Gaurav Harshadbhai Chokshi Vs ITO (ITAT Ahmedabad)
Section 69A: Cash Withdrawn and Re-Deposited Cannot Be Taxed on Mere Assumptions-ITAT Deletes ₹14.38 Lakh Addition
Earlier Withdrawals Explained the Subsequent Deposits
The Ahmedabad ITAT has deleted an addition of ₹14,37,910 under Section 69A, holding that the assessee had satisfactorily explained the cash deposits through earlier withdrawals from the same bank account.
The Tribunal examined the bank statements, cash withdrawal and deposit summary, and cash book. It found that the documented withdrawals and available cash balance were sufficient to cover the subsequent deposits.
Neither the Assessing Officer nor the CIT(A) had identified any evidence showing that the withdrawn cash had been spent, invested, or otherwise utilised elsewhere. In these circumstances, the explanation could not be rejected merely on assumptions about the usual purpose of cash withdrawals.
However, the Tribunal dismissed the separate ground challenging the initiation of penalty proceedings under Section 271AAC(1) as premature. The appeal was therefore partly allowed.
Reassessment Based on Information About Cash Deposits
The assessee, a resident individual, faced reassessment proceedings for Assessment Year 2018-19 based on information concerning cash deposits in his bank account.
In response to the notice under Section 148, he filed a return on 30 March 2023, declaring income of ₹4,42,200.
During the assessment proceedings, the assessee clarified that one of his Syndicate Bank accounts was dormant and had no cash deposit transactions during the relevant financial year.
He further explained that the actual cash deposits in his active account were ₹14,37,910, rather than ₹54,67,410. His case was that these deposits came from earlier cash withdrawals from the same account.
The withdrawals between 14 May 2017 and 31 March 2018 aggregated to ₹15,73,500, exceeding the total cash re-deposits.
Assessing Officer Rejected the Connection Between Withdrawals and Deposits
The Assessing Officer rejected the explanation on the ground that the amounts and dates of withdrawals and deposits were not connected.
Accordingly, the entire cash deposit of ₹14,37,910 was treated as unexplained money under Section 69A and taxed under Section 115BBE.
The reassessment order was passed on 23 March 2024 under Section 147 read with Section 144B.
The assessee challenged this treatment before the CIT(A), maintaining that the bank withdrawals provided the source for the subsequent deposits.
CIT(A) Relied on Human Probabilities
The CIT(A) confirmed the addition by an order dated 23 December 2025.
According to the CIT(A), withdrawals from a bank account are ordinarily made for specific purposes or to meet expenses. Applying the test of human probabilities, the appellate authority concluded that the assessee had failed to establish that the withdrawn money was subsequently re-deposited.
Before the Tribunal, the assessee argued that the withdrawals were demonstrably higher than the deposits and that the authorities had not identified any specific expenditure or alternative utilisation of the cash.
The Revenue maintained that the assessee had failed to establish a direct connection between the withdrawals and subsequent deposits.
Bank Statements and Cash Book Established Availability
The Tribunal examined the bank statements together with the summary of withdrawals and deposits.
It found regular cash withdrawals aggregating to ₹15,73,500, against deposits of ₹14,37,910, from the same bank account.
More significantly, the “Peak Credit Summary” furnished in the paper book demonstrated that the cash available from documented withdrawals was sufficient to cover the subsequent deposits. The Tribunal also examined the cash book and found that the cash balance was adequate.
Thus, the decision rested on documented cash availability, rather than merely comparing the annual totals of withdrawals and deposits.
The Tribunal held that, without contrary evidence or a finding that the money had been utilised elsewhere, the availability of cash and its subsequent deposit could not be ignored.
Primary Onus Discharged; Revenue Needed Contrary Material
The Tribunal concluded that the assessee had discharged the primary onus under Section 69A by establishing earlier withdrawals from the same account as the source of the deposits.
Once that explanation was supported by the records, the Assessing Officer was required to bring material on record to counter it.
The addition of ₹14,37,910 was consequently deleted, and the grounds challenging its confirmation were allowed. The Tribunal did not separately decide any general question concerning the rate or applicability of Section 115BBE.
The challenge to initiation of penalty proceedings under Section 274 read with Section 271AAC(1) was dismissed as premature. The order therefore does not constitute a separate adjudication deleting a penalty.
Author’s Comments
The useful feature of this decision is the Tribunal’s examination of the cash available before the deposits, supported by bank records and the cash book. Merely showing that total yearly withdrawals exceed total deposits may leave unanswered whether sufficient cash existed on the relevant deposit dates.
A chronological cash reconciliation makes the explanation stronger by showing withdrawals, intervening utilisation, and the balance available for re-deposit.
The decision also illustrates the limits of relying on human probabilities. Here, the assumption that withdrawals must have been spent could not displace the documented cash availability when no contrary utilisation was established.
For similar disputes, the practical emphasis should be on proving the cash trail. The figures explain the source only when the chronology supports them.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
1. The present appeal has been preferred by the Assessee against the Order, dated 23/12/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 23/03/2024, passed under Section 147 read with Section 144Bof the Income Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2018-2019.
2. The Assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has passed the order u/s 250 of the Act in a very casual, non-speaking, vague and cryptic manner. The Ld. CIT(A) has grossly failed to address each and every contention raised by the assessee in the well-reasoned submission. It is humbly requested the Hon’ble ITAT to quash the order passed by the Ld. CIT(A) being the same bad in law and devoid of any merit.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in confirming the addition of Rs.14,37,910/- to the total income of the assessee by treating it as unexplained money u/s 69A of the Act. It is humbly requested the Hon’ble ITAT to delete the impugned addition of Rs.14,37,910/- being the same bad in law and devoid of any merit.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in confirming the assessment order u/s 147 r.w.s. 1448 of the Act being the same highly non speaking, vague and without assigning any reason for the addition of Rs. 14,37,910/- made u/s 69A of the Act. It is humbly requested the Hon’ble ITAT to delete the impugned addition of Rs.14,37,910/- being the same bad in law and devoid of any merit.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in confirming the initiation of penalty proceedings u/s 274 r.w.s. 271AAC(1) of the Act. It is humbly requested the Hon’ble ITAT to quash the penalty proceedings u/s 274 r.w.s. 271AAC(1) of the Act being the same bad in law ab initio.
3. The relevant facts in brief are that the Assessee is a resident individual. For the Assessment Year 2018-2018, reassessment proceedings were initiated in the case of the Assessee on the basis of information regarding cash deposits made by the Assessee in his bank account during the relevant previous year. In response to notice issued under Section 148 of the Act, the Assessee filed return of income on 30/03/2023 declaring income of INR.4,42,200/-. During the assessment proceedings, notice the Assessee submitted detailed written explanations stating as under:
(a) Bank Account No.70432010045890 maintained with Syndicate Bank was a dormant/dead account with no cash deposit transactions during the relevant financial year.
(b) In active Bank Account No.70432010044551 with Syndicate Bank (now Canara Bank), the total cash deposits made during the year amounted to INR.14,37,910/- (and not INR.54,67,410/-).
(c) The cash deposits of INR.14,37,910/- were fully sourced out of prior cash withdrawals made regularly from the very same bank account. Specifically, between 14/05/2017 and 31/03/2018, total cash withdrawals from the account aggregated to INR.15,73,500/-, which exceeded the total cash re-deposits of INR.14,37,910/-.
4. The Assessing Officer rejected the Assessee’s explanation regarding cash deposits and held that the amounts and dates of cash deposits and cash withdrawals were not connected. Consequently, the Assessing Officer treated the cash deposits of INR.14,37,910/- as unexplained money under Section 69A of the Act and brought the same to tax in the hands of the Assessee under Section 115BBE of the Act vide Assessment Order, dated 23/03/2024, passed under Section 147 read with Section 144B of the Act.
5. Aggrieved by the Assessment Order, the Assessee preferred appeal before the Learned CIT(A) which was dismissed vide impugned Order, dated 23/12/2025. The Learned CIT(A) observed that withdrawals from bank account are usually made for specific purposes or meeting expenses. Relying upon the test of human probabilities, the Learned CIT(A) concluded that the Assessee had failed to show that the funds withdrawn were re-deposited. Thus, the Learned CIT(A) confirmed the addition of INR.14,37,910/- made by the Assessing Officer under Section 69A of the Act.
6. Being aggrieved by the order passed by the Learned CIT(A), the Assessee has preferred the present appeal on the grounds reproduced in paragraph 2 above.
7. We have heard the rival submissions and perused the material available on record.
Ground Nos. 1, 2 and 3
8. Ground Nos. 1, 2, and 3 raised by the Assessee are directed against the order of Learned CIT(A) confirming addition of INR.14,37,910/- made by the Assessing Officer as unexplained money under Section 69A read with Section 115BBE of the Act.
9. The Learned Authorised Representative for the Assessee submitted that the cash deposits of INR.14,37,910/- were fully sourced out of prior cash withdrawals aggregating to INR.15,73,500/- made from the same bank account during the relevant financial year. It was contended that the cash withdrawals were demonstrably higher than the cash deposits. The Learned Authorised Representative for the Assessee contended that neither the Assessing Officer nor the Learned CIT(A) pointed out any specific expenditure or alternate utilization of cash withdrawn by the Assessee, and therefore, rejecting the cash flow availability on mere conjecture and human probabilities was unjustified.
10. Per contra, the Learned Departmental Representative relied upon the orders of the lower authorities and submitted that the Assessee had failed to establish a direct nexus between the cash withdrawals and subsequent re-deposits, and hence, the addition made under Section 69A of the Act was rightly sustained by the Learned CIT(A).
11. We have given thoughtful consideration to the rival submissions and examined the bank statements along with the summary of cash withdrawals and deposits placed on record. It is an undisputed fact that the Assessee maintained Bank Account (No. xxxxxxxxxx4551) with Syndicate Bank (now Canara Bank). A perusal of the bank account statement reveals regular cash withdrawals throughout the relevant financial year aggregating to INR.15,73,500/- against cash deposits aggregating to INR.14,37,910/-. The availability of cash in hand out of documented bank withdrawals, as detailed in ‘Peak Credit Summary’ placed at Pages 49 to 53 of the paper-book, was clearly sufficient to cover the subsequent cash deposits made into the same bank account. In the absence of any contrary evidence or finding that the withdrawn funds were invested or expended elsewhere, availability of cash and its utilization for deposit in bank account of the Assessee cannot be ignored. Once the primary onus placed on the Assessee under Section 69A of the Act stands duly discharged by establishing the source of cash deposits as earlier cash withdrawals from the very same bank account, it was upto the Assessing Officer to bring on record material to counter the submission of the Assessee. Bare perusal of bank statement shows that cash aggregating of INR.15,73,500/- was withdrawn during the relevant period. Further, perusal of cash book shows that peak cash balance was sufficient for cash deposits. Therefore, accepting the contention of the Assessee, we delete the addition of INR.14,37,910/- made by the Assessing Officer under Section 69A of the Act. Accordingly, Ground Nos. 1, 2, and 3 raised by the Assessee are allowed.
Ground No. 4
12. Ground No. 4 pertains to initiation of penalty proceedings u/s 274 read with Section 271AAC(1) of the Act and the same is dismissed as being premature.
13. In the result, the present appeal preferred by the Assessee is partly allowed.
Order pronounced on 30/09/2026
