Explained cash deposits during demonetisation were accepted where withdrawals, disclosed income, and savings evidence supported the source.

Cash deposits made during the demonetisation period were held not to be unexplained under section 69A because the assessee substantiated the source with contemporaneous partnership-firm withdrawals, disclosed agricultural income, savings of wife and mother, and redeposits of cash withdrawn from bank accounts. The record also showed earlier cash withdrawals and past savings consistent with the deposits. The absence of proof of the proposed land purchase did not, by itself, negate the documented source of funds. On that material, the deposits were treated as explained and the addition was deleted.

---

---

Issues: Whether cash deposits made during the demonetisation period were unexplained and liable to addition under section 69A of the Income-tax Act, 1961.

Analysis: The assessee explained the deposits as comprising savings from partnership-firm withdrawals, disclosed agricultural income, savings of wife and mother, and redeposits of cash withdrawn from bank accounts. The record showed withdrawals from the firm, agricultural income already reflected in the return, reasonable past savings, and cash withdrawals from bank accounts during August 2016. The absence of proof of the proposed land purchase did not displace the fact of earlier withdrawals, and the explanation was supported by the material on record.

Conclusion: The source of the cash deposits stood duly explained and the addition was deleted in favour of the assessee.

Ratio Decidendi: Where cash deposits are supported by contemporaneous withdrawals, disclosed income, and reasonable savings evidence, the mere absence of proof of the intended use of withdrawn cash does not justify treating the deposits as unexplained.

---