Cash withdrawals recorded in books and paid to members cannot be treated as undisclosed income.

Cash withdrawals from a primary milk cooperative society's bank account were held to represent payments to members for milk supplied, because the amounts received from the district federation were withdrawn and distributed according to quantity and quality of milk supplied, and the withdrawals were reflected in the books. On those facts, the withdrawals could not be treated as undisclosed or unexplained income. The addition made on that basis was therefore unsustainable and was deleted.

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Issues: Whether the addition made on account of cash withdrawals from the bank account as undisclosed income was sustainable.

Analysis: The assessee, a primary milk cooperative society, received amounts from the district federation for milk supplied, withdrew the same from the bank, and distributed the funds to its members according to the quantity and quality of milk supplied. The withdrawn amount was duly reflected in the books. On these facts, the withdrawal represented payments made to members and not unexplained or undisclosed income. The appellate affirmation of the addition was therefore based on an incorrect appreciation of the factual position.

Conclusion: The addition was not sustainable and was deleted.

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