SUBRAMANIAN RAMASWAMY IYER,MUMBAI vs. I.T.O WARD (3)(4), THANE, THANE, MUMBAI

The brief facts of the case are that the assessee had filed the return by declaring total income Rs. 2,78,950/-. The case has been selected for “limited” scrutiny under CASS for a reason, the large cash deposit in Savings Bank Account. The assessee has submitted the details and explained the source of cash which was duly withdrawn in the earlier months. Finally, the assessee deposited the cash and paid for the assessee’s regular expenses. It is further explained that the assessee withdrawn the total cash of Rs. 13,60,000/- and the cash was deposited Rs. 9,52,500/- but the Ld. AO had rejected the assessee’s plea and confirmed the addition of Rs. 10,93,500/-. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) without considering the submission of the assessee rejected the appeal of the assessee and confirmed the addition. Being aggrieved, the assessee filed an appeal before us.

The Ld. AR argued and filed a paper book comprising pages 1 to 47 which has been placed on record. The Ld. AR first invited our attention in APB Page 36 to 38 related to the inflow and outflow of the cash & the explanation of source of cash, deposited in the bank account. The relevant pages of the APB from page 36 to 38 are reproduced as below:

The Ld. AR further contended that the assessee had withdrawn cash from his bank accounts during the period from 01.04.2015 to 31.03.2016. The relevant Citi Bank account statements are enclosed at APB pages 10 to 19. The statement of account maintained with Citibank, reflecting the transaction details for the corresponding period, is enclosed at APB pages 20 to 35. The cash transactions are duly supported by the bank statements of Citibank and UCO Bank, which are placed at APB pages 10 to 45. The Ld. AR, therefore, submitted that sufficient cash was available with the assessee out of the withdrawals made from the bank accounts to explain the subsequent cash deposits. Accordingly, the Ld. AR prayed for deletion of the addition.

The Ld. DR relied upon and supported the orders of the revenue authorities.

We have heard the rival submissions and considered the material available on record. The assessee filed his return of income, and the case was selected for limited scrutiny on account of substantial cash deposits. During the assessment proceedings, the Ld. AO observed that the source of the cash deposited in the bank account was not satisfactorily explained and, accordingly, treated the cash deposits as unexplained. The Ld. AR submitted that the requisite details had been furnished before the Ld. AO. A copy of the response dated 21.10.2018 filed in compliance with the notice issued under section 142(1) of the Act has also been placed on record, wherein the assessee furnished details of the bank accounts from which the cash had been withdrawn. The cash-flow statement was also furnished before the Ld. CIT(A). On examination of the material placed before us, we find that the assessee has explained the source of the cash deposits with reference to the cash withdrawals made from his bank accounts. The relevant bank statements and transaction details were also furnished before the revenue authorities.

We further note that the assessee had made various payments, including credit-card payments and expenditure towards his regular living expenses, through the banking channels. Considering the cash-flow statement together with the bank statements placed on record, we find that sufficient cash withdrawn from the bank accounts was available with the assessee to explain the impugned cash deposits. The relevant supporting documents had been furnished before both the Ld. AO and the Ld. CIT(A). In view of the above, the source of the impugned cash deposits stands explained by the assessee on the basis of the material placed on record. Accordingly, the impugned appellate order is set aside and the addition of Rs.10,93,500/- made by the Ld. AO is deleted.

In the result, the appeal of the assessee bearing ITA No.4247/Mum/2026 is allowed. Order pronounced in the open court on 13th day of August 2026.