Unexplained cash deposits: implausible explanation for bank cash credits failed, and addition under section 69A was upheld.

Cash deposits in bank accounts were treated as unexplained money under section 69A because the assessee's explanation was found improbable and unsupported by credible evidence. The assessee claimed the deposits represented repayment of gold loans kept unutilised for a long period after being raised for a proposed business, but the retention of cash for more than 20 months while interest continued to accrue was considered implausible. On those facts, the source of the deposits was not satisfactorily established, and the addition was upheld.

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Issues: Whether the addition of Rs. 20,15,000 made towards cash deposits in bank accounts as unexplained money under section 69A of the Income-tax Act, 1961 was justified.

Analysis: The assessee sought to explain the cash deposits as repayment of gold loans allegedly kept unutilised for a long period after being raised for starting a new business. The explanation was found unacceptable because the deposits represented cash allegedly retained idle for more than 20 months while interest cost on the loans continued to accrue. On the facts, the explanation was treated as implausible and insufficient to establish the source of the cash deposits.

Conclusion: The addition under section 69A was upheld and the assessee's challenge failed.

Ratio Decidendi: Where the assessee fails to give a credible and probable explanation for the source of cash deposits, the amount may be treated as unexplained money and brought to tax.

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