Case Law Details
Pushpa Vs ITO (ITAT Bangalore)
Bangalore ITAT Deletes ₹58.80 Lakh Addition; Cash Withdrawn from Same Bank Can Be Redeployed Unless Revenue Proves Otherwise
The Bangalore ITAT in Mrs. Pushpa v. ITO deleted an addition of ₹58,79,960 made under section 69A, holding that cash withdrawn from a bank account would ordinarily remain available for redeposit unless the Revenue establishes that the money was utilised elsewhere. The reassessment had been initiated on the basis of cash deposits made in a co-operative bank account by a non-filer of return.
The assessee explained that substantial cash had been withdrawn from the same bank account for her daughter’s proposed marriage and purchase of gold. Since the marriage was postponed, the cash was redeposited into the bank account on various dates. The assessee furnished details of withdrawals aggregating several lakhs made during the year and contended that the deposits merely represented redeployment of the same funds.
The Tribunal examined the bank account and observed that the cash deposits substantially correlated with earlier cash withdrawals from the same account. It held that the entire addition was unsustainable because cash withdrawn from a bank account remains available for redeposit unless there is evidence showing that it was spent or diverted for some other purpose. The Revenue had brought no such material on record.
The ITAT further noted that even the alleged peak unexplained amount of about ₹3.85 lakh could reasonably be explained considering the income position of the assessee’s husband, who was regularly assessed to tax and had annual income ranging between ₹5 lakh and ₹10 lakh. Accordingly, the Tribunal held that there was no basis to sustain the addition and directed the Assessing Officer to delete the entire addition of ₹58,79,960 under section 69A.
Key Ratio: Cash withdrawn from a bank account is presumed to be available for redeposit in the same account unless the Department demonstrates, with evidence, that the withdrawn cash was utilised elsewhere.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 2680/Bangalore/2025 is filed by the Assessee against the Appellate Order passed by the National Faceless Appeal Centre, Delhi (the Ld. CIT(A)) for Assessment Year 2017–18 on 30.09.2025 wherein the Appeal filed by the Assessee against the Reassessment Order passed u/s. 147 dated 25.02.2025 by the Assessment Unit (the Ld. Assessing Officer) was dismissed.
2. The Assessee aggrieved with the same has preferred this Appeal raising following grounds of Appeal: –
1. The Ld. CIT(A) and A.O has erred in law and on facts in completing the reassessment proceedings under section 147 read with section 144B without properly appreciating the facts, explanations, and material evidence placed on record. The order passed is arbitrary and contrary to the principles of natural justice.
2. The order passed in violation of the provisions of section 151A of the Act is not legally tenable and void ab inito;
3. The Ld. CIT(A) and A.O have erred in assuming jurisdiction under section 147 of the Act without fulfilling the mandatory preconditions prescribed under section 148A(b) and section 149(1)(b) of the Act, thereby rendering the reassessment bad in law and void ab initio.
4. The Ld.CIT(A) and the AO have erred in law and on facts in not appreciating that the proceedings are barred by limitation as the alleged escaped income is the limit referred to in section 149 of the Act.
5. The Ld.CIT(A) has erred in law and on facts in upholding the order of the Ld. AO.
6. The Ld. CIT(A) and A.O have erred in law and on facts in making an addition of Rs. 58,79,960/- under section 69A read with section 115BBE of the Act, treating the cash deposits in the bank account as unexplained money, ignoring the explanation and evidence furnished regarding the source of funds.
7. The Ld. CIT(A) and A.O. have failed to appreciate that the cash deposits were made out of earlier withdrawals from the same bank account and from personal savings accumulated over time. The addition made without considering the cash flow pattern and bank statements is unjustified.
8. The Ld. CIT(A) and A.O. have. has erred in disregarding the appellant’s submission that the withdrawals were made for her daughter’s marriage expenses and redeposited due to the postponement of the event, which is duly supported by circumstantial evidence.
9. The Ld. CIT(A) and A.O. have. has erred in treating the entire gross cash deposit as income without considering the availability of cash balance, withdrawals, or recycling of funds. Such an approach is contrary to settled principles of law and results in double taxation.
10. The Ld. CIT(A) and A.O. have erred in sustaining the addition made under section 69A read with section 115BBE without examining the facts independently and without assigning cogent reasons for rejection of the appellant’s explanation.
11. The Ld. CIT(A) and A.O. have erred in and on facts in not granting the benefit of peak credit;
12. The Ld. CIT(A) and A.O. have erred in law and on facts in not appreciating that the jurisdictional fact to invoke section 69A of the Act is not satisfied.
13. The Ld. CIT(A) and A.O. have erred in levying interest under sections 234A, 234B, 234C and 234F of the Act, which is consequential and liable to be deleted if the underlying additions are deleted.
14. The Ld. CIT(A) and A.O. has further erred in initiating penalty proceedings under sections 271AAC(1) and 272A(1)(d) of the Act mechanically and without recording the requisite satisfaction under section 274 of the Act.
15. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.
(Tax effect Rs. 45,42,269/-)
On the basis of the above grounds and other grounds which may be urged at the time of hearing with the consent of the Honourable Tribunal, it is prayed that the order passed under section 147 r.w.s 144B of the Act, as upheld by the Commissioner of Income Tax (Appeals), be quashed and relief sought be granted.
3. Briefly stated the facts of the case shows that Assessee is a non-filer of return and therefore based on the risk management strategy it was found that Assessee has deposited cash of Rs. 58,79,960/- in Sri Basavesjwara Pattana Sahakara Bank Niyamita. Therefore, an order u/s. 148A(d) was issued and subsequently notice u/s. 148 was also issued on 30.03.2024. The Assessee was issued notice u/s. 143 (2) on 30.09.2024, notice u/s. 142(1) on 30.09.2024 and subsequently show cause notice on 14.02.2025. The Assessee submitted only the part reply. On 20.06.2024 in response to notice u/s. 148 of the Act the Assessee filed her return of income declaring total income of Rs. 65,520/-.
4. With respect to the details of cash deposited in the cooperative bank of Rs. 58,79,960/-, the Assessee originally submitted that Assessee got personal savings in her bank account and during the previous year her daughter’s marriage got fixed, for the purpose of marriage expenses of her daughter and towards purchase of gold Assessee has withdrawn the cash on various days. Due to the circumstantial reasons, the marriage got postponed and same was redeposited back to the bank account on various days. Therefore the claim of the Assessee is that the source of the cash deposit is her earlier cash withdrawal cash from the same bank account. To support its case, the Assessee stated that on 18.04.2016, cash of Rs. 12,08,000 was withdrawn, subsequently on 21.05.2016, Rs. 8,44,000/- were withdrawn and on 1st and 2nd June, 2016 the Assessee withdraw 5,25,000/- and further on 22.07.2016 sum of Rs. 8,00,000/- was withdrawn. Further on 16.08.2016 Assessee withdrew a sum of Rs. 15,50,000/-. Likewise Assessee submitted that cash was withdrawn and it was deposited in the bank account of the Assessee with the above cooperative bank and therefore there is no unaccounted income which can be taxed in the hands of the Assessee.
5. The Ld. Assessing Officer printed such bank account details at page no. 6 of the Assessment Order. The Ld. Assessing Officer rejected the contention of the Assessee that Assessee has not been able to explain the source of cash deposits into bank account along with documentary evidences and therefore show cause notice was issued and after making an addition u/s. 69A of the Act the Assessment Order was passed on 25.02.2025.
6. The Assessee preferred an Appeal before the Ld. CIT(A). Assessee reiterated the same facts. However, the Ld. CIT(A) confirmed the addition stating that the Ld. Assessing Officer stand is founded on consistent judicial precedents which emphasize strict scrutiny for cash deposits to ascertain genuineness. Accordingly referring to several judicial precedents, the action of the Ld. Assessing Officer was confirmed.
7. The Ld. Authorized Representative Shri Siddesh N Gaddi, Chartered Accountant referred to his written submission along with the annexures and further the details of income of the husband of the Assessee for previous four years were also submitted. His main argument was that the bank account statement itself says about the cash withdrawal which is the source of the amount deposited in the bank account. His argument was that in absence of any other contrary evidence available with the revenue authorities that the amount of cash deposit is not used as source from the earlier cash withdrawal, there cannot be presumption against the Assessee that such cash withdrawal is not available with the Assessee. He further even otherwise referred to the fact that Assessee also has a personal savings available with her along with the source of income of cash from the Assessee’s husband. It was stated that the income of the Assessee’s husband is in the range of Rs. 5,00,000/- to Rs. 10,00,000/- for last four years and therefore same could not have been added to the total income of the Assessee.
8. Even otherwise he submitted that the cash deposit is only of Rs. 3,85,485/-, in all the alternatives if all the arguments of the Assessee are not acceptable even then no addition could have been made more than the peak credit of Rs. 3,85,485/-. He further stated that Assessee has clearly stated reason for holding cash in her hand about the marriage of the daughter of the Assessee which could not unfortunately happen. Thus, the addition made by the Ld. lower authorities deserves to be deleted.
9. The Ld. Departmental Representative vehemently supported the orders of the Ld. lower authorities and stated that Assessee is frequently withdrawing the cash, redepositing the cash and therefore it cannot be said that the amount that has been withdrawn by the Assessee in cash is available to the Assessee for redeposit into the bank account. The Ld. Departmental Representative Shri Subramaniam S, JCIT vehemently stated that the conduct of the Assessee itself shows that why a person will withdraw the sum in cash from bank account on day one and redeposit the same cash in the same bank account on day two. Thus the orders of the Ld. lower authorities are based on sound judicial precedents and therefore should be upheld.
10. We have carefully considered the rival contention and perused the orders of the Ld. lower authorities and further verified the bank account which is the issue in Appeal before us. The Assessee has deposited cash of Rs. 59,43,900/- in the bank account maintained by the Assessee with a co-operative society. The bank account of the cooperative society in Assessee’s bank account on 01.04.2016 the balance shows that she was having a sum of Rs.18,59,985/-.
The Assessee has deposited cash on various occasions. The details of cash deposit are in the range of Rs. 6,730/- to Rs. 7,00,000/- maximum. For the purposes of the deposits, the Assessee has withdrawn the cash on 18.04.2016. However prior to that the Assessee has deposited cash on 02.04.2016 of Rs. 2,68,970/- in two tranches. Therefore now the issue that arises is that when there is no cash withdrawal in the bank account of the Assessee during this year, wherefrom Assessee got this sum to be deposited on 2/4/2016. The facts clearly show that if the cash flow statement is seen, the whole of the addition made by the Ld. Assessing Officer is unsustainable because the cash is withdrawn from the bank account, it is available for redeposit in the bank account. However, if there is no shortfall in the cash flow statement by the Assessee, that needs to be explained by the Assessee.
11. According to the peak deposit statement, a sum of Rs. 3,85,485/- is not sourced out of the earlier cash withdrawal. However, it is seen that the husband of the Assessee is having a substantial income ranging from Rs. 5,00,000/- to Rs. 10,00,000/- for last four years. Therefore, it cannot be said that the sum of Rs. 3,85,485/- could not have been available with the assessee so to be added to the total income of the Assessee. Even otherwise if the basic exemption limit is to be considered, the small amount is remaining which can definitely be financed out of the income of the husband of the Assessee. It was stated that he is regularly assessed to income tax. In view of the above facts we find that the amount of addition made by the Ld. Assessing Officer and confirmed by the Ld. CIT(A) is devoid of any merit. The amount of cash withdrawal by the Assessee from the same bank account naturally would be available to the Assessee to redeposit the same in the same bank account, unless the revenue finds that the cash amount withdrawn by the Assessee is not available with the Assessee as it has been used for some other purposes then only such addition can be sustained. In absence of any such material we do not find any reason to uphold the addition of Rs. 58,79,960/- in the hands of the Assessee. Accordingly we allow the ground No. 6 of the Appeal of the Assessee and direct the Ld. Assessing Officer to delete the above addition made u/s. 69A of the Act.
12. All other grounds of Appeal are supportive and general in nature or consequential. Therefore, they are not required to be adjudicated separately and hence dismissed.
13. In the result Appeal of the Assessee is partly allowed as indicated above.
Order pronounced in the open court on 22nd June, 2026.
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