tribunal reportedly deleted the remaining ₹11,65,000 addition after considering the bank records and remand verification. TaxGuru’s report reproducing the reasoning; TaxCorp’s case summary.
The reports identify the case as Altaf Ali Baig Moghal v. ITO, for assessment year 2021–22, and say the order was pronounced in open court on 30 September 2026. The available reporting is secondary; an official tribunal order and appeal number have not been verified.
How the bank-deposit calculation became disputed
The original addition and remand verification
According to the reports, the Assessing Officer initially treated ₹32,50,000 as unexplained bank deposits under section 69A. During remand proceedings, the officer reportedly verified two registered land-sale deeds dated 25 March 2021 for rural agricultural land in Karlapalem Village, Bapatla District, with combined consideration of ₹18,53,000. The reports say the ₹32,50,000 figure shown in the return was clarified as a clerical error.
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Deposits and credits accepted as explained
The remand verification reportedly identified cash deposits of ₹9,00,000, ₹1,00,000 and ₹5,85,000, plus a ₹5,00,000 transfer, for a total of ₹20,85,000. The taxpayer explained ₹18,53,000 as land-sale proceeds and ₹2,32,000 as agricultural income. The Commissioner of Income Tax (Appeals) reportedly accepted those sources but retained a ₹11,65,000 balance by reference to the original ₹32,50,000 figure. TaxGuru; TaxCorp.
The fixed-deposit movement
The transaction table reproduced by TaxGuru lists a ₹10,00,000 fixed deposit created on 3 September 2020 and debited or encashed on 2 November 2020. The report says the FD was created using funds already in the bank account. The Tribunal reportedly treated the original deposit and later encashment as movements of the same underlying sum, rather than as two separate deposits.
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Why this matters when tracing an FD maturity credit
A bank statement can show several entries for one sum: an initial deposit, a transfer into an FD, and a maturity or encashment credit back to the account. Those entries describe the movement of money; they do not necessarily establish multiple sources of money. In this case, the reported error was counting the earlier deposit and the later FD encashment separately despite the bank trail connecting them.
The decision does not make FD maturity proceeds immune from scrutiny. The important question remains where the money originally came from and whether the records connect that source to the amount placed in the FD and returned to the account.
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For a taxpayer facing a question about cash deposits or an FD credit, a clear reconciliation can help show whether an entry is a fresh receipt or the return of money already accounted for. The records most directly relevant to the transaction sequence are:
- Bank statements showing the original deposit or credit and the later FD debit and maturity credit.
- The FD advice, receipt or account statement identifying the opening date, amount and encashment date.
- Documents supporting the original source of funds, such as sale documents or income records, where relevant.
- A transaction-by-transaction reconciliation matching amounts and dates, so the same sum is not presented as two independent sources.
Keep the explanation tied to the actual records. An FD statement can establish that money moved into and out of a deposit; on its own, it may not establish the source of the funds used to create it.
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What the ruling does—and does not—establish
The reported holding is narrow: on the facts and bank records considered, the later encashment of funds already placed in an FD could not be counted as a fresh deposit on top of the original deposit. The reports do not establish a blanket exemption for FD credits, nor do they show that every unexplained bank credit is resolved merely because an FD is involved.
The case-specific amounts—including the ₹32,50,000 initial figure, ₹20,85,000 identified credits, ₹18,53,000 reported land-sale consideration, ₹2,32,000 agricultural income and ₹11,65,000 deleted balance—are figures reported for this appeal, not general thresholds or statistics. The underlying official order was not independently verified in the reporting available here.
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