Explained cash deposits: closely timed withdrawals from the same account defeated an unexplained money addition.

Cash deposits were treated as explained where they followed closely after withdrawals from the same bank account, and the opening balance and intervening transactions showed sufficient available funds. Because the revenue did not establish that the withdrawn cash had been used elsewhere or that the deposits came from any independent unexplained source, the immediate source of the deposits was accepted as the earlier withdrawals. On that basis, the addition as unexplained money was not sustainable and was deleted.

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Issues: Whether cash deposits of Rs. 10,15,000 were liable to be treated as unexplained money under section 69A.

Analysis: The assessee demonstrated that the impugned cash deposits were made within four days of withdrawals from the same bank account. The opening balance and intervening transactions showed availability of sufficient funds, and the revenue did not establish that the withdrawn cash had been utilised elsewhere or that the deposits had any independent unexplained source. In these circumstances, the immediate source of the deposits stood explained by the earlier cash withdrawals.

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

Final Conclusion: The appeal was allowed and the impugned addition was deleted on the footing that the cash deposits were explained by the earlier cash withdrawals from the same bank account.

Ratio Decidendi: Where cash deposits are closely proximate to prior withdrawals from the same bank account and the revenue fails to show a different utilisation of the withdrawn cash, the deposits cannot be treated as unexplained under section 69A.

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