2025 (2) TMI 1133 - AT - Income Tax

Unexplained sources u/s 69A - cash deposits in Bank account - HELD THAT - It is a well settled law that if the assessee is able to show that it had made cash withdrawals from which the deposits were made then it would be reasonable to infer that the source of cash deposits was from the cash withdrawals made by the assessee unless the Revenue is able to establish that there was a specific expenditure incurred by the assessee as a consequence to which the assessee was not in a position to/did not have adequate cash in hand to make the cash deposits in his bank account. In the case of C. Vamsi Mohan 2015 (3) TMI 1236 - ITAT HYDERABAD held that said withdrawal having been made by the assessee just before a week the same can reasonably be treated as available with the assessee for cash deposit especially when there is nothing to show that the said amount was utilized by the assessee for some other purpose. In the case of ITO v. Deepali Sehga 2014 (9) TMI 1073 - ITAT DELHI it was held that merely because there was a time gap between withdrawal of cash and its further deposit to the bank account the amount cannot be treated as income from undisclosed sources under Section 69 of the Act in the hands of the assessee. In view of the facts of assessee s case as highlighted above and the judicial precedents on the subject we are of the view that the assessee has been able to explain the source of cash deposits in his bank account as coming from earlier withdrawals made by the assessee from the same bank account. Department has not brought any material to show that the earlier withdrawals from the same bank account was utilized by the assessee for any other purpose. Appeal of the assessee is allowed.

Summary

The appeal was filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) regarding the addition of Rs. 17 lakhs towards cash deposits in the bank account as unexplained sources under Section 69A of the Act for the Assessment Year 2017-18.**Issues Presented and Considered:**1. Whether the addition of Rs. 17 lakhs towards cash deposits in the bank account as unexplained sources under Section 69A of the Act was justified.2. Whether the Assessee provided sufficient evidence to explain the source of the cash deposits.3. Whether the Department established that the cash withdrawals were utilized for other purposes.**Issue-Wise Detailed Analysis:**- The Assessing Officer observed cash deposits of Rs. 7,00,000 and Rs. 10,00,000 during the demonetization period and asked for the source. The Assessee explained that the cash was withdrawn for a property purchase that did not materialize, leading to redepositing the cash.- The Ld. CIT(A) upheld the addition, citing the lack of crucial evidence such as a sale agreement and confirmation letter from the seller.- The Tribunal noted that if the Assessee demonstrated cash withdrawals matching the deposits, it could be inferred that the source of deposits was the withdrawals, unless the Revenue proved otherwise.- Citing various judicial precedents, the Tribunal emphasized that the burden of proof lies on the Assessee and mere time gaps between withdrawals and deposits cannot be the basis for alleging undisclosed income.**Significant Holdings:**The Tribunal held that the Assessee adequately explained the source of cash deposits from earlier withdrawals made from the same bank account. As the Department failed to show alternative utilization of the withdrawn cash, the appeal of the Assessee was allowed.In conclusion, the Tribunal found in favor of the Assessee, allowing the appeal and setting aside the addition of Rs. 17 lakhs towards cash deposits as unexplained sources.