Hamsakala Suresh Rao Vs ITO (ITAT Bangalore)
No 69A Addition When Deposits Linked to Earlier Withdrawals – Idle Cash Argument Not Enough- Burden Shifts to Revenue – Withdrawals Sufficient to Justify Deposits, Addition Deleted
Bangalore Tribunal in the case of has held that when cash deposits during the demonetisation period are supported by earlier withdrawals, such deposits cannot be taxed as unexplained u/s 69A.
Assessee, an individual, had filed return of income declaring ₹1,23,680 under the head “Income from Other Sources.” During assessment, AO noticed cash deposits of ₹48,50,000 in the Assessee’s bank account during the demonetisation period. As Assessee did not give a satisfactory explanation for the source, AO treated the deposits as unexplained money u/s 69A & made addition. CIT(A) upheld the addition.
Before Tribunal, the Assessee argued that sufficient cash withdrawals had been made from the same bank accounts prior to demonetisation, which were later redeposited. AO himself had recorded in his order that there were cash withdrawals. Therefore, deposits could not be treated as unexplained.
Revenue contended that there was no clear linkage established between withdrawals & deposits & in the absence of correlation, authorities were justified in taxing deposits u/s 69A.
Tribunal observed that cash withdrawals admitted by AO were in fact higher than the deposits made. In such circumstances, it was reasonable to presume that deposits came from earlier withdrawals unless Revenue could prove otherwise. The Department failed to bring on record any material to show that withdrawals were utilised elsewhere. Tribunal clarified that while a prudent person may not ordinarily withdraw large sums to keep idle at home, such reasoning alone cannot sustain an adverse inference in absence of evidence. Once Assessee provided a plausible explanation, the burden shifted to Revenue to disprove it with positive evidence, which it failed to do. Accordingly, Tribunal directed deletion of addition of ₹48,50,000 made by AO. The appeal of the Assessee was allowed in full.
