Govindasamy Sasikala Vs ITO (ITAT Chennai)
Chennai ITAT: Mere Time Gap Between Cash Withdrawal and Redeposit Cannot Justify Section 69A Addition
The Chennai ITAT held that cash deposits cannot be treated as unexplained under section 69A merely because there is a time gap between earlier cash withdrawals and their subsequent redeposit, particularly when the assessee substantiates the source through bank statements and a cash-flow statement. The assessee, an individual deriving income from salary, private tuition and interest, explained that the cash deposits of ₹10.49 lakh represented redeposit of earlier cash withdrawals aggregating to ₹9 lakh, together with tuition income and accumulated savings. The explanation was supported by a month-wise cash-flow statement and bank statements. The Assessing Officer, however, rejected the explanation solely on the ground that the cash-flow statement was self-prepared, there was a substantial time gap between withdrawals and redeposits, and the tuition income and savings were not independently corroborated.
The Tribunal observed that the Revenue had not disputed the genuineness of the bank withdrawals, nor had it brought any material on record to show that the cash withdrawn had been spent, invested or otherwise utilised elsewhere before being redeposited. It reiterated that there is neither any statutory provision nor any settled legal principle prescribing the period within which withdrawn cash must necessarily be redeposited. Consequently, mere lapse of time cannot, by itself, render the explanation unacceptable.
Following its earlier decisions in Ganapathy Paneerselvam v. ITO and Shanmugam Ethiraj v. ITO, the Tribunal held that once an assessee furnishes a plausible explanation supported by contemporaneous documentary evidence, the burden shifts to the Revenue to establish that such explanation is false or that the withdrawn cash was no longer available. In the present case, the authorities below had not pointed out any arithmetical discrepancy or factual inconsistency in the month-wise cash-flow statement and had rejected the explanation only on assumptions and conjectures arising from the time gap.
The Tribunal further observed that even if the explanation regarding tuition income and accumulated savings were ignored, the undisputed bank withdrawals of ₹9 lakh themselves constituted substantial documentary evidence explaining the source of the deposits. Since the assessee had discharged the initial burden and the Revenue failed to rebut the explanation with any cogent material, the addition of ₹10.49 lakh under section 69A was held to be unsustainable. The Tribunal accordingly deleted the entire addition and allowed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The captioned Appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated28.10.2025 Assessment Year 2019-20.
