Karan Kumar Vs ITO (ITAT Lucknow)
Maths Beats Suspicion! Cash Flow Explained, Addition Denied- Cash Withdrawn > Cash Deposited? ITAT Says: Simple Maths, No 69A
In this case, Assessee was a salaried individual earning only salary & bank interest, & had filed his return declaring income of ₹5,62,840 for A.Y. 2017-18. During demonetisation, he deposited ₹4,41,500 in old currency into his bank account. AO treated ₹1,91,500 out of this as unexplained cash deposit & made an addition u/s 69A, alleging that Assessee had not proved the source of cash. CIT(A) confirmed the addition without proper appreciation of facts.
Before the ITAT, the assessee submitted a complete cash flow explanation. He demonstrated that from 01.04.2016 to 31.10.2016, he had withdrawn ₹7,68,800 in cash from his own bank account, out of which only ₹3,27,300 was spent towards personal & household expenses. Therefore, a balance of ₹4,41,500 was still available in hand, which was exactly the amount deposited during demonetisation.
Tribunal observed that the withdrawals were higher than deposits, & the Revenue did not bring any evidence to show that the cash withdrawn was utilised elsewhere. The addition made by AO was based merely on assumption, doubt & presumption without any tangible material. ITAT held that when the cash availability is proved through bank statements & there is no contrary evidence from the department, the explanation of the assessee must be accepted.
Further, Tribunal emphasised that the burden shifts to the Revenue to prove that the cash withdrawn was not available or was spent for some other purpose, & no such evidence was produced. Hence, the explanation that the cash deposit came from earlier withdrawals was found logical, reasonable & supported by records.
Accordingly, ITAT held that the addition of ₹1,91,500 u/s 69A was unjustified, deleted the entire addition, & allowed the appeal of the assessee.
Core Principle Reaffirmed:
When cash withdrawals before demonetisation exceed the cash deposit, & the department fails to prove alternate utilisation, no addition can be sustained.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
