Cash deposits during demonetisation explained by withdrawals and household savings, so addition for unexplained cash deleted on appeal

Addition under unexplained cash provisions for deposits during demonetisation was contested on the ground that the deposits were sourced from prior bank withdrawals and household savings. Tribunal accepted the taxpayer's explanation that cash deposits derived from withdrawals used for household expenses and a daughter's marriage, and that the spouse's accumulated household savings (stridhan) further supported the source. On this basis the unexplained deposit claim was held to be satisfactorily explained and the assessing officer's addition was deleted; the taxpayer's appeal was allowed.

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Issues: Whether the addition of Rs. 11,29,500/- made under Section 69A read with Section 115BBE of the Income-tax Act, 1961, on account of cash deposits during the demonetization period is justified, or whether the deposits stand satisfactorily explained by prior bank withdrawals and accumulated household savings.

Analysis: The assessment under Section 143(3) recorded an addition on account of cash deposits and the appellate authority had confirmed the same. The evidence on record shows aggregated past bank withdrawals and asserted accumulated cash savings (including amounts characterized as stridhan and household savings) sufficient to account for the impugned deposits. The appellate record contains detailed submissions quantifying total withdrawals and explaining the flow of funds from withdrawals and household savings into the deposits. The explanation demonstrably links prior withdrawals and accumulated household cash to the deposits in question and is not rebutted by contrary evidence on record.

Conclusion: The addition of Rs. 11,29,500/- is deleted and the appeal is allowed in favour of the assessee.

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