Samar Exports Vs ITO (ITAT Chennai)
In this case, the assessee was subjected to addition of ₹57 lakh (net ₹55.26 lakh) under section 68 for cash deposits made during the demonetisation period, which was upheld by the CIT(A).
The assessee explained that the deposits were not unexplained money, but were out of earlier cash withdrawals of ₹63.50 lakh from the same disclosed bank account made between April and July 2016. The bank statement clearly established a direct trail of withdrawals and subsequent deposits.
The Tribunal observed that the withdrawals were not disputed by the Revenue and the deposits were actually lower than the withdrawn amount, thereby establishing availability of sufficient cash. Importantly, the Revenue failed to bring any material on record to show that the withdrawn cash was utilized elsewhere.
The ITAT held that once cash is withdrawn from a disclosed source and later redeposited, the source stands prima facie explained. It further clarified that mere time gap between withdrawal and deposit cannot be the sole ground to reject the explanation, especially when supported by documentary evidence.
The Tribunal also noted that minor inconsistencies in explanation cannot override concrete bank records, and in a business context, holding cash for a period is not abnormal.
Accordingly, it was concluded that the assessee had discharged the burden of proof, and in absence of any contrary evidence, the addition under section 68 was unsustainable and deleted.
Once withdrawal is proved, redeposit cannot be taxed-unless the Revenue proves diversion.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, (in short “ld.CIT(A)”) for the assessment year 2017-18, dated 30.06.2025, against the assessment order dated 28.12.2019 passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).
