Tribunal deletes section 69 addition where cash deposits were traced to sale proceeds and uncle’s funds

5-Second Takeaway

The Tribunal held that cash deposits could not be treated as unexplained income under section 69 when the assessee furnished documentary evidence showing the money came from sale proceeds and from his uncle, with immediate RTGS transfer to the uncle’s account. It also held that the addition could not rest on gross cash deposits alone, where the revenue brought no independent material to show undisclosed income.

The dispute concerned an addition under section 69 for cash deposited in the assessee’s bank account. The assessee explained that part of the money came from sale proceeds of old vehicles and that the larger portion belonged to his uncle, Shri K.C. Chikkanaiah, whose amount was deposited in the assessee’s account only because of technical issues with the uncle’s own bank account.

The Tribunal accepted the explanation on the basis of supporting documents, including a chartered accountant’s certificate, a notarized confirmation from the uncle, and the bank trail showing immediate transfer of the funds by RTGS on the same day. On that record, the identity and source of the receipts were shown, and the money did not remain with the assessee.

The Tribunal also noted that the Assessing Officer had relied on gross cash deposits without properly considering withdrawals, cash flow, or the assessee’s explanation, and had brought no independent material to show that the deposits represented the assessee’s undisclosed income.

Holding that suspicion could not substitute for evidence, the Tribunal deleted the addition.