HC Rejects ‘Human Conduct’ Theory: Cash Deposit Explained, Sec 69A Addition & Penalty Quashed

ITO Vs M. Muniswamy Reddy (Karnataka High Court) The Karnataka High Court dismissed the Revenue’s writ appeal and upheld the quashing of an assessment made under Section 144 involving addition of ₹32,00,500 as unexplained cash deposits under Section 69A r/w 115BBE. The Court noted that the assessee had provided a plausible explanation supported by evidence, including a registered agreement of sale showing receipt of ₹26,50,000 and proof of income of the son supporting the balance ₹4,50,000. The Assessing Officer had rejected the explanation on presumptive grounds, such as questioning w...