Case Details: Madhusudan Reddy Pasham vs. ACIT [2025] 181 taxmann.com 537 (Hyderabad - Trib.)
Judiciary and Counsel Details
- Ravish Sood, Judicial Member
- Manjunatha G., Accountant Member
- P. Murali Mohan Rao, CA for the Appellant.
- A.P. Babu, Sr. A.R. & Ms U. Mini Chandran, CIT-DR for the Respondent.
Facts of the Case
During search proceedings under section 132, the Assessing Officer noticed cash deposits in certain bank accounts of the assessee. In the assessment framed under section 143(3) read with section 153A, the Assessing Officer treated the cash deposits as unexplained money under section 69A, on the ground that the deposits were not properly explained in the cash flow statement submitted by the assessee.
Aggrieved, the assessee filed an appeal before the Commissioner (Appeals). The assessee contended that the cash deposits were made out of earlier cash withdrawals from the same bank accounts and furnished bank statements to demonstrate that total cash withdrawals during the relevant assessment years were substantially higher than the cash deposits. It was further submitted that no evidence had been brought on record by the Assessing Officer to show that the withdrawn cash had been utilised for any other purpose. However, the Commissioner (Appeals) partly upheld the addition.
The assessee carried the matter in further appeal before the Tribunal.
The Tribunal examined the bank statements and cash flow furnished and observed that the Assessing Officer had failed to take into account that cash withdrawals exceeded cash deposits. It was noted that the Revenue had failed to establish any alternate use of the cash withdrawn by the assessee. In the absence of such evidence, the explanation that the deposits were made out of earlier withdrawals could not be rejected.
Tribunal Held
The Tribunal held that, merely because cash deposits appeared in the bank account, they could not be treated as unexplained when corresponding withdrawals were available, and no contrary material was brought on record. Accordingly, the Tribunal held that the addition made under section 69A in respect of such cash deposits was unsustainable and directed its deletion.
However, the Tribunal observed that, in respect of a separate bank account, the issues of ownership and the nature of certain credits required verification. To that limited extent, the matter was restored to the Assessing Officer’s file for fresh examination.
List of Cases Referred to
- ACIT v. P. Madhusudan Reddy [IT Appeal No. 1373(Hyd) of 2012, dated 21-4-2017] (para 15).
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