Cash deposits explained by earlier withdrawals were accepted as genuine, so the addition could not be sustained.

Cash deposits in three bank accounts were held to be satisfactorily explained where they matched earlier withdrawals from the same accounts. The withdrawals were claimed to have been made for proposed house construction, and when the project did not proceed, the amounts were redeposited. On verification, the explanation was accepted as supported by the account trail, so the addition for unexplained cash deposits was not sustainable.

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Issues: Whether the addition of Rs. 15,00,000 made on account of cash deposits in bank accounts was sustainable when the deposits were stated to be redeposits of earlier withdrawals.

Analysis: The deposits in the three bank accounts were matched with earlier withdrawals from the same accounts. The withdrawals were stated to have been made for proposed house construction, and when the construction did not materialise, the amounts were redeposited. On verification, the deposits were found to be supported by corresponding withdrawals, and the explanation was accepted as satisfactory.

Conclusion: The source of the cash deposits stood satisfactorily explained and the addition of Rs. 15,00,000 could not be sustained; the issue was decided in favour of the assessee.

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