Ramesh Verma Vs ITO (ITAT Delhi)
Delhi ITAT deleted an addition of 71.12 lakh, holding that the assessee sufficiently explained the cash deposits by correlating them with prior cash withdrawals recorded in the books. The ruling emphasizes that S. 69A (unexplained money) cannot be invoked when the source of deposits is traced to funds from bank accounts already part of the regular books.
Assessee, an individual, was selected for limited scrutiny for cash deposits & withdrawals. AO noticed cash deposits of ₹71,12,000/- in SBI & Prathma Bank &treated the same as unexplained u/s 69A. CIT(A) upheld this addition stating that cash withdrawn is normally spent & cash book cannot be believed, also rejecting it as additional evidence u/r 46A.
Before the Tribunal, Assessee produced:
- Cash ledger (cash flow statement),
- Bank statements of both accounts,
- Showing withdrawal of ₹77,91,978/- & deposits of ₹71,12,000/-
- Opening cash balance ₹690/- & closing cash balance ₹6,79,978/-.
Tribunal observed:
- Both bank accounts were part of regular books of account.
- Section 69A cannot apply when entries are recorded in books.
- Sufficient cash was withdrawn prior to each deposit.
- CIT(A) wrongly ignored cash ledger & failed to appreciate the explanation.
Therefore, the immediate source of deposits stood explained, & the addition was unjustified.
