Bank deposits explained by regular business activity and withdrawals were not treated as unexplained income under section 69A.

Cash deposits in a bank account are not to be taxed as unexplained money under section 69A where the surrounding banking pattern and regular business activity reasonably explain the source and use of funds. The assessee showed continuing labour and construction business, with regular deposits and corresponding withdrawals from the same account, and the withdrawals were stated to have been used for business expenditure or investment purposes. On that material, the credited amounts were not treated as independent unexplained accretions or undisclosed income, and the addition based on the deposits was deleted.

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Issues: Whether cash deposits in the assessee's bank account could be added as unexplained money under section 69A when the assessee showed regular business activity and corresponding withdrawals from the same bank account.

Analysis: The assessee's explanation before the appellate authority showed that the bank transactions were part of a continuing labour and construction business. The record reflected regular deposits and withdrawals, and the withdrawals were stated to have been used either for business expenditure or for investment purposes. On this basis, the deposits were not treated as independent unexplained accretions. The material on record did not justify treating the credited amounts as undisclosed income under section 69A.

Conclusion: The addition was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The assessment addition based on the bank deposits was deleted and the assessee's appeal succeeded.

Ratio Decidendi: Cash deposits in a bank account cannot be taxed as unexplained income where the surrounding banking pattern and business activity reasonably explain the source and utilisation of the funds.

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