Section 69A cash deposit additions partly deleted where computation errors and documented source explanations were accepted, but an unsupported rental advance failed.

An addition under section 69A was partly deleted where the cash flow statement contained a computational error from duplicating a negative opening balance, as the mistake did not represent a real unexplained source. The claimed rental advance was rejected because no rent agreement, tenant details, or supporting vouchers were produced, so that portion of the addition was sustained. Cash withdrawals from the partner's firm were accepted as explained because the firm's records showed sufficient withdrawals and the cash nexus was established. Contributions by the assessee's husband and his HUF for agricultural land purchase were also accepted as explained sources on the basis of confirmations, financial statements, and return disclosures, resulting in partial relief.

---

---

Issues: (i) Whether the arithmetical error in the redrafted cash flow statement, by treating a negative opening balance twice, warranted deletion of the corresponding addition; (ii) whether the claimed rental advance of Rs. 2,25,000 could be accepted as a source for cash deposits; (iii) whether cash withdrawals of Rs. 6,50,000 from the partner's firm could be treated as explained source; and (iv) whether the contribution of Rs. 50,42,676 by the assessee's husband and his HUF towards purchase of agricultural land constituted an explained source of cash deposit.

Issue (i): Whether the arithmetical error in the redrafted cash flow statement, by treating a negative opening balance twice, warranted deletion of the corresponding addition.

Analysis: The addition under section 69A of the Income-tax Act, 1961 was founded on a recomputed cash flow statement. The record showed that the deficit of Rs. 2,24,355 was carried forward incorrectly as a negative opening balance, resulting in duplication of the same deficit in the monthly working. This was a computation mistake and not a substantive rejection of source explanation.

Conclusion: The addition to the extent of Rs. 2,24,355 was deleted in favour of the assessee.

Issue (ii): Whether the claimed rental advance of Rs. 2,25,000 could be accepted as a source for cash deposits.

Analysis: The assessee relied on a claimed rental advance reflected in the balance sheet, but no rent agreement, tenant particulars, or supporting vouchers were produced before the authorities. In the absence of supporting evidence, the claim remained unsubstantiated and could not discharge the burden of proving the source of the cash deposit.

Conclusion: The claim was rejected and the addition was sustained against the assessee to that extent.

Issue (iii): Whether cash withdrawals of Rs. 6,50,000 from the partner's firm could be treated as explained source.

Analysis: The firm's capital account and balance sheet showed withdrawal of Rs. 14,00,000 during the year, of which Rs. 6,50,000 was withdrawn in cash. The documentary record supported the availability of that cash with the assessee, and the withdrawal nexus was established.

Conclusion: The amount of Rs. 6,50,000 was accepted as explained source and deleted from the addition in favour of the assessee.

Issue (iv): Whether the contribution of Rs. 50,42,676 by the assessee's husband and his HUF towards purchase of agricultural land constituted an explained source of cash deposit.

Analysis: The assessee produced confirmations, financial statements, and return disclosures of the husband and his HUF showing their respective shares in the property investment. The material showed that the property was acquired for the family arrangement and that the source of the impugned cash deposit was traceable to the contributors' disclosed means. The explanation was supported by contemporaneous records and was not an afterthought.

Conclusion: The amount of Rs. 50,42,676 was accepted as explained source and deleted in favour of the assessee.

Final Conclusion: The addition was reduced by accepting the assessee's explanation for part of the cash deposits, while the unsupported rental advance claim was rejected, resulting in partial relief and sustenance of the balance addition.

Ratio Decidendi: An addition under section 69A can be sustained only to the extent the assessee fails to substantiate the source of cash deposits with reliable evidence; proven computational errors and duly evidenced cash availability or explained investment sources must be given effect to.

---