Assessee wins as previous withdrawal of Rs. 15 lakh covers re-deposit under Section 69A and 115BBE

ITAT Indore-AT ruled in favor of the assessee regarding cash deposit addition under Section 69A read with Section 115BBE. The assessee had deposited Rs. 11,00,000 in bank account, which AO treated as unexplained money. However, ITAT found that previous withdrawal of Rs. 15,00,000 was sufficient to cover the re-deposited amount. Following precedent from ITAT Bangalore, the tribunal held that since previous withdrawal exceeded re-deposit amount, no further verification was required at AO level. The addition made by AO was deleted entirely.

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Issues Involved:
1. Addition of Rs. 11,00,000 as unexplained money under Section 69A read with Section 115BBE of the Income-tax Act, 1961.
2. Applicability of amended provisions of Section 115BBE to the facts of the case.

Issue-wise Detailed Analysis:

1. Addition of Rs. 11,00,000 as unexplained money under Section 69A read with Section 115BBE of the Income-tax Act, 1961:

The appellant contested the addition of Rs. 11,00,000 to their total income as unexplained money under Section 69A read with Section 115BBE of the Income-tax Act, 1961. The appellant argued that the said amount was redeposited from cash withdrawn on prior occasions. The Assessing Officer (AO) and the Commissioner of Income-Tax (Appeals) [CIT(A)] rejected this explanation due to a 20-month gap between the withdrawal and redeposit, questioning the purpose of the initial withdrawal.

The appellant referenced a decision by the ITAT Bangalore in I.T.A. No. 360/BANG/20-22, where the Tribunal accepted that earlier withdrawals could explain later deposits, regardless of the time gap. The Tribunal cited the Karnataka High Court's decision in Smt. P. Padmavathi Vs. The ITO, which held that once the source of funds is explained, the gap between withdrawal and redeposit should not be a concern for the revenue authorities.

The Tribunal agreed with the appellant, stating that the previous withdrawal of Rs. 15,00,000 was sufficient to cover the redeposit of Rs. 11,00,000. Consequently, the addition made by the AO was deleted.

2. Applicability of amended provisions of Section 115BBE to the facts of the case:

The appellant argued that the amended provisions of Section 115BBE should not apply as the cash deposit was made before the amendment received presidential assent on 15.01.2016. The Tribunal, however, did not need to address this issue in detail, as the primary ground for the addition was already resolved in favor of the appellant.

Conclusion:

The Tribunal allowed the appeal, deleting the addition of Rs. 11,00,000 made by the AO under Section 69A read with Section 115BBE. The decision was based on the precedent set by the ITAT Bangalore and the Karnataka High Court, which accepted earlier withdrawals as a valid explanation for later deposits, irrespective of the time gap. The Tribunal found no need for further verification at the AO level, as the previous withdrawal amount exceeded the redeposit amount. The appeal was thus allowed, and the addition was ordered to be deleted.

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