Unexplained cash deposits under Section 69A deleted where bank reconciliation, loans and transfers explained credited amounts.

Addition under Section 69A challenged on the ground that asserted unexplained cash deposits were reconciled by documentary records. Tribunal accepted bank statements, ledgers, unsecured loan receipts and repayments, and interbank transfers as non-sales credits which the Assessing Officer had omitted, and held that once those amounts were excluded the bank credits matched disclosed turnover. Applying the principle that documented reconciliations can explain bank credits, the Tribunal concluded the Section 69A addition lacked basis and deleted the addition, allowing the appeal in favour of the assessee.

---

---

Issues: Whether the addition of Rs. 52,16,169 made under Section 69A of the Income-tax Act, 1961 as unexplained cash deposits is justified.

Analysis: The Tribunal examined the reconciliation of total bank credits vis-a -vis the disclosed turnover and the bank statements and ledgers submitted by the assessee. The assessee produced records showing unsecured loans of Rs. 45,00,000 received and repaid during the year and interbank transfers totaling Rs. 9,64,788 which the Assessing Officer had not excluded from sales/turnover. When these amounts were accounted for separately, the cash deposits reconciled with the disclosed turnover such that no unexplained cash remained. The Tribunal found that the Assessing Officer's computation overlooked these non-sales credits and that the addition under Section 69A therefore lacked basis.

Conclusion: The addition of Rs. 52,16,169 under Section 69A is deleted and the appeal is allowed in favour of the assessee.

---