Admission in rectification proceedings bars treating previously accepted retirement benefits as unexplained cash deposits, reversing the addition.

Whether unexplained cash deposits can be treated as income where the assessing officer, in rectification proceedings, accepted those deposits as retirement benefits and revised returned income: the article explains that an assessing officer's admission of source in a section 154 rectification removes the legal basis to thereafter classify the same amounts as unexplained money and re-impose an addition under section 69A; accordingly the addition is not sustainable, the appellate order was set aside and the assessing officer directed to delete the additions, with the appeal allowed for the assessee.

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Issues: Whether the addition of cash deposits as unexplained income under section 69A of the Income-tax Act, 1961 is sustainable where the assessing officer, in rectification proceedings under section 154 of the Income-tax Act, 1961, has accepted the source of such deposits as retirement benefits and revised the returned income.

Analysis: The Tribunal examined the sequence of orders: original addition as unexplained cash under section 69A; subsequent rectification under section 154 where the assessing officer accepted that the deposits arose from retirement benefits and accepted a revised taxable income; and a later direction under section 263 leading to a reassessment under section 147 read with section 263 and section 144B that again made the addition. The Tribunal relied on the effect of the Department's own admission in the section 154 proceedings regarding the nature and source of the deposits and considered whether such admission permits sustaining an addition under section 69A. The Tribunal found that once the assessing officer, through rectification, accepted the source of the cash deposits as retirement benefits and revised the income accordingly, there remained no legal basis to treat the same amounts as unexplained money and to re-impose the addition under section 69A.

Conclusion: The addition under section 69A of the Income-tax Act, 1961 is not sustainable in view of the acceptance of source in rectification proceedings under section 154; the appellate order is set aside and the assessing officer is directed to delete the additions. The appeal is allowed in favour of the assessee.

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