In reality, there is a lot of air on top of the cotton bag. The atmospheric pressure is 1 atm = 10⁵ Newtons / m².
If the surface area of the cotton bag is 4 meter square, then the weight of air column on top of the cotton bag = 10⁵ * 4 = 400, 000 kg.
If the platform of the weighting machine and iron bar is 3 m², then the weight due to air column on weighing machine, when the iron bar is placed = 3 * 10^5 kg.
Thus the reading is more when the cotton bag is placed on the weighing machine.