Explained cash deposits from prior withdrawals defeat an unexplained income addition where no contrary diversion is shown.

Cash deposits in a bank account were not treated as unexplained income where they were preceded by substantial withdrawals from the same account and redeposited within a short span. The absence of material showing diversion of the withdrawn cash for any other purpose meant that mere lapse of time between withdrawal and redeposit was insufficient to justify an addition. On that factual basis, the deposits were accepted as explained and the addition under section 69A was deleted in favour of the assessee.

---

---

Issues: Whether the cash deposits in the assessee's bank account could be treated as unexplained income under section 69A of the Income-tax Act, 1961.

Analysis: The assessee showed that the disputed cash deposits were preceded by substantial cash withdrawals from the same bank account and that the deposits were made within a short span thereafter. The record did not show that the withdrawn cash had been diverted for any other purpose. Mere lapse of time between withdrawal and redeposit, without contrary material, was held insufficient to sustain the addition.

Conclusion: The cash deposits were treated as explained and the addition under section 69A was deleted in favour of the assessee.

---