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Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
<h1>Cash flow reconciliation of withdrawals and deposits can defeat an unexplained income addition for opening cash balance.</h1> Cash deposits were reconciled with corresponding bank withdrawals through the cash flow statement, which also separately accounted for household /expenses ... Unexplained cash deposit - assessee has declared opening cash balance - HELD THAT: - The Tribunal found from the cash flow statement for the relevant period that the assessee had made substantial cash withdrawals from his bank accounts, and that the cash deposits together with household expenses remained within the overall availability of such withdrawals. On that factual position, the deposits were held to be sourced from earlier withdrawals, consistent with the assessee's explanation that cash in hand was deployed in money lending activity. Once the bank deposits were explainable from withdrawn cash, the Assessing Officer was not justified in bringing the opening cash balance to tax as income of the year under consideration. [Paras 8] The addition sustained on account of opening cash in hand was deleted. Final Conclusion: The Tribunal allowed the appeal and held that the opening cash balance could not be assessed as undisclosed income for the assessment year in question, since the cash deposits were satisfactorily explained by cash withdrawals shown in the cash flow statement. Issues: Whether the opening cash balance of Rs. 3,50,000 could be treated as unexplained income when the cash deposits were explained through cash withdrawals reflected in the cash flow statement.Analysis: The cash flow statement for the relevant period showed substantial cash withdrawals from bank accounts, cash deposits out of those withdrawals, and household expenses separately accounted for. On this reconciliation, the cash deposits were found to be sourced from withdrawals, supporting the assessee's explanation that cash was available in hand and utilized over time. In that factual backdrop, the opening cash balance could not be brought to tax as undisclosed income for the year under consideration.Conclusion: The addition treating the opening cash balance as unexplained income was deleted, and the issue was decided in favour of the assessee.Ratio Decidendi: Where cash deposits are satisfactorily reconciled with cash withdrawals and the cash flow statement explains the availability of cash in hand, the opening cash balance cannot be assessed as unexplained income.
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