ITAT Bangalore Strikes Down ₹58.80 Lakh Addition Under Section 69A: Cash Redeposited from Prior Withdrawals Cannot Be Treated as Unexplained Money
Case Overview
Case Name: Pushpa Vs ITO (ITAT Bangalore)
**ITA No.😗* 2680/Bangalore/2025
Assessment Year: 2017–18
Order Date: 22nd June, 2026
Forum: Income Tax Appellate Tribunal, Bangalore
In a significant ruling that reinforces the principle of burden of proof in reassessment proceedings, the Bangalore Bench of the Income Tax Appellate Tribunal delivered a ruling in favour of the assessee in the case of Pushpa Vs ITO, completely striking down an addition of ₹58,79,960/- that had been made under Section 69A of the Income Tax Act, 1961. The Tribunal established a clear and important legal proposition: cash once withdrawn from a bank account is naturally presumed to remain available with the account holder for subsequent redeposit into the same account, and the Revenue cannot treat such redeposits as unexplained income without first establishing, through cogent evidence, that the withdrawn funds were deployed or spent elsewhere.
Background and Factual Matrix
Who Was the Assessee?
The assessee, Mrs. Pushpa, was a non-filer of income tax return. She maintained an account with Sri Basaveshwara Pattana Sahakara Bank Niyamita, a co-operative bank. During the financial year relevant to Assessment Year 2017–18, significant cash deposits totalling ₹59,43,900/- were observed in this co-operative bank account. The risk management system of the Income Tax Department flagged these cash deposits, leading to the initiation of reassessment proceedings.
How Reassessment Was Triggered
Upon identification of the cash deposits through the Department's risk profiling mechanism, an order under Section 148A(d) of the Income Tax Act, 1961 was issued, followed by a notice under Section 148 on 30.03.2024. Subsequently, notices under Section 143(2) and Section 142(1) were issued on 30.09.2024, and a show cause notice followed on 14.02.2025.
In response to the Section 148 notice, the assessee filed a return of income on 20.06.2024, declaring a total income of just ₹65,520/-.
The Assessee's Explanation
The assessee provided the following explanation for the cash deposits in the co-operative bank account:
- She had personal savings in her bank account accumulated over time.
- Her daughter's marriage had been fixed, and in anticipation of marriage-related expenditures and purchase of gold, she had withdrawn substantial cash from the very same bank account on multiple dates during the year.
- Due to unforeseen circumstances, the marriage was postponed.
- Since the marriage did not take place, the withdrawn cash was redeposited back into the same bank account on various dates.
The assessee supported her claim with specific details of cash withdrawals made during the year, including:
- 18.04.2016: Withdrawal of ₹12,08,000/-
- 21.05.2016: Withdrawal of ₹8,44,000/-
- 01.06.2016 and 02.06.2016: Withdrawal of ₹5,25,000/-
- 22.07.2016: Withdrawal of ₹8,00,000/-
- 16.08.2016: Withdrawal of ₹15,50,000/-
The total withdrawals, thus, aggregated to substantial amounts, and the assessee's contention was straightforward — the source of the cash deposits was none other than her earlier cash withdrawals from the same bank account, thereby making it a mere recycling or redeployment of funds and not any unexplained income.
Proceedings Before the Assessing Officer
The Assessing Officer printed and examined the bank account statement in the Assessment Order itself. Despite having the bank account details before him — which clearly reflected the pattern of withdrawals and subsequent deposits — the Assessing Officer rejected the assessee's explanation, holding that she had failed to satisfactorily explain the source of the cash deposits through adequate documentary evidence. A show cause notice was issued, and ultimately the Assessing Officer completed the reassessment by making an addition of ₹58,79,960/- under Section 69A read with Section 115BBE of the Income Tax Act, 1961, vide order dated 25.02.2025.