Section 69A addition fails where cash deposits are linked to earlier withdrawals and the Revenue offers no contrary evidence.

Cash deposits could not be treated as unexplained money under section 69A where the assessee produced audited books, the audit report and balance sheet, and showed corresponding cash withdrawals from the bank account. The Revenue did not dispute the withdrawals or bring any material to show that the deposited cash came from another source or that the withdrawn cash had been used elsewhere. In the absence of contrary evidence, the explanation linking the deposits to earlier withdrawals was accepted, and the addition was deleted.

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Issues: Whether the addition made under section 69A of the Income-tax Act, 1961, on account of cash deposited in the bank account was sustainable where the assessee showed corresponding cash withdrawals recorded in audited books and the Revenue did not rebut the explanation.

Analysis: The books of account were audited and the audit report together with the balance sheet were produced. The bank statement showed cash withdrawals of Rs. 1,00,26,500 during the relevant period, and the Department did not dispute the withdrawals. No material was brought on record to show that the cash deposited was not out of the withdrawn cash or that the withdrawn cash had been utilized for any other purpose. In the absence of contrary evidence, the explanation linking the deposits with the earlier withdrawals could not be rejected.

Conclusion: The addition under section 69A was not sustainable and was deleted in favour of the assessee.

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