Prior cash withdrawals can explain redeposited cash, and expense reimbursements do not become taxable income.

Cash deposited after prior withdrawals from the same bank account was not treated as unexplained money, because the withdrawals of earlier cash sufficiently explained the redeposit and no material showed diversion of those funds elsewhere. Amounts received from LIC for office maintenance and transaction fee were treated as reimbursement of expenses, not taxable income, because the record showed they related to actual expenses incurred in the course of official duties. The appellate additions were therefore deleted and relief was granted to the assessee on both issues.

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Issues: (i) Whether the cash deposit of Rs. 20,00,000 was liable to be treated as unexplained money under section 69A when it was claimed to be a re-deposit of earlier withdrawals from the same bank account; (ii) Whether the amount received from LIC towards office maintenance and transaction fee was taxable income or only reimbursement of expenses.

Issue (i): Whether the cash deposit of Rs. 20,00,000 was liable to be treated as unexplained money under section 69A when it was claimed to be a re-deposit of earlier withdrawals from the same bank account.

Analysis: The bank statement showed cash withdrawals aggregating to Rs. 28,40,000 before the impugned deposit, and the assessment record itself noted those withdrawals. The source of the deposit was therefore traceable to the assessee's own funds withdrawn from the same bank account, and no material was brought to show that the withdrawn cash had been utilized elsewhere. The factual finding of the first appellate authority that no bank statement had been produced was held to be contrary to the record.

Conclusion: The addition under section 69A was unsustainable and was deleted in favour of the assessee.

Issue (ii): Whether the amount received from LIC towards office maintenance and transaction fee was taxable income or only reimbursement of expenses.

Analysis: The LIC letter and the material on record showed that the assessee had been paid Rs. 2,20,000 towards office maintenance and Rs. 80,290 towards transaction fee. These payments were treated as reimbursements for expenses incurred in the course of official duties, and therefore did not constitute taxable income to that extent. The adverse finding of the first appellate authority was held to be unsustainable.

Conclusion: The disallowance of Rs. 3,00,290 was set aside and relief was granted to the assessee to that extent.

Final Conclusion: The appeal succeeded in part, with relief granted on both substantive additions and the impugned appellate order set aside.

Ratio Decidendi: A cash deposit is not assessable as unexplained money where prior withdrawals from the same account reasonably explain the redeposit and the revenue does not show alternative utilization of the withdrawn cash; similarly, amounts proved to be reimbursement of actual expenses do not assume the character of taxable income.

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