GOVINDASAMY SASIKALA,TIRUVALLUR vs. ITO, NON CORP WARD 10(3), CHE, CHE

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ITA 3913/CHNY/2025Status: DisposedITAT Chennai13 July 2026AY 2017-1988 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had satisfactorily explained the source of cash deposits with bank statements and a cash-flow statement. The Revenue failed to provide evidence that the withdrawn cash was utilized elsewhere, making the addition unsustainable.

What were the facts?

The assessee deposited Rs. 10,49,000/- in cash into her bank account. She explained this as redeposit of earlier withdrawals, tutor income, and accumulated savings. The Assessing Officer and CIT(A) were not satisfied, citing a time gap and lack of independent evidence.

What were the issues?

Whether cash deposits in a bank account can be treated as unexplained money under Section 69A solely due to a time gap between withdrawals and redeposits, without disproving the assessee's explanation.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: MS. PADMAVATHY S & SHRI MANU KUMAR GIRI

Hearing: 16.06.2026

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned Appeal filed by the Assesseeis directed against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated28.10.2025 Assessment Year 2019-20. 2. Brief facts of the case are that the assessee is an individual deriving income from salary, interest and private tuition. She is not carrying on any business. The case was reopened pursuant to information received under the Risk Management Strategy (RMS) indicating cash deposits aggregating to Rs.10,49,000/- in her

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 2 :: Canara Bank savings account during the relevant previous year. Notice u/s. 148A(b) was issued, followed by an order u/s. 148A(d) and notice u/s. 148. 2.1 In response, the assessee filed the return of income declaring total income of Rs.4,31,630/-. During the reassessment proceedings, the assessee explained that the cash deposits represented redeposit of earlier cash withdrawals aggregating to Rs.9,00,000/- made from her own bank account and the bank account of her husband, coupled with tutor income earned during the year and accumulated savings of earlier years aggregating to Rs.5,49,000/-. A detailed cash-flow statement showing receipts, withdrawals, deposits and cash balance was furnished together with bank statements. 2.2 The Assessing Officer was not satisfied with the explanation and treated the entire cash deposits of Rs.10,49,000/- as unexplained money u/s. 69A of the Act. The Assessing Officer held thatthe assessee failed to satisfactorily explain the source of cash deposits of Rs.10,49,000/-. The cash-flow statement was self-prepared and unsupported by independent evidence. There was a considerable time gap between the cash withdrawals and subsequent cash deposits. The claim regarding tutor income and accumulated savings was not substantiated by sufficient documentary evidence.Accordingly, the Assessing Officer treated the cash deposits as unexplained money u/s. 69A. 3. On appeal, the addition was confirmed by the ld. CIT(A). The ld. CIT(A) affirmed the assessment order by observing thatthere was a substantial time gap between the withdrawals and redeposits. No satisfactory explanation was furnished regarding retention of cash for several months. The claim of tutor income and accumulated

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 3 :: savings was not independently corroborated. The cash-flow statement alone could not establish the availability of cash.Accordingly, the addition u/s. 69A was sustained. Now the assessee is in further appeal before the Tribunal. 4. Before us, the ld. Authorised Representative (AR) submitted thatcomplete bank statements evidencing cash withdrawals were furnished before the Assessing Officer. The withdrawals aggregated to Rs.9,00,000/- and constituted the principal source for the subsequent deposits. Tutor income of Rs.4,55,000/- and accumulated savings of Rs.94,000/- were also available and reflected in the cash-flow statement. The assessee maintained a month-wise cash-flow demonstrating continuous availability of sufficient cash to make the impugned deposits. Neither the Assessing Officer nor the CIT(A) has pointed out any defect in the bank statements or established that the withdrawn cash had been spent elsewhere. Merely because there was a time gap between withdrawal and redeposit, the explanation cannot be rejected in the absence of any material showing that the cash was no longer available. Since the assessee was not carrying on any business and was not required to maintain regular books of account, the invocation of section 69A without disproving the explanation furnished is unsustainable. The ld.AR referred pages 61, 62, 63 of the paper book to bolster his arguments. He also cited the Co- ordinate Bench orders in the case of Ganapathy Paneerselvam Vs The Income Tax Officer ITA No.609/Chny/2025 dated 27.06.2025 which at para 23 held as under: 23. In the present case, the Assessing Officer has not brought on record any such material to suggest that the cash withdrawn earlier was spent, invested, or otherwise deployed elsewhere. We note that the only basis for the AO’s rejection of the assessee’s explanation is

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 4 :: the time gap between the withdrawal and the subsequent re-deposit of cash. However, it is to be noted that there is no statutory or judicially prescribed time limit within which cash must be re- deposited to be considered explained. The mere existence of a time gap, without any corroborative evidence of alternate use of funds, cannot be a valid ground to disbelieve the assessee’s explanation. Furthermore, there is no legal bar on an assessee retaining cash in hand for a reasonable period, particularly when the source of such cash is accounted for and traceable through bank withdrawals. The AO’s inference that no prudent person would hold cash and forego interest is speculative and not based on any evidence specific to the assessee's financial conduct or circumstances. In the case of Mr. Shanmugam Ethiraj Vs The Income Tax Officer ITA No.822/Chny/2020 dated 11.05.2022 at para 10 held as under: 10. In this case, there is no dispute with regard to fact that the assessee has withdrawn cash to the tune of Rs.2,19,59,800/- and made cash deposit to the tune of Rs.1,17,38,500/- into City Union Bank account during the relevant financial year. Therefore, we are of the considered view that once the Assessing Officer never disputed fact that cash withdrawal from bank account is higher than amount of cash deposited intobank account, then the A.O. ought not to have made additions towards cash deposits into bank account only for the reason that there is time gap of more than 3 to 5 days between cash withdrawal and cash deposits from very same bank account. It was not the case of the Assessing Officer that cash withdrawal from bank account on earlier occasion had been spent by the assessee or used for some other purposes. In absence of any finding contrary to explanation of the assessee that cash deposits into bank account is out of withdrawal from earlier occasion cannot be disregarded. The learned CIT(A), without appreciating above facts has simply confirmed additions made by the Assessing Officer. Hence, we reverse findings of the learned CIT(A) and direct the Assessing Officer to delete additions made towards cash deposits into City Union Bank account u/s.69 of the Income Tax Act, 1961. It was therefore prayed that the addition be deleted.

5.

The ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted thatthe burden to explain the source of cash deposits squarely rests upon the assessee. The explanation based upon earlier withdrawals is unreliable because of the long interval between withdrawals and deposits. No independent

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 5 :: evidence was produced regarding tutor income or accumulated savings. The cash-flow statement is only a self-serving document. The Assessing Officer and the CIT(A) rightly held that the explanation was not satisfactory and correctly invoked section 69A.

6.

We have heard the rival submissions, perused the orders of the lower authorities and carefully examined the material placed on record. The solitary issue for consideration is the addition of Rs.10,49,000/- made under section 69A of the Act on account of cash deposits in the assessee's savings bank account.The assessee explained that the impugned cash deposits were sourced primarily from earlier cash withdrawals aggregating to Rs.9,00,000/- from his disclosed bank account, besides tutor income of Rs.4,55,000/- and accumulated savings of Rs.94,000/-. In support of the explanation, the assessee furnished the relevant bank statements and a month- wise cash-flow statement demonstrating the availability of sufficient cash on the respective dates of deposit.On perusal of the assessment order, we find that the Assessing Officer has not disputed the genuineness of the bank withdrawals or the correctness of the bank statements furnished by the assessee. The addition has been sustained primarily on the premise that there was a considerable time gap between the cash withdrawals and the subsequent redeposit of cash into the bank account. However, no material has been brought on record to establish that the cash withdrawn had been spent, invested or otherwise utilised for any purpose so as to render it unavailable for redeposit. In the absence of any such evidence, the explanation offered by the assessee cannot be rejected merely on account of the intervening period between withdrawal and redeposit.

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 6 ::

7.

The Co-ordinate Bench of the Tribunal in Ganapathy Paneerselvam Vs. ITO in ITA No.609/Chny/2025 dated 27.06.2025 has held that there is neither any statutory provision nor any settled legal principle prescribing the period within which cash withdrawn from a bank account must necessarily be redeposited. The Tribunal further observed that, unless the Revenue demonstrates with cogent evidence that the withdrawn cash had been utilised elsewhere, the mere existence of a time gap cannot constitute a valid ground to disbelieve the assessee's explanation. Similarly, in Mr. Shanmugam Ethiraj Vs. ITO in ITA No.822/Chny/2020 dated 11.05.2022, the Co-ordinate Bench held that where cash withdrawals from the bank account exceed the subsequent cash deposits and the Revenue has not established that the withdrawn cash was deployed for any other purpose, an addition under section 69A cannot be sustained merely because there was a gap of a few days or even longer between the withdrawal and redeposit.

8.

The ratio laid down in the aforesaid decisions squarely applies to the facts of the present case. Here also, the Revenue has accepted the factum of cash withdrawals from the disclosed bank account and has not produced any evidence to show that the withdrawn cash was no longer available with the assessee. The rejection of the explanation is founded solely upon assumptions arising from the time gap, which, by itself, is insufficient to sustain an addition under section 69A.

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 7 :: 9. We also find merit in the assessee's contention that a detailed month-wise cash-flow statement was furnished explaining the availability and movement of cash throughout the relevant period. Neither the Assessing Officer nor the ld.CIT(A) has pointed out any arithmetical discrepancy or factual inconsistency in the said cash- flow statement. The explanation has been rejected without disproving the availability of cash reflected therein.The authorities below have further observed that the tutor income and accumulated savings were not independently substantiated. Even if that part of the explanation is kept aside, the undisputed bank withdrawals aggregating to Rs.9,00,000/- constitute substantial documentary evidence explaining the source of the impugned deposits. Once the assessee furnishes a plausible explanation supported by contemporaneous documentary evidence, the burden shifts upon the Revenue to establish that such explanation is false or unacceptable. No such contrary evidence has been brought on record in the present case.It is also relevant to note that the assessee is an individual deriving salary and tuition income and is not engaged in any business requiring maintenance of regular books of account. Therefore, in the facts and circumstances of the present case, the explanation supported by the bank statements and cash- flow statement cannot be discarded merely on conjectures and surmises.

10.

In view of the foregoing discussion, and respectfully following the decisions of the Co-ordinate Benches referred to above, we hold that the assessee has satisfactorily discharged the initial burden of explaining the source of the cash deposits. Since the Revenue has failed to rebut the explanation by bringing any cogent material on

ITA No 3913/Chny/2025 (AY 2019-20) Govindasamy Sasikala Vs ITO NCW 10(3) CHE :: 8 :: record, the addition of Rs.10,49,000/- made under section 69A of the Act is unsustainable. Accordingly, we set aside the order of the learned CIT(A) on this issue and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are allowed.Accordingly, the addition of Rs.10,49,000/- made u/s. 69A and sustained by the ld. CIT(A) is deleted. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on the 13thday of July 2026

Sd- Sd- (प�ावती एस) (मनु कुमार िग�र) (PADMAVATHY S) (MANU KUMAR GIRI) लेखा सद)या/ACCOUNTANT MEMBER �या�यक सद)य/JUDICIAL MEMBER चे�नई/Chennai, *दनांक/Dated: 13thJuly, 2026. SNDP, Sr. PS आदेश क ��त+ल,प अ-े,षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF SANDEE Digitally signed by SANDEEP P KUMAR Date: 2026.07.15 KUMAR 17:27:05 +05'30'

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