Unexplained cash deposits under section 69A deleted where withdrawals, advances recovered, and business income supported the cash trail.

Cash deposits in the assessee's bank account could not be taxed as unexplained money under section 69A where the deposits were explained through recovery of earlier advances, bank withdrawals and business income. The Tribunal found that the earlier advances were not disputed in principle, that sufficient cash remained available after accounting for withdrawals used for advances, and that the declared business profit also formed part of the available cash. As the revenue did not cross-verify the supporting documentary material or dislodge the explanation, the cumulative record showed availability of cash to cover the deposits. The addition was deleted in favour of the assessee.

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Issues: Whether the addition made under section 69A of the Income-tax Act, 1961, on account of cash deposits in the assessee's bank account was sustainable in law.

Analysis: The assessee explained the cash deposits by referring to recovery of earlier advances, bank withdrawals, and business income. The material on record showed that the earlier advances were not disputed in principle, some cash remained available after accounting for withdrawals utilised for advances, and the declared business profit also contributed to available cash. The Tribunal held that the revenue had not carried out cross-verification of the supporting documentary material so as to dislodge the assessee's explanation, and a cumulative reading of the record indicated availability of cash to cover the deposits. On that basis, the addition could not be sustained.

Conclusion: The addition under section 69A was deleted and the issue was decided in favour of the assessee.

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