No bar in holding cash after withdrawals for longer period before redeposit in bank

There is no bar in holding cash after withdrawals for longer period before deposited into bank on subsequent dates – ITAT

In a recent judgment, ITAT Visakhapatnam has deleted addition u/s 69A towards unexplained money holding that there is no bar in holding the cash after withdrawals for the longer period before being deposited into bank on subsequent dates. 

ABCAUS Case Law Citation:
4621 (2025) (06) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) of National Faceless Appeal Centre in confirming the addition made by the Assessing Officer (AO) u/s 69A of the Income Tax Act, 1961 (the Act) treating the cash deposited as unexplained money.

Before the Tribunal the assessee submitted that source for the cash deposits were out of withdrawals made from the spouse account and redeposited In the instant appeal, the assessee had challenged the order of CIT(A) in confirming bank.

It was contended that AR AO had not considered the cash withdrawals as the source for cash deposits because of time lag of one year between the date of withdrawals and date of deposits.

It was submitted that the onus of proving the source had been established whereas the AO had merely not accepted the claim of the assessee based on assumption and surmises. 

The Tribunal observed that the assessee had established the source of cash deposits before the AO.  However, AO had not made any enquiries but has not accepted the submissions of the assessee on the basis that there was a time lag of one year between the withdrawals and the deposits. 

It was noted by the Tribunal that AO further observed that assessee had not furnished any reasons for keeping such huge amount as cash in hand.  However, there is no bar in holding the cash after withdrawals for the longer period before being deposited into bank on subsequent dates. 

The Tribunal observed that AO had neither brought any material on record to prove that the cash withdrawn by the assessee during the earlier year was utilized for some other purpose other than making the deposits into the spouse account.  In the absence of any material evidence that the cash has been expended it can be concluded that assessee held the cash for a longer period of time before depositing the same into the bank account during the relevant year. 

The Tribunal directed the AO to delete the addition since the assessee has proved the sources of cash deposits into the bank account. 

Accordingly, the appeal of the assessee was allowed.

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