Explained source for bank deposits accepted where receivables from prior business supported the cash flow and section 69A failed.

Bank deposits were found not to be unexplained money under section 69A because the assessee substantiated an existing retail liquor business with prior assessment records, licence fee documents and an audited balance sheet showing receivables. In the absence of any adverse material discrediting the business or the receivables, the realization of those receivables was accepted as an explained source for the deposits. On that basis, the addition was deleted.

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Issues: Whether the bank deposits of Rs. 12,21,810 were liable to be treated as unexplained money under section 69A of the Income-tax Act, 1961.

Analysis: The assessee produced material showing prior engagement in retail liquor trading, including the earlier assessment order acknowledging such business, licence fee documents, and an audited balance sheet reflecting receivables of Rs. 15 lakhs as on 31.03.2018. No adverse material was brought to discredit the existence of the business or the receivables. On these facts, realization of the receivables could constitute an explained source for the bank deposits, and the addition could not be sustained under section 69A.

Conclusion: The addition of Rs. 12,21,810 was deleted and the issue was decided in favour of the assessee.

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