HAMSAKALA SURESH RAO ,MANGALORE vs. INCOME TAX OFFICER, WARD-1(3), MANGALORE
Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN KAssessment Year: 2017-18
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, New Delhi vide order dated 20-03-2025 in DIN
No.ITBA/NFAC/S/250/2024-25/1074783431(1) for the assessment year
2017-18. 2. The present appeal is filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals) [CIT(A)] confirming the addition of ₹48,50,000/-. The addition was made by the Assessing
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Officer (AO) under section 69A of the Income Tax Act on account of cash deposits in the bank.
The assessee is an individual. He filed the return of income declaring ₹1,23,680/- under the head "Income from Other Sources." During assessment, the AO noticed cash deposits of ₹48,50,000/- in the assessee’s bank account. Since, the assessee did not give a satisfactory explanation for the source, the AO treated it as unexplained cash under section 69A of the Act and added it to the total income of the assessee. On appeal, the learned CIT(A) confirmed the order of the AO.
Being aggrieved by the order of the ld. CIT-A, the assessee is in appeal before us.
The learned Authorised Representative (AR) of the assessee argued that there were sufficient cash withdrawals from the bank prior to demonetisation. These withdrawals were used for making the cash deposits during the demonetisation period. The AO himself has recorded in his order that the assessee made cash withdrawals. Therefore, the cash deposits cannot be treated as unexplained under section 69A of the Act.
Per contra, the learned Departmental Representative (DR) argued that the assessee failed to establish a clear link between the cash withdrawals and the subsequent deposits. In the absence of such correlation, the authorities below were justified in treating the deposits as unexplained. Page 3 of 4
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7. We have heard both sides and examined the records. It is admitted that the assessee made cash withdrawals from the bank. These withdrawals exceeded the cash deposits. This fact is also acknowledged by the AO. In such circumstances, a reasonable presumption can be drawn that the deposits were made out of earlier withdrawals. The Revenue has not produced any material to show that the withdrawn cash was utilised elsewhere. Once the assessee has given a plausible explanation, the burden shifts to the Revenue to disprove it with evidence. No such evidence has been brought on record.
1 It is true that a prudent person normally does not withdraw large sums only to keep them idle at home. But this reasoning alone cannot be a ground to make an adverse inference against the assessee. The law requires the Revenue to show positive material that the withdrawals were spent otherwise. In this case, no such finding is available. Therefore, we are unable to agree with the conclusion of the AO and the ld. CIT(A). The addition is not sustainable in law. We accordingly direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced in court on 4th day of September, 2025 (SOUNDARARAJAN K) Accountant Member Bangalore Dated, 4th September, 2025
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file
By order
Asst.